Investing in Madagascar remains governed by relative freedom to the extent that the new company isn’t subject to any specific condition, nation, previous authorization, or approval.
Like the options offered by Ohada or French law, foreign investors may choose between a natural or legal person who carries out an exertion in Madagascar and must register within 30 days of starting the exertion. Opening a bank account is obligatory for any recently registered business.
Types of business structures that can be registered in Madagascar
A subsidiary, which will assume an independent legal form in accordance with Malagasy Law, and a commercial business, typically a limited company or a limited liability company, are the two types of entities that can be registered in Madagascar.
A subsidiary
It will borrow an independent legal form according to the Malagasy Law and is registered as a commercial company, generally a limited company or a limited liability company (SARL).
A branch
It doesn’t have an independent legal personality, and can not act under its own name. In practice, the branch can have several names similar to the liaison office, resident representative or representative office, marketable branch, or agency.
A recently registered business entity must apply for a taxpayer identification number (NIF), a statistics number from the National Bureau of Statistics (INSTAT), and an RCS number from the Trade and Companies Registry (Registre des Commerces et des Sociétés). Registration is also needed with the National Fund for Social Welfare (CNaPS). The realities are represented at the Economic Development Board of Madagascar, within its one-stop-shop, which is the specialized body for company enrollment.
Registering a subsidiary as a domestic limited company (société Anonyme)
Investors may choose to establish a domestic limited firm when they fund their progress using a debenture loan (which isn’t allowed for a domestic limited liability company) or if the firm is planning to expand its actions in the future and will need significant investments.
Investors establishing a domestic limited company must follow this method:
- Register the company at the one-stop-shop of the Economic Development Board of Madagascar (EDBM) and submit the documents described in the procedure below.
- Gain the documents of objectification and collect the enrollment documents from EDBM.
Registering as a domestic limited liability company (société à responsabilité limité)
Alternatively, investors may choose to establish a limited liability company when its associates provide a degree of relational closeness or a more defined exertion than that of a limited company.
Private limited liability company
The private limited liability company (SARL) is a legal form generally used when the shareholders provide a close relationship between shareholders or defined exertion. Again,
a public limited liability company offers obscurity to its shareholders and is a favorable option for equity opening. Indeed, a business has three main sources of funding:
- Equity: The share capital performing from the shareholdings. A corporation can decide to increase its capital to finance its systems.
- Bank loan: Any similar decision is dependent on the banking market that may not be compatible with the fiscal cycle of the company’s requirements.
- Bonds: Flexible backing option, generally at a lower rate and not subject to any warranty, unlike bank loans.
While the SARL is limited to the first two sources of backing, the SA can use bonds as backing. SA is frequently used when the firm is anticipated to develop and requires significant investments. The share capital of the SA should only be paid up to 25 percent at the time of objectification (the outstanding quantum shall be paid 3 years after enrollment with the trade and companies register).
Take away
The decision to expand to Madagascar is a very exciting and difficult time for your business. While expanding your business internationally is undoubtedly something to be proud of, doing so also demands careful consideration and planning, particularly if you’re still learning how to establish a Madagascar subsidiary. The incorporation procedure can take a few weeks to a few months, and it includes a variety of tasks, such as understanding intricate tax rules and attempting to hire staff from other countries while adhering to new employment compliance regulations. A business that is officially registered can grow and escape the penalties the Malagasy government imposes on the unofficial sector. The formalization of a company enables it to take advantage of the resources set up by the government of Madagascar to support, guide, and develop businesses in Madagascar.
