Lesotho

Starting a Business in

Lesotho

Listed below is a detailed summary of the bureaucratic and legal hurdles an entrepreneur must overcome in order to incorporate and register a new firm, along with their associated time and set-up costs.  It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income (GNI).

The information appearing on this page was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 183 economies. The most recent round of data collection for the project was completed in June 2011.

  • Standardized Company

  • Legal Form: Private Limited Company
  • City: Maseru

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No. Procedure Time to Complete Associated Costs
1 search company name

Verify the uniqueness of the company's name and reserve a name does usually take around 1-2 days and cost 5 LSL.
1-2 days LSL 5
2 Hire a registered legal practitioner to prepares and register company documents

It is not compulsory for attorneys to prepare the company documents. However, the Registrar of Companies will not allow anyone except a registered attorney to register a company in the Deeds Office or to carry out any statutory requirements in the Registrar’s Records. Registration costs vary and include all stamp duties, reservations of names, and payments to the Registrar’s Office.

The promoters must submit the memorandum and articles of association in duplicate, accompanied by a power of attorney by the subscribers to the memorandum in favor of the party filing the documents and by a share capital duty receipt. The Registrar General forwards the “notification of registration of new companies” to the Commissioner of Income Tax. The name reservation takes about 3 days as its manually checked and is valid for 60 days. The memorandum and articles of association must be notarized about 2 days after the subscribers subscribe to the share capital. Because the attorney provides this service, no separate fee is charged for the notary. The incorporation time may vary, but usually done within 2 weeks.

Fee schedule for company registration:
- Name reservation: LSL 5.
- Registration fee: LSL 100.
- Certificate of Incorporation: LSL 20.
- Stamp duty: LSL 100 for the first LSL 1,000 and 1% on the balance.

All registration fees, application fees for name reservation, and stamp duties are paid to the attorneys who attend the company registration, who in turn pay this fee to the Registrar of Companies. The Registrar will not accept any payment from a third party who is not involved in the registration process. In addition, the Registrar will receive payments only in cash or by a check drawn on an attorney’s trust account.
20 days LSL 1,112
3 Have land lease stamped and pay the stamp duty.

All sublease agreements for longer than 3 years must be registered in the Deeds Registry after obtaining Ministerial Consent to the sublease. Thus, if any new business enters into a sublease agreement for longer than 3 years, ministerial consent must be obtained and should be registered in the Deeds Registry within 3 months. Ministerial consent and subsequent registration can take from 3 months to 3 years. Usually, however, agreements are entered into for 3 years less 1 day, which does not require registration or any formalities except the formal stamping of the agreement according to the Stamp Duty Order.

Fee schedule for stamp duty on agreements:
- Up to 5 years: 0.5%.
- 5–10 years: 0.8%.
- 10–20 years: 1%.
- Over 20 years: 1.4%.

 1 day 0.8% on sublease rent, assuming the sublease rent is 10% of initial capital and it is a 5-10 years agreement
4 Receive an inspection by the Public Health Inspector

The Maseru City Council requires a health inspection by its health officers and issues a health certificate after satisfactory results. The certification process does not involve any costs, but the time can vary from 1 week to 3 weeks.
14 days LSL 30-60
5 Apply for operation license and register for taxes with the OSS at the Ministry of Trade and Industry.

The company must apply for an operation license with the One Stop Shop (OSS) at the Ministry of Trade and Industry. The founder must file the memorandum and articles of association, together with the certificate of incorporation, an application fee, the sublease, and a certificate of inspection of business premises. For economic activities in which other agencies are involved in granting a license, necessary consultations are made, and the founder will need a recommendation from the responsible agency.

Moreover and as a result of reform, registration for taxes can be done at the OSS now. The company must register with the Income Tax Department within 2 months of incorporation. The taxpayer is given a company registration number. The time frame for tax registration has been reduced by the use of a single number, the taxpayer identification number (TIN). This number, along with a single form and a single office, are used for both VAT and income tax purposes. The entrepreneur is given the TIN number immediately, and a certificate of registration is generally issued on the same day.

 1 day LSL 1000
* 6 Open a bank account and pay the required initial capital in a bank

The required or authorized company capital is not paid to the bank before registration. This normally takes place after the company is registered. An application is made to the bank, with the opening of a bank account taking from 2 days to 3 weeks. Procedures 6 and 7 can be undertaken simultaneously).
3 days (simultaneous with previous procedures) no charge
* 7 File for workman’s compensation with an insurance company

Workman’s compensation insurance must be taken out with a private insurance company registered in Lesotho. The cost of insurance depends on the number of employees and the level of risk. The “pay as you earn” (PAYE) tax is payable to the Lesotho Revenue Authority, by completing a monthly form that states employee names and details.
1 day (simultaneous with previous procedures) no charge
* Takes place simultaneously with another procedure.
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