Zanzibar, with its growing economy and strategic location, offers an attractive environment for businesses looking to tap into East African markets or invest in its burgeoning tourism and Blue Economy sectors. For any entrepreneur or foreign entity eyeing the archipelago, understanding the foundational legal framework is paramount. The Zanzibar Companies Act, No. 15 of 2013, serves as the primary legislation governing the incorporation, operation, and dissolution of companies within the Isles.
This article highlights the essential provisions for establishing a Limited Liability Company (LLC) or registering a Foreign Branch in Zanzibar, guided by this crucial Act.
1. Establishing a Limited Liability Company (LLC) in Zanzibar
The LLC is the most common and versatile business structure, offering shareholders protection from personal liability beyond their investment.
Key Provisions for Incorporation:
- Minimum Requirements (Section 6): An LLC can be formed by one or more persons, and it must have a memorandum and articles of association. There’s no statutory minimum share capital requirement, making it accessible for various ventures.
- Memorandum of Association (Section 9): This document defines the company’s constitution, its name, the liability of members (limited by shares or guarantee), the amount of share capital, and the subscribers’ declaration of intent to form the company.
- Articles of Association (Section 10): These are the internal rules governing the company’s operations, management, and the rights and duties of its members and directors. Model articles are provided in the Act’s schedules, which can be adopted or modified.
- Company Name (Section 19-25): The proposed name must be unique and approved by the Zanzibar Business and Property Registration Agency (BPRA). It must end with “Limited” or “Ltd.”
- Registered Office (Section 85): Every company must have a registered office in Zanzibar, where official communications and legal documents can be served.
- Directors and Secretary (Section 132 & 176):
- An LLC must have at least one director, who can be of any nationality.
- A company secretary is also mandatory. While the secretary can be an individual or a body corporate, they must generally possess relevant qualifications or experience as prescribed by the Act. This role is crucial for ensuring compliance.
- Registration Process (Section 26-30): The application for registration, including the memorandum, articles, and other prescribed forms, is submitted to the BPRA. Upon successful review, BPRA issues a Certificate of Incorporation, formally bringing the company into existence.
2. Registering a Foreign Branch in Zanzibar
For established companies elsewhere that wish to have a direct operational presence in Zanzibar without forming a new local entity, registering as a foreign branch (or “external company”) is the appropriate route. This typically applies to companies incorporated outside Zanzibar but establishing a place of business within the Isles.
Key Provisions for Registration:
- Definition of “External Company” (Section 341): The Act defines an external company as a company incorporated outside Zanzibar that establishes a place of business within Zanzibar.
- Required Documents (Section 342): Within one month of establishing a place of business, the foreign company must submit certified copies of the following to BPRA:
- Its charter, statutes, or memorandum and articles of association (or other instrument defining its constitution).
- A list of its directors and secretary, with their names, nationalities, and any other directorships held in Zanzibar.
- A statement of the company’s local secretary or agent in Zanzibar, authorized to accept service of process and notices on the company’s behalf. This individual or entity must be resident in Zanzibar.
- A statement of the registered office or principal place of business of the company in Zanzibar.
- Certificate of Registration (Section 343): Upon satisfactory submission, BPRA issues a Certificate of Registration of an External Company, legitimizing its operations in Zanzibar.
- Ongoing Compliance (Section 344-348): Foreign branches must notify BPRA of any changes to their constitutional documents, directors, secretary, or registered office. They are also generally required to file annual accounts with BPRA.
Why These Provisions Matter
Adhering to the Zanzibar Companies Act, 2013, is not merely a formality; it’s the bedrock of legal recognition, investor confidence, and operational legitimacy. Proper incorporation or registration ensures access to legal protections, enables engagement in commercial contracts, facilitates obtaining necessary licenses (e.g., business license, investment certificate from ZIPA), and allows for tax compliance.
Navigating these requirements can be intricate, particularly for foreign investors unfamiliar with Zanzibar’s distinct legal landscape, which often operates in parallel with Union laws. Therefore, seeking professional legal advice is highly recommended to ensure full compliance and a smooth entry into Zanzibar’s dynamic business environment.
