A business may be managed by individuals, partnerships, trusts, close corporations, companies, or branches of foreign companies. A company may be described as public (limited) or also private (proprietary limited). Both are under the company’s act. The most common establishment for operating a business in Lesotho is a private company. It must have at least two directors. There need not be any Lesotho occupant directors. A subsidiary of a foreign company is regarded as a Lesotho company. The legal liability of the Parent company is limited to the quantum of capital committed (together with any guarantees offered). A branch of a foreign company is regarded as an external company if it establishes a place of business or owns immovable property in Lesotho, and must register the same way. The legal arrears of a branch aren’t limited to the extent of its Lesotho assets. Both a Lesotho company and a branch operation are subject to the services of the Companies Act.
The major business structures in Lesotho
An entrepreneur can choose from these major structures, such as sole dealer/, partnership, private or public limited company. All business legal structures are regulated by governments in terms of initial enrollment, periodic reporting, levies, and operating licenses. So the type of structure you choose has future ramifications.
Sole trader/proprietorship
In this type of business, the proprietor isn’t lawfully separated from the business. The business is controlled by one person, because the business isn’t separated from the proprietor, all liability rests on the proprietor. Business creditors can sue the proprietor for any debts incurred for the benefit of the business. This business structure exposes the business proprietor’s particular assets. If you want to cover your assets also this structure isn’t ideal. If you have to raise capital through equity benefactions it’s not possible because the structure doesn’t allow outside investors. You’ll have to change the structure. The proprietor is responsible for the levies. A sole procurement doesn’t continue in infinity. As soon as the proprietor passes on the business stops being functional. Power can be transferred by selling the assets. The advantages of a sole dealer are that it’s affordable to start and simple to run and when paying the duty you don’t have to make separate duty returns. Still, the disadvantages are that particular liability is unlimited and power is only limited to one person.
Partnership
It’s nearly like a sole proprietorship in that the possessors aren’t lawfully separate from the business. The only difference between a sole proprietorship and a partnership is that a sole proprietorship has only one proprietor and a partnership has two or further possessors. The possessors pay levies in their individual capacity after sharing profits. The partners have equal operation rights and control, or their liabilities and control can be spelled out in a written cooperation agreement. However, the cooperation will be dissolved unless the agreement specifies or provides for the durability of the business by the remaining partners. If a partner dies or leaves the cooperation. All partners have equal power over all business assets and arrears or in proportions defined in the cooperation agreement. The cooperation agreement determines how a departing partner will be paid for part power when he or she leaves, dies, or retires. The advantages are that power isn’t limited to one person, you can have more than one proprietor. The disadvantages are that the partners have unlimited self-liability, and each partner is lawfully responsible for the business acts of other partners. On duty issues, each partner is needed to submit separate duty returns.
Private or public company
It’s registered as a separate legal reality from its owners. On enrollment, you have to file company documents with the register of companies to prompt enrollment. An amount is paid for the company to be registered. The company will have a separate commercial bank account and all deals for the company are recorded independently from the possessor’s particular deals. The funds generated from the deals are possessed by the business. The enterprise will be needed to pay income duty on its profits and also whenever it pays dividends to its shareholders. The operations of the organization are governed by the article of association which would have been approved by the shareholders. The shareholders appoint directors who’ll be responsible for overseeing the handling of the company and would be responsible for major opinions, including a selection of company officers. A company can live forever indeed if one or further of the shareholder’s possessors dies. The power of the company can be transferred by the trade of shares. The advantages of a company are that shareholders have limited self liability and power is swiftly transferred by the trade of shares. Other investors can be added by the trade of shares. The company can live forever. The company submits separate duty returns. The disadvantages are that it’s more expensive to set up and maintain a company. The type of business structure to use will depend on a number of factors, from the type of business you’re operating to duty ramifications.
