Zimbabwe is a popular destination for businesses wishing to expand their operations into Africa. It is well-known for its highly qualified people, infrastructure, and natural resources. The first step to success in Zimbabwe is to register your firm right away to avoid costly delays.
Types of companies in Zimbabwe
The first stage in forming a company in Zimbabwe is to determine what type of company you wish to form. You must choose between forming a private limited company (PLC), a private business corporation (PBC), or a cooperative (co-op). Understanding the differences between a PBC (Private Business Corporation), a Private Limited Enterprise (Pvt Ltd), and a cooperative company is critical.
Private Limited Company
A Private Limited Company (PLC) is a legal business entity that is formed and registered with the Companies Registry (the Registrar of Companies in Zimbabwe). A Private Limited Company becomes an individual in the eyes of the law once it is registered with the Companies Registry. Because it is accountable for its acts, finances, and responsibilities, a Private Limited Company is a wholly independent entity from its owners. This is the most frequent business structure in Zimbabwe for any firm that wants to make money for its shareholders.
Why you should establish a Private Limited Company
Private Limited Companies allow business owners, or shareholders, to partake in the earnings of the firm without being personally accountable. If the firm gets into financial difficulties, the shareholders’ financial liability is restricted to the value of their shares or financial guarantees, which means they are only responsible for covering corporate debts up to the amount they invest or promise to pay. Limited liability is the term for this form of protection.
The disclosure of corporate and financial information is one of a Private Limited Company’s most critical responsibilities. This is accomplished by adhering to many annual filing requirements and event-driven obligations, such as submitting annual returns, filing tax returns, and annual accounts, and reporting any significant changes in the business, such as changes in company addresses, changes of company directors, transfer of shares, company name changes, amendment of memorandum and articles of association, increase in share capital, vary share capital, allotment of shares, and company name changes.
Private Business Corporation
A Private Business Corporation is an alternative company structure to a Private Limited Company that is formed and registered with the Companies Registry (Zimbabwe’s Registrar of Companies). A Private Business Corporation becomes an individual in the eyes of the law once it is registered with the Companies Registry. Because it is accountable for its activities, finances, and responsibilities, a Private Business Corporation is a wholly independent entity from its owners.
One or more members own a Private Business Corporation (shareholders). A single individual can be the only shareholder and director of a Private Business Corporation, or numerous people might be shareholders and/or directors. This means you can form your own Private Business Corporation.
Members of private business corporations must provide capital to the company. This defines how much each shareholder owns of the company.
All taxable income must be paid by private business corporations. Shareholders receive post-tax profits in proportion to the number and value of their shares. Alternatively, the company could reinvest surplus profits back into the company.
Cooperative Company
A cooperative firm is not a private corporation and that:
- declares in its memoranda that one or both of the following are its principal objectives:
- provision of a service to its members that facilitates the production or marketing of agricultural produce or animals
- the sale of goods to its members
- the sale of services to its members.
- by its articles:
- restricts the right to transfer its shares
- provides that its ordinary shares shall be of one class only
- fixes a limit on the number of shares that may be held by any member, subject to section thirty-nine
- regulates the voting rights of its members in accordance with section thirty-nine
- limits the dividend that may be paid on its shares to a rate not exceeding ten percent per annum on the amounts
