What is Company Registration in East Timor?
The economy of country is raked as low income economy by World Bank. The lack of consistency in enforcing regulations continues to discourage private-sector development. The minimum capital necessary to start a business is quite high. The public sector accounts for approximately half of nonagricultural employment, and the formal labor market remains underdeveloped. East Timor has not allowed yet land ownership to foreigner, and investment in other sectors of the economy is screened. Modest progress has been made in establishing an effective banking system, but the financial sector is still at a nascent stage of development. The personal income and corporate tax rates are 10 percent, very low compare to other country tax rate. Most government revenue comes from offshore petroleum projects in the Timor Sea. The economic base is narrow, and political instability continues to hold back lasting economic development.
Business Form & Structure
The country has provided all form of business to lure foreign investment in country. It is lack of growth and development, hence required huge investment which can be collected internally and externally under various means of availability of investment route. The various legal form of business in East Timor are briefed below:
- Sole Proprietorship
- Branch/Representative office/Subsidiary
This kind of business is simple and not expensive to set up with less obligation and requirement of compliance which is term as non-incorporated entity with entire liable of all debt and liabilities of the owner for business to the extent of person’s assets.
It is a company without limited liability, formed between two persons or mode under a specific name and in which partners assume joint responsibility, to the extent of all their entire personal assets, for the partnership debts and liabilities.
Foreign company can established a Branch office, representative office or Subsidiary in country. It a means provided by government of East Timor to get the foreign entity in country to explore and develop the infrastructure and resources of country.
Company can be formed by applicant subject to compliance of regulatory framework. There are all together three kinds of company i.e. Single Shareholder Limited Liability Company, Limited Liability Company and Joint Stock Company.
Let’s have a look on its basic shareholder and share capital requirement for incorporation:-
Single Shareholder Limited Liability Company : It requires at least 1 shareholder and share capital of minimum USD 5,000 and maximum of USD 5, 00,000.
Limited Liability Company : It mandates at least 2 or maximum of 30 shareholders with minimum capital USD 5,000 to USD 5, 00,000.
Joint Stock Company : This kind of company required at least 3 shareholders and minimum share capital of USD 50,000.
Basically to register this kind of business form in country, applicant has to make sure of following requirement confirmed by applicable commercial law in country and have to submit the following documents to Public Registry Department in the National Directorate for Registry and Notary under Ministry of Justice.
First: Certificate of uniqueness of Company name.
Second: Memorandum of Association (MOA0 and Article of Association (AOA)
Third: ID for each shareholder
Fourth: proof of paid share capital
Fifth: Former declaration of the company members accepting the positions and responsibilities. (If not mention in AOA)
Sixth: Proof of residency in Timor of at least 1 administrator
Seventh: Address of company office (shown on map)
Eight: Power of attorney (POA) for the legal representative (if applicable)
In addition to above documents, applicant registering Single Shareholder Limited Liability Company or Limited Liability Company also need to submit following:-
Ninth: Proof of Civil Status of each shareholder (age of majority/emancipation and/or marriage certificate.
Tenth: Tax Identification number (TIN) of each shareholder (if it is not mentioned in the MOA)
Further it is worthy to take note on following points too:-
- Any company with share capital above USD 5, 00,000 must be registered as Joint Stock Company, in accordance to applicable law.
- If any of shareholders are a local company, proof of business registration, copy of latest AOA, and minutes stating the decision to establish/participate in the new company should be prescribed.
- If any shareholder are a foreign company, proof of company’s registration in foreign country, copy of latest AOA, and the minutes stating the decision to establish/participate in the new company in Timor should be present. No doubts all the documents must be notarized, legalized and translated into one of the official language.
After having all this documents in hand now can processed to register the company in Timor. Now step wise process to register a company is as follows:-
- Deposit Minimum capital at bank
Registration fees are paid by commercial bank. The minimum capital requirement is prescribed by the commercial registry code which has to be deposited in specified bank and same has to be further utilized in business.
Register the company’s name, file the company’s statutes, apply TIN, and obtain the final registration number and the certificate of incorporation certified by concerned authority. This process takes around 5 days to complete.
- Publish Statutes
After internal validation and check in of documents provided by applicant for registration of company the same has to be publish for public information stating summary of company registration details.
- Obtain a company stamp
Last but not the least for completion of company registration procedure in Timor, is to have its stamp.
Further, it’s worthy to note down that as per the requirement of law company may need to get tax registration, municipal laws registration, licenses/permit, labor law registration and so on to finally operate the business in state.
On review of economy of East Timor, though it’s not so fascinating but have abundance opportunity to have significant return as the many aspects of economy are still not explore and labor are cheap to hire and operate business in country. Actually its hidden fact, the growth is significant where the most of economic aspects are not explore yet and has wider opportunity to form business/trade in country which not only give good return but easy access to have good coverage of market.