guide to...
Company Formations
Zimbabwe on the rise
Setting up in Bangladesh
Doing business in Scotland Opportunities in Russia
Business in the Land of the Dragon Wei Zhang, Partner at Jun He Law Offices in Beijing on China’s business environment
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guide to...
Company Formations
Contents 6 Germany: A Reliable Business Environment 8 Zimbabwe on the Rise 10 Haiti: Open for Business 14 Weaving Success in Bangladesh 16 China: Doing Business in the Land of the Dragon 20 Doing Business in Scotland 22 Opportunities in Russia
guide to...
Company Formations
Germany: A Reliable Business Environment
Dr Arne Vogel is a Lawyer (grade: manager) at PricewaterhouseCoopers Legal AG Rechtsanwaltsgesellschaft, Hamburg, Germany
PwC Legal Germany is part of the international PwC Legal network, whose more than 2000 lawyers provide truly global services to their clients in more than 70 jurisdictions worldwide. It is not only part of the most widespread legal network in the world, it also closely cooperates with the PwC network of firms which deliver high quality assurance, tax and advisory services in 158 countries. According to Dr Vogel, setting up a company is not very complicated in general – if you know how to do it. With only a few exceptions any (foreign) individual or legal entity may establish companies like a GmbH, the standard private limited liability company in Germany, for business purposes. German law prescribes a minimum share capital of ¤25,000 for a GmBH. All that is required to set up a GmbH is a founding charter and the company’s Articles of Association, which can be a two-pager. The documents need to be notarised and must be filed to the commercial register together with a personal declaration of the designated managing director, a list of shareholders and evidence for the existence of the shareholders and for the paid-in share capital. Furthermore, the local trade register and tax authorities have to be notified. “However, a wide variety of general and industry-specific regulations may apply and several other authorities may need to be involved,” explained
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Dr Vogel. “That makes it almost inevitable to consult experts to comply with all requirements.”
of 15% and a local trade tax rate between seven and 20%.”
With its well-educated workforce, stable political conditions and a well-functioning judicature, Dr Vogel belives that Germany provides a reliable environment for business.
With more than one million registered entities, the GmbH is by far the most common company in Germany. Approximately 91,600 GmbH picked up business in 2011 alone, compared to approximately 64,000 partnerships with unlimited liability and 2,500 stock corporations (AG).
“Access to banking is easy for companies in Germany and most solvent companies will have good access to credit facilities at moderate interest rates, even though in the wake of the financial crisis the requirements for loans have tightened,” he observed. “Corporate taxes are comparably moderate with a federal corporate income tax rate
According to Dr Vogel, the formation process for a GmbH improved significantly within the last ten years, especially due to deregulation and widespread implementation of electronic communication with authorities. “However, still too many different authorities are involved in the formation process and too many industry-specific regulations do apply,” he commented. “That makes it difficult, in particular for foreign companies, to start a business and comply with all regulations without counselling a competent advisor. It would therefore be desirable to reduce the number of involved authorities and to further deregulate the formation procedure. “The economy in Germany is growing at least at a slow pace, so that formations should not decrease. However, any slump in the world economy would of course also affect businesses in Germany as well,” concluded Dr Vogel.
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Setting up a company is not very complicated in general
guide to...
Company Formations
Zimbabwe on the Rise Phathisile Ncube is a legal practitioner at Mawere & Sibanda Legal Practitioners
Founded in 2001, Mawere & Sibanda Legal Practitioners is a full service law firm specialising in corporate law, with its offices in the central business district in Harare, Zimbabwe.
2009 as a result of the formation of the inclusive government that has created a conducive environment for the business planning and project execution,” she commented.
Company formation services are provided by M & S Trust Company, an entity wholly owned by the law firm which is overseen by Miss. Daisy Zinyemba an Associate Partner at the firm.
The private limited liability company structure is in the greatest demand in Zimbabwe, in comparison to public companies. Ms. Ncube stated that incorporation of the former is simple and relatively cheap.
Ms. Ncube explained that it is relatively easy to set up a company within Zimbabwe, and that there has been a phenomenal increase in company registrations in the last few years due to self-employment and indigenisation issues.
“Private limited companies are favoured because the shareholders or directors control the operations of the company with minimum external supervision outside of the normal corporate governance issues.
“There is also a market registration increase due to foreign investors engaging in joint ventures with local partners,” she added.” This has happened since February 2009.
“A public company on the other hand takes a much longer time and is subject to stricter regulatory control.”
She noted that the sectors seeing the most company formations are the mining and related sectors due to the increased injection of foreign investment from Chinese and Western European countries. There has also been an increase in formations in the telecommunications and service sectors. “The increase recorded in these sectors is largely attributable to the stable political and macroeconomic environment that has persisted since
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In practice offshore companies are hardly incorporated in Zimbabwe because there is a simpler proce-
dure getting the same result, observed Ms. Ncube. “The main challenge is that the process is slow as it requires Ministerial approval,” she explained. “The solution to this challenge is to register a local company wholly owned by a foreign entity. The results are practically the same.” In the next 12 months, Ms. Ncube expects the political environment in Zimbabwe to normalise. She hopes that the elections due in 2013 will result in a clear victory by one political party and that the results will not be disputed. “This will result in removal of sanctions and normalisation of the country’s relations with the West and multilateral lenders,” she explained. “We expect massive FDI to go into the restoration of infrastructure and energy which will boost employment and general economic activity.” She noted that the Companies Office is in the process of being fully computerised which should help speed the company formation procedures. “In general we are optimistic that the economy can only get better. We expect an increase in formations due to: the continued stable economic and political environment; fiscal prudence; an improvement in electricity and water supply,” concluded Ms. Ncube
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There has been a phenomenal increase in company registrations in the last few years
guide to...
Company Formations
Haiti: Open for Business Ludwig LeBlanc is a Junior Associate and Managing Partner of LeBlanc and Associates Law Firm
Cabinet LeBlanc & Associates is a law firm established in 1990. It advises companies in the fields of company law, contract law, and mergers and acquisitions. The firm’s clients include companies in the world, state enterprises, international organisations and individuals. As a law firm, the cardinal point of its work is still defending the interests of the client. However, this advocacy of the customer can result in various ways, both in council, litigation and negotiation.
of the Law. He also monitors them both during their creation as their development.
The firm has a strong national and international reputation. It has lawyers who are regularly called as law‘s expert in U.S. courts, in Tallassee, Washington and Florida. The firm represents small businesses, corporate, faith based organizations, NGOs and State Agency such as Trinity Broadcasting Network ,Malteser International Haiti, Smile of a Child, US Agency for International Development (USAID)…
Mr LeBlanc stated that the country is now open for business and offers lots of advantages for prospective companies via the investment code for the
Ludwig LeBlanc is an experienced business attorney and has recognised experience in contractual matters, corporate law, corporate finance, mergers and acquisitions, joint ventures and international law. He organises, manages, and assists the corporate or NGOs in all matters with a precise knowledge
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Commenting on the ease of setting up a company in Haiti, Mr LeBlanc explained that it takes more than 85 days to obtain the registration of a company. This involves drafting the Bylaws of the company, to submit it to a Public Notary who will notarise the documents and submit it to the Commerce Ministry to get the Authorisation to operate.
tourism, small and large industries and Agriculture. “There has been a growth in creation of companies because of recent government stability, Haiti has a lot to offer in that particular International Crisis. Foreign companies has a lot to gain in every sector, Companies can easily have enormous profits, like MCI International, DIGICEL Communications due to the lack of serious competition. There is a lot of opportunity for foreign investment, now is the time to prospect,” explained Mr LeBlanc. He noted that the construction and tourism sectors are seeing the most attractive sector as Best Western and Marriott are now present in HAITI. Commenting on the ease of doing business in Haiti, Mr LeBlanc explained that it is not easy to access credit facilities for small businesses. However, local corporation taxes are not complicated and are in accordance with international taxes. The company structure in greatest demand is similar to the LLC, called Société Anonyme. In order to improve the formation process and the business environment in general, Mr LeBlanc believes it is necessary to reduce the process to incorporate a company.
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There has been a growth of creation of companies because of recent government stability
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guide to...
Company Formations
Weaving Success in Bangladesh A.K.M. Rafiqul Islam is the active Chairman of Rangamati Waterfront, a leisure and hospitality resort in Kaliakair Upazila
Commenting on company formation levels in Bangladesh, Mr Islam explained that growth potentiality is 6%+ annually, and that it went as high as 8%. This, he noted, is a situational advantage as well as availability of manpower.
to appoint an administrator in a private company found delinquent. Due to strong opposition and a stand from the business chambers, the government withheld from introducing the change in the Company Law.
“Already the outline of growth in the production and export of garments and shoes would exceed double digit figures (ranging between 20% to 30%) in spite of the recession in the EU an stagnation in the US,” he explained.
He added that per capital income of Bangladesh is higher than in India. In terms of doing business in Bangladesh, the country ranks higher than India, Bhutan and Afghanistan, as per the IFC index for 2013. Bangladesh is ranked 129, India 132, Bhutan 148 and Afghanistan in 168.
According to Mr Islam, Bangladesh enjoys a special situation in respect of Textiles & Garments – 80% of Bangladesh’s foreign exchange comes from this sector. He noted that, besides its traditional markets in the US and EU, it is expanding to India, China, Japan, Russia and South America. Leather and leather goods such as shoes, bags, and accessories are picking up every year. Mr Islam is confident that industrial growth will be impressive in the next 12 months, especially in textiles, garments including knit fabrics, sweaters, and leather goods.
“Nothing is made available on a platter, but the entrepreneurs take the risk based on the indication study and seeing what others are doing. If you are out of the Dhaka City at night you will find illuminated high rise buildings busy making garments to catch up the shipment. Bangladesh was never in the ship building business except for making small boats for riverine communication. Today, we are making ships for the German and the Scandinavian ports,” he concluded.
Mr Islam explained that Business Chambers, headed by FBCCI, is very active in protecting the interests of business and industry. Recently, the government went back from its decision to amend Company Law 1994, enabling the government
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In terms of doing business in Bangladesh, the country ranks higher than India, Bhutan and Afghanistan
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guide to...
Company Formations
China: Business in the Land of the Dragon Wei Zhang is Partner specialising in M&A and corporate at Jun He Law Offices, a corporate law firm headquartered in Beijing
Jun He is a Chinese law firm specialising in general commercial practice. Established in April 1989, Jun He’s head office located in Beijing and currently has eight branch offices in Shanghai, Shenzhen, Dalian, Haikou, Guangzhou, Hong Kong, New York, and Silicon Valley, California, the United States. Thus far, Jun He has over 690 staff, including 151 partners and counsels, 350 associates. The firm’s professionals practice in 14 specialty groups, each focuses on and offers expertise in an area including general corporate, real estate and construction, foreign investment, merges and acquisitions, securities, banking and financing, intellectual property, tax, international trade, labor and employment, and dispute resolutions. Commenting on the current business environment in China, Mr Zhang explained that it has improved significantly, however there is still a lot of work to do. In particular, he stated that more restrictions on foreign investment in industrial sectors have been removed, and local governments are vested with higher authority to approve foreign investment.
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“However, there are also certain complications worth noting: national security review regime was established last year, anti-trust compliance was strengthened, both of which help prolong the approval process required for the large-sized transactions and transactions in which foreign investors would acquire control, thus enhancing the uncertainty in obtaining the approval required,” he commented. “Further, increase of labour costs have caused many manufacturers to relocate their facilities outside China, even offshore transaction involving a target company having Chinese entities may have to take into consideration the Chinese em-
ployees’’ slowdown or ‘work-stop’ for compensation which apparently lacks legal ground but has practical impact on the transaction. Notwithstanding the foregoing, as China remains a market with huge potential to grow, it will continue to attract foreign investors to do M&As.” Mr Zhang noted that the service sector, cleantech/energy as well as new energy, new tech, high-end manufacturing, among others, are encouraged by the government, thus are the sectors where the greatest opportunities lie. “According to the PWC’s report early this year, Chinese investment in Europe has been greatly increasing. We expect such increase will continue onwards, especially when the valuation of more target companies is now found to be relatively reasonable, plus Chinese investors have motivation to acquire advanced technology, brand names and cliental bases through M&As,” concluded Mr Zhang.
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Local governments are vested with higher authority to approve foreign investment
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Company Formations
Doing Business in Scotland Tom Hughes is one of four general practitioners within the practice of Gerber Landa & Gee, CA in Glasgow For the past two decades Mr Hughes has specialised in corporate reconstruction and recovery, including the stabilisation and refinancing of Partick Thistle Football Club in Glasgow, several judicial factories for the Law Society of Scotland and administrations, including travel agents and other retail and general businesses. Gerber Landa & Gee was formed by an amalgamation of three practices in 1968. Since then it has developed a substantial portfolio of family businesses across the retail, wholesale, manufacturing, leisure and professional sectors. The firm advises and supports all types of business from formation or acquisition to cessation or sale. The firm is currently a four Partner practice with 25 employees, which allows it to provide compliance backup in taxation, accounting and auditing, although the firm particularly prides itself on its ability to provide business advisory services using its experience to enhance the growth of its clients in their particular area. “It goes without saying that the near collapse of the banks caused havoc in the Scottish economy as well as the UK economy,” said Mr Hughes. He noted that unbridled lending in the decade leading up to the collapse lulled people into a false view that economic growth could be exponential. “Confidence took a severe dent and the political uncertainties in the Eurozone have not helped. Until an element of confidence and trust in the Government, the economy and the banks returns there will be slow progress.” Mr Hughes stated that, as with any economy, foreign investment is very desirable. It is, however, important that Scotland is able to encourage generic investment from Government or the private sector based in Scotland. He believes that pump priming in all of these areas is essential for future economic growth. Many businesses have struggles since the collapse of the banks in 2008. According to Mr Hughes, the increase of the Value Added Tax rate to 20% and employer’s National Insurance to 13.8% have not helped.
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“The banks have been relatively benign but indications in the current year are that they are taking a more active part in calling in debt,” he added.
is 8.3% and, according to Mr Hughes, “any budget deficit must come home to roost”. He stated that it is imperative that this is kept under control.
Discussing the sectors contributing to Scotland’s growth, Mr Hughes explained that the oil and whisky industries have been stalwarts of the Scottish economy for a long time. The public sector has also played a major role.
“Unfortunately, there are competing demands and self-interest is always a threat,” he commented. “An example of this is the funding of the public sector pensions by private taxpayers who have less generous pensions or no pension at all. This is a glaring iniquity but one that is difficult to solve. Politicians of all parties need to take a step back and work out a constructive plan over a prolonged period to reduce the deficit.”
“Different factors create uncertainty in all of these areas and it is not yet clear that renewable energy is the answer,” he observed. “Construction is also important and the Commonwealth Games in Glasgow in 2014 may kick-start sustained growth in several areas. Probably all areas of the UK face similar challenges, apart from Aberdeen and London who have unique advantages because of their locations.” Commenting on the factors that have contributed to Scotland’s slowed growth of 0.8%, Mr Hughes stated that the economic growth throughout the ‘New Labour’ Government in the UK was unsustainable and supported by debt. He noted that there had to be a severe correction and that Scotland is not alone in suffering from reduced growth. “Interest rates have now been at an all-time low for a long time. Although a number of businesses are cash rich they are wary of investing this with so much uncertainty in European markets.” The current budget deficit for the whole of the UK
Mr Hughes suggests that the Scottish Government could invest heavily in the public sector to boost growth. However, he noted that it is likely that there will need to be budget cuts. In these circumstances private sector growth must be encouraged and political and fiscal strategies should focus on upon this. It would include the encouragement of foreign investment by promoting the skills and quality of life within Scotland. “I am not convinced that the Scottish or the UK Governments have worked out how to ensure strong and sustained growth without increasing private debt and the budget deficit,” said Mr Hughes. “World Governments and the banking system have been all over the place for the past five years. Until there is stability it is difficult to predict economic growth anywhere with certainty. “History shows, however, that Scotland and Britain are resilient. The recent generations have been very fortunate with no World Wars, many fatal illnesses controlled and generally availability of jobs and constant improvement in the standard of living. It may be that we are reaching an era where there is going to be less cars, less televisions, and less holidays, although the plethora of iPhones and iPads contradict this. Prosperity does not necessarily have to be financial. It is, however, one factor that affects quality of life. If Governments are able to deal with the economic difficulties with compassion for the less fortunate, then I see prosperity of a different kind in the future,” he concluded.
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The oil and whisky industries have been stalwarts of the Scottish economy for a long time
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guide to...
Company Formations
Opportunities in Russia Mike Allen is a partner with Russia Consulting, where he runs the UK and US country desks, which are focussed on helping investors from these, and other English speaking countries, enter the Russia/CIS market
Mr Allen noted that there has been a generally strong demand in company formation due to Russia having a buoyant economy with strong business to business (B2B) and retail demand and with GDP growth of approximately 4% expected for 2012. This has been offset to an extent by concerns in the Euro zone limiting funds available for investment. “Russia continues to experience a high level of retail sales growth, which is expected to be 5.3% in 2012 and is driven by the consumer products, food and beverage, IT and Pharma/health care sectors. Looking ahead these and the agriculture and food production, B2B, construction, leisure and transportation equipment sectors are likely to provide good areas for investment over the next decade. “There have been significant improvements in the ability to do business in Russia in recent years, in particular in the rule of law and the ability to enforce contracts and in property registration, where
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Russia came 11th and 46th out of the 185 countries reviewed in this year’s Ease of Doing Business report issued by the World Bank. The banking system functions well and generally payments are made electronically. However, bank loan facilities are more limited than in Western Europe. “These advantages are offset by a generally cumbersome and bureaucratic process of starting a business, which is likely to take between 3 and 6 months, and a bureaucratic State filing requirement for quarterly financial reporting and for all taxes.”
Mr Allen explained that the Ease of Doing Business report issued by the World Bank identified the areas of Trading Across Borders, Obtaining Construction Permits and Getting Electricity Connected as being particularly troublesome, where Russia was evaluated as being the 162nd., 178th and 184th. country out of the 185 countries reviewed. “Looking forward we expect company formations to continue at a similar level to 2012. The Government is paying more attention to international trade relations and the business climate is expected to continue its strong and improving trend. “Western media has a tendency to be alarmist when reporting on domestic issues in Russia. This market presents a very attractive growth opportunity for many businesses and provided proper advice is taken investing companies can avoid difficulties.”
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There have been significant improvements in the ability to do business in Russia in recent years
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