In working with many businesses in Zimbabwe and helping them with their registration to kickstart them into the market, one of the frequently asked questions we get asked by our clients is which type of company to register and the benefits of each.
In case you are not familiar with the Company Registration Process in Zimbabwe, when registering a company, you have the option to register two types of companies namely a Private Limited Company famously abbreviated to Pvt Ltd or a Public Business Corporation referred to as a PBC.
There are some distinctions to these two types of organization the biggest one being that a PBC can have a minimum of one member whilst a Private Limited Company must have a minimum of two directors. There are more distinctions to these two types of organizations than the one I stated above but I will cover those in a more detailed article later on.
If you are thinking of registering a company and wondering which is the best way to go, here are 10 Reasons why you should consider registering your company as a Private Limited Organization in Zimbabwe.
1. Legitimacy and Brand Awareness
What is the first thing that comes to your mind when you see a company named XYZ with the (Pvt) Ltd? You automatically respect it right? Registering your company as a Private Limited Organization in Zimbabwe gives it an edge and makes it stand out largely due to positive perception in both the minds of your customers, partners and suppliers alike.
2. Easy Registration
If you want to start your business and some of your shareholders are not in Zimbabwe, then it’s easy for you to achieve that if you register your business as a Private Limited Organization. They will only need certified scans of documentation to go through the process making things simpler and easier for you. It will be a big advantage and you/or your partners won’t have to go through the hassle of funding transportation costs just to submit some papers.
3. Separate Liabilities from Owners
A Registered company has its own separate legal persona. Many a time we have encountered terrible situations where a person loses their assets and being left broke just because they were operating a business without having their company registered.
When your company is registered as a Private Limited Company, debts which affect the company will not personally affect you.
If you are a foreign National looking to register a company in Zimbabwe, then you can easily register your company as a Private Limited Organization in Zimbabwe without any restrictions.
5. Investment Incentives
A Private Limited Organization can easily take control of the investment incentives offered by the government and the regulatory board called Zimbabwe Investment Authority.
6. Easy to Raise Capital
Capital is the lifeblood of any business. If you have your company registered as a Private Limited Organization, it’s easy for you to raise capital for the organization by selling equity. Should the investment go wrong, your other businesses and your person will NOT be affected since the company would be standing as its own legal persona.
7. Easy to Scale the Business
Should you wish to raise capital, you can do that by selling off shares to outside investors if your company is registered as a Private Limited.
8. You can easily Establish a Subsidiary Company
The great Warren Buffet said Never Put all your eggs in one basket. If you want to establish a subsidiary company, you can easily do that by registering a private limited organization and setting your main company as a Corporate Shareholder within the newly registered company.
9. Easy to Meet
With Private Limited Organizations, there are no restrictions as to where the shareholders can meet and where a board meeting can be held. This makes planning easy, simple and cost-effective, particularly for new companies.
10. Easy to avoid Conflicts
The owners will have a clear understanding that their investment in the company is not by any preregistration verbal or written promises. If a dispute arises, share allocation will determine who has the most decision making power.
From the above, I hope you have gotten an understanding of why you should register your company as a Private Limited Organization in Zimbabwe. If you have any questions that you might need clarification, feel free to ask our team via the comments section or LiveChat, myself, or our team will be happy to assist you.