What is a Company? 

The word Company may be defined as an Association where two or more people come together to carry out business in common with a view to make profit.    

Is there Company Law in Zambia? 

Yes, there is a provision for registration of Companies in Zambia under the Companies Act (Cap 388 of the Laws of Zambia) administered by the Patents and Companies Registration Office. This Act gives a detailed guideline regarding the procedures for registration and post incorporation. 

Who is eligible to register a Company in Zambia? 

Any two or more persons associated for any legal purpose may form an incorporated company by subscribing their names to an application for incorporation and lodging it with the Registrar. 

What other documents must accompany the application for incorporation? 

An application for incorporation must be lodged together with: 

·          proposed Articles of Association of the Company, if any 

·          statutory declaration of compliance that the requirements of the Act in respect of incorporation and matters precedent and incidental thereto have been complied with made by:- 

1.       a legal practitioner  having a practicing  certificate who was engaged in the formation of the Company; or

2.       a person named in the application for incorporation as a first Director or Secretary of the Company.   

·          a signed consent from each person named in the application as a Director  or Secretary of the Company to act in relevant capacity; and 

·          a declaration of guarantee by each subscriber if the Company is to be limited by guarantee.   

Who is NOT eligible to subscribe to an application for incorporation?

·          anyone under eighteen years of age;                  

·          an undischarged bankrupt under Zambian Laws;

·          an undischarged bankrupt under laws of another country, subject to an order by court;

·          anyone who is of unsound mind and has been declared so by the court or a court or a court of jurisdiction of another country.                

What are Articles of Association?                                                                 

These are Regulations that regulate the relationship between the company and members thereto.

What is the Procedures to register a Company?

To register a company, the promoters who have expressed their desire to be formed into a company with a specific name and objects, and have prepared documents (in this case the application for incorporation and other relevant documents) will lodge these documents with the Registrar of Companies. If these documents are in order, they will then be registered upon payment of the relevant fees and the Registrar issues Certificates of Incorporation and Share Capital which are conclusive evidence that the Company has been formed or registered.        

What is the Minimum Capital requirement for a private Company limited by shares to commerce business?        

A private company limited by shares shall not transact any business or exercise any borrowing powers until it has furnished the Registrar with a declaration signed by one of the Directors or Secretary  stating that subscription to the value of K50,000 has been paid to the Registrar and has issued it with a certificate o Minimum Capital.                                                            

What is the Minimum Capital requirement for a public Company to commence business?    

The minimum authorised capital requirement for a public company is K1,000,000. A public company should not carry on business, exercise any borrowing powers or incur any indebtedness except for a purpose incidental to its incorporation or to the obtaining of subscription or payment for its shares until it has satisfied the minimum capital requirement and the Registrar has issued it with  a Certificate of Minimum Capital. 

What is the minimum nominal Capital of a private company       

The minimum nominal capital of a private company is K2000,000. 

What is the minimum authorised Capital of a public company?

 The minimum authorised capital of a public company is K10000,000. 

Is there a provision for a registered Company to change its name? 

Yes, a company may pass a special resolution to change its name and such name change does not affect any rights or obligation of the company nor render defective any legal proceedings that could have been continued or commenced against it by the former name. 

How many types of companies are obtainable in Zambia? 

Two types of Companies are obtainable under the  Companies Act, namely:

(i)a public company;  (ii) a private company 

Under private company, fall the following:

·          a private company limited by shares;

·          private company limited by guarantee; and

·          an Unlimited Company. 

What is a Public Company? 

A public Company is one with share Capital and has capacity to enter  any business, unless restricted by its Articles. Its name always ends with the words Plc (an abbreviation for Public Limited Company). This type of Company has no restrictions on the right to transfer Shares where there is unpaid liability, and if it is wound up and its assets are insufficient to cover its liability, the liability of its shareholders is limited to the amount left unpaid on their shares (Sections 265 & 266). The minimum membership of a Public Company is seven. It has no limit on the minimum number of members. It can also list shares on the stock market. 

What is private Limited Company? 

A Private Limited Company is one with share Capital. It may not have more than 50 shareholders. Its Articles of Association restricts the right to transfer shares and is prohibited from making invitations to purchase its shares or debentures. If it is wound up and its assets are insufficient to cover its liabilities, the liability of its member/shareholders is limited to the amount left unpaid on their shares (section 122,265 and 266). This is the most common form of Company obtainable in Zambia. 

What is a Company Limited by guarantee? 

A company limited by guarantee does not have a share Capital. It must not carry on business for the purpose of making profits for its members or for anyone concerned in its promotion or management. It may not have more than 50 members. It is prohibited from making invitation to the Public to purchase its debentures. Under this Company, each member must sign a declaration of guarantee, specifying the amount that he undertakes to contribute in the event that the company is wound up. This type of Company is widely used by charitable and quasi-charitable organizations such as school, churches, foundations, etc. 

What is an unlimited Company 

An unlimited Company is also a private company and has the same attributes as that of a private liability company. The only limited between the two is that the case of an unlimited company, if it is wound up and its assets are insufficient to cover its liabilities, the liability of its shareholders to the discharge of those liabilities is unlimited. 

What is the requirement in membership of a private company? 

The requirement in membership in a public company is that there should be a minimum of seven members and no limit on the maximum number of members. 

What is the requirement on membership of a private company? 

For a private company the minimum is two and the maximum is limited to 50.              

Are there any post incorporation requirements that a company needs to comply with after it has been registered? 

Yes, there are documents that every company must deliver to the Registrar shortly after the occurrence of the events which they record, e. g. return of allotment, annual return, etc. 

What is an Annual Return? 

This is a statutory form that every company must file with the Registrar at a particular time in the year. An Annual Return serves as a means of publicising information. The return collates much that should have been delivered for registration when the relevant transactions occurred, so that anybody conducting a search may find it unnecessary to search back beyond the latest annual return on the file. A return also enables some additional or more recent information to be obtained. 

Which general information must an Annual Return State? 

An annual return  must state the full address of the company’s registered office, particulars of directors and secretary and its main activities. If the company has a share Capital, the company must give the particulars of share capital and shareholders. This enables much the same information to be obtained as that obtainable from the company’s membership register though as the return date. 

What is the consequence of failure to file the annual return? 

Failure to file the annual return alerts the Registrar and enables him to take appropriate steps leading to the Company’s  removal from the Register. Besides the company being removed from the Register it and every officer of the company who by default is also guilty of an offence and is liable to a prescribed fine. 

When should an annual return be filed? 

An annual return must be filed within three months after the end of the Company’s financial year, or within one month after the annual general meeting (AGM), if such meeting is held three months after the end of the financial year. 

What other document is lodged with the annual return of a private company? 

A private Company shall lodge with its annual return a certificate to the effect that it has not since its last annual return or date of incorporation, issued any invitation to the public to subscribe for any shares or debentures of the Company. 

Is there any requirement for Companies to hold annual general meeting? 

Yes, every company should hold, within three months after the end of the financial year of the company, a meeting to be called the annual general meeting (AGM) 

Is there any provision for Companies to maintain Accounts? 

Yes, part viii of the Companies Act, Cap 388, provides for an obligation for a company to maintain accounting records to explain the transactions and financial position of the company. Annual accounts have to be prepared every year and must include a full account of a company’s position as loans to officers, tax liabilities, etc. The Act also imposes an obligation on a company within three months after its incorporation to appoint an auditor of the company.