The country of Madagascar is a well-developed country and it has natural resources. However, here at its tourism is developing very actively, and it is its warm climate, beautiful landscapes and unique flora and fauna. They have been signing a large number of agreements with these countries. In addition, the region is engaged in international trade since it has 6 major ports. There are several ways of doing business in Madagascar and the most common of them is to found a limited liability company. Additionally, foreign entrepreneurs are able to form a public limited company, a branch office or a representative office.
Madagascar allows foreign investors to buy a company, take part in all remunerated activities, form a wholly owned company and repatriate income without limits. The result of this is how it divides and some of which should be taken into account:
Foreign investment & ownership
Foreign investors can hold up to 100% ownership in companies in Madagascar and repatriate profits with no restrictions.
Business Structure: Depending on your needs, you choose the adequate business form (e.g. SARL, SA).
Company registration: Choose a unique name and set it aside as you would like to operate.
File Articles of Association: You will need to file the company’s bylaws with the SEC.
Open a company bank account for the company
Apply to the tax authorities for a Taxpayer Identification Number.
Trade and Companies Register: For companies, the responsible government institution is the Registre du Commerce et des Sociétés (RCS).
Business environment
Madagascar’s business environment is changing, and some sectors such as agriculture, tourism and mining are offering opportunities.
Labor force & costs: There is a cheap labor force and cheap office space rental.
Business Customs: Networking is usually coffee meetings, meals, and cocktail receptions. In business meetings, men wear a suit and tie and women wear suit.
Ease of doing business: Madagascar is ranked 161 out of 190 in the World Bank’s Ease of
Doing business survey
Insolvency: Collective debt settlement procedures are established by the law on bankruptcy, which was updated in 2014.
Additional Considerations:
- Local laws and regulations: Obtain advice from legal practitioners in Madagascar in order to abide by local laws and regulations.
- Bidding: Bid low enough such that your company will be considered for acquisition.
- Be prepared to negotiate the terms of the acquisition with the current owners.
- Research: Madagascar’s investment climate and government policies.
Company registration in Madagascar: the advantages of this region
Some main advantages to encourage some entrepreneurs to business in Madagascar:
No matter what nationality, a company must be registered by one shareholder and one director. The least amount of capital a person can start a business in Madagascar with is 1 US dollar. Rental price for office space is cheap, and labor force is cheap. It enables enhancing cooperation with partners in the state and in other countries.
Before entering, foreign banks, financial institutions, insurance companies and telecommunication companies must comply with regulations for foreign companies. But other firms can come into Malagasy market as long as they respect local laws. However, it is not required to work with a local agent or partner, and this is the common practice of foreign business interests. However, increased fraud in recent years makes it advisable for companies to do due diligence through third party such as law firms or auditors before signing the final agreement.
Government and private sector entities are actively seeking foreign direct investment (FDI) in Madagascar and are warmly welcoming entities that can bring their own capital – equity or credit facilities. There are limited financing options within Madagascar as most banks in Madagascar are controlled by foreign parent companies, capital costs are higher and terms and conditions are more complex than in the United States.
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