When venturing into the business landscape of Botswana, it’s crucial to understand the distinctions between a “business name” and a “company” as defined by the Companies and Intellectual Property Authority (CIPA). This knowledge not only ensures compliance with local regulations but also aligns your business structure with your operational goals.
Business Name
A business name, often associated with sole proprietorships or partnerships, serves as the trading style or title under which an individual or entity conducts business. Key characteristics include:
- Legal Status: A business name is not a separate legal entity; the proprietor assumes all responsibilities and liabilities.
- Liability: Owners have unlimited liability, meaning personal assets can be used to settle business debts.
- Formation: Registered under the Registration of Business Names Act.
- Ownership: Can be owned by an individual or a company.
- Naming: The owner’s name is included on the certificate.
- Administration: No requirement for a company secretary unless owned by a company.
- Costs:
- Name reservation: P20
- Registration fee: P150
- Renewal fee every three years: P500
It’s important to note that a business name does not provide limited liability protection, exposing owners to personal financial risk.
Company
A company is a separate legal entity formed by one or more individuals, offering a distinct legal personality from its members. General features include:
- Legal Status: Can own property, enter contracts, sue, and be sued independently of its shareholders.
- Liability: Shareholders’ liability is typically limited to their investment in the company.
- Formation: Incorporated under the Companies Act.
- Ownership: Can own multiple business names.
- Naming: Ends with (Proprietary) Limited, Limited, or CC, depending on the company type.
- Administration: Must engage a company secretary.
- Costs:
- Name reservation: P20
- Registration fee: P360
- Annual return fee: P500
Companies offer limited liability protection, safeguarding personal assets from business debts.
Types of Companies in Botswana
Botswana recognizes several company structures:
- Private Company: Formed with the intention of making a profit, having a maximum of 25 shareholders, and not offering shares to the public. The name ends with (Proprietary) Limited.
- Public Company: Has an unlimited number of shareholders, usually listed with the Botswana Stock Exchange, and offers shares to the public. The name ends with Limited.
- Close Company: Formed by 1-5 individuals, prohibits corporate bodies or trustees from holding membership, and is not expected to meet international financial reporting standards but must keep books of accounts. The name ends with ‘CC’.
- Company Limited by Guarantee: Does not declare dividends or share profits among members and is formed to promote specific objectives, with proceeds supporting the company’s goals.
Making the Right Choice
When deciding between registering a business name or incorporating a company, consider the following factors:
- Size and Scope: Companies are suitable for larger operations requiring limited liability, while business names fit smaller ventures.
- Liability: Companies offer limited liability protection; business names do not.
- Compliance Requirements: Companies face more stringent regulatory obligations compared to business names.
For detailed guidance and to ensure compliance with Botswana’s legal framework, consult the Companies and Intellectual Property Authority (CIPA).