CC registration under scrutiny

POTENTIAL Namibian entrepreneurs fear the complexities and cost involved in registering a company, should the Business and Intellectual Property Authority (Bipa) review the Close Corporations (CC) and Companies Act.

This came to light after The Namibian, through its business section, received numerous queries from prospective entrepreneurs worried that amendments to the act will spell doom for them, as they will be forced to register unlimited liability companies.

Namibia is among a few countries in the world that still register CCs as business entities. South Africa, for example, stopped the registration of CCs when it introduced the new Companies Act (Act 71 of 2008).

When The Namibian quizzed Bipa on the matter last week, the authority was diplomatic, but did not rule out the possibility of the amendments.

According to Bipa’s manager for communication, Annemarie Schüllenbach, “it would be premature for Bipa to pronounce itself on the future of CC registrations at this stage”.

She, however, indicated that Bipa has started working on the amendments to the Close Corporations and Companies Act and part of this comprehensive review will include the registration of CCs.

“Given that we have started with the amendments, the matter at hand will be dealt with, but as yet, we have not considered it,” said Schüllenbach.

She assured young people, who are mostly worried about the plight of CCs, that Bipa would take due consideration and consult all stakeholders before implementing any changes to the legislation.

Though both are considered legal entities, in a CC, members have limited liability, as they are personally liable for their claim in the entity. A private company, however, is a separate legal entity with certain rights, privileges, and liabilities beyond those of an individual.

Close corporation members own and manage the CC, while in a private company, the shareholders have to appoint a board of directors to oversee its operation.

Registering a CC starts with name reservation that costs N$75, and a founding statement that costs N$150.

While the cost of registering a company depends on the number of shares, the number of directors, and the date the year ends, it costs at least N$500 to register a company with Bipa.

This excludes the expenses related to external service providers, as applicants are advised to use legal practitioners, and secretarial and auditing firms because of the complexity of the process.

The memorandum and articles of association of a company, for instance, have to be adjusted to suit the specific circumstances and needs of each individual company, explained Bipa.

There were over 45 000 close corporations registered in Namibia in the last five years data from the registration authority as published in the central bank bulletins indicates.

– Erastus: erastus@namibian.com.na

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