The Sunday Mail
Entrepreneurship Matters
Dr Kudzanai Vere
What I have learnt in life is never to assume things.
I was surprised one of the days when I went out into the market with my marketing team on the reasons that we got from small and medium enterprises for not having registered with Zimbabwe Revenue Authority (ZIMRA).
Despite the various workshops that Zimra does, seeking to enlighten people on what it means and what it takes to become a tax compliant trader, the majority is still in the dark. All these workshops are done free of charge and yet people choose not to attend not because they know everything but they just have a negative attitude towards learning and at times the institution calling for the meeting.
The institution at times uses some organisations to convene the meetings where they come and present on taxes but people still don’t come in the expected numbers.
Even before we go to the Zimra issues, the first step of having your company registered with the Company registry has also proved a big issue with most of the SMEs.
In order to register with Zimra, you must first have your company documents ready (Certificate of Incorporation, Cr6, Cr5, Memorandum and Articles of Association) and they form the input into what the Zimra process requires though there is an option of registering as an individual in business which does not require any company documents except for the personal documents of the individual.
Kudfort Advisory Services and other consultancy companies are all out in full force to assist small and medium enterprises in Zimbabwe with information relating to the importance of formalising. Information about these organisations is accessible from almost all social media platforms and they are more than willing to take you through the whole company registration and formalisation process.
In this article I will focus on the importance of company registration and the functions of the Company Registry and Intellectual Property Office (CRIP)
Company Registry and Intellectual Property Office (CRIP)
The Registrar of Companies’ main role is to provide for the constitution, incorporation, registration, management, internal administration of companies and winding up of companies and private business corporations. The institution is also set up to enable the voluntary registration of other business entities and to ensure the removal of defunct companies. I will not talk about the intellectual property side in this article as my focus is on company formation.
Once you decide to venture into business, it’s always proper to do the right thing the first time. We have heard of tough lessons that people learn along the business journey that we would not want you to go through. The issue of company registration must not be taken for granted or as optional. You can operate your company without registration but you will always be playing small for there are vast business opportunities that you will be forgoing.
Zimbabwe has the recent Companies and Business Entities Act (Chapter 24:31) which governs the formation and registration of companies. There are basic requirements for the registration of both the Private Business Corporation (PBC) and Private Limited Company (Pvt) Ltd.
For a Private Business Corporation, the following information is required;
Five unique names for the name search process
Full names, ID numbers and residential addresses of members (from 1 up to 20)
Capital contribution
Main objectives of the company
Company address
The Private Business Corporation is ideal for those who cannot afford to register as Private Limited Company. The Government responded to small and medium enterprises who wanted to formalise and yet they could not afford the cost of registering a Private Limited Company or one would just want to be by themselves.
On PBC a sole trader can just register and own a company as membership starts from 1 up to 20. They can also enjoy the separate legal persona benefits and the limited liability in the same way a private limited does.
It is possible to graduate your PBC to a private business company using the same name.
In the event that you want to register a Private Limited Company (Pvt) Ltd, the following information is required
Five unique names for the name search process
Full names ID numbers and residential addresses of members (from 2 up to 50)
Shareholding structure
Main objectives of the company
Company address
Full name, ID number and residential address of company secretary, who can be one of the directors.
E-mail address for the company secretary
You secure your company name from being taken by others
Once you decide on a name for your company, it’s important to get it registered with the registrar of companies for you risk losing it to others. I am one person who lost his beloved name Paradign Enterprises in 2004 when I then wanted to register it after using it for three years. The name was already taken and I had extensively marketed the brand.
Boost confidence in customers and suppliers
Company registration gives customers and suppliers a sense of confidence and many companies, especially larger businesses and the Government, will not do business with a business that’s not registered. The market perceive you as professional and legit once you operate a registered company.
Easy access to funding
It is easy to access funding if your business is registered. The registration process requires information that will instil confidence in anyone who would want to deal with your organisation. They are in a position to track who the owners of the business are and assess whatever information and due diligence they want on them. Such information as the names, ID numbers and residential addresses can be accessed on the CR6 form formerly CR14 and the registered office being accessible on the CR5.
Participation in tender processes
To participate in Government tenders one of the requirement among others is company registration documents. The Government is the digest customer in every economy that you cannot afford not to deal with simply because you don’t have the requisite papers. By having your company documents ready that gives you an opportunity to participate in tenders.
Limited liability
The new companies act talks about the three main types of companies one can register in Zimbabwe, that is the Private Limited Company (Pvt) Ltd and the Private Business Corporation (PBC). Either way your company acquires a legal standing, that is to say it will become a separate legal person which can transact, sue or be sued in its own name. Once you your company is registered, its liabilities are limited to it unless otherwise in instances where the corporate veil is pierced to see who actually is behind the company.
Business continuity
The issue of separate legal personality necessitates business continuity even after the founding directors are gone. Unlike in the sole trader case where the death of the owner means the death of everything (kufa kwako zvarova). If your company is registered, it can continue operating with new directors being appointed that is if you were running it professionally.
Conclusion
If you want to grow and succeed in business, formalisation is the way forward. You can’t afford to lose the benefits that comes with having your company registered. Registration boost customer and supplier confidence and gives your organisation a legal standing.
Determined to engage, inspire and transform generations in the areas of entrepreneurship and personal development.
The writer, Dr Kudzanai Vere, is an entrepreneur, author of four books, business and personal development, multiple award-winning entrepreneurship and business coach. Dr Vere has coached more than 5 000 entrepreneurs globally and continues to impact people in the areas of entrepreneurship, business and personal development. He is the CEO of Kudfort Group./Contact Dr Kudzanai Vere for transformational entrepreneurship and business coaching and training on [email protected] or +263 719 592232
