This is the first in a series of articles to be posted. Later submissions will deal with more detail.

The Companies Act Cap 40:01 of the Laws of Botswana as amended by Statutory Instrument No. 7 of 1995 regulate the constitution, incorporation, registration, management, administration and winding up of companies and the associations and for other purposes incidental thereto.

The Act provides for the formation of two types of companies i.e. a company having a share capital and a company not having a share capital (a company limited by guarantee). A company having a share capital may be either a public company or a private company having shares of par value or having shares of no par value. A company not having a share capital limits the liability of each of the members to such amounts as he or she undertakes to contribute to the assets of the company in the event of it being wound up while he or she is a member or within one year afterwards. The amount in question may not accede a specified amount but in all cases shall not be less than one Pula. It should be noted that all companies limited by guarantee are deemed to be public companies for purposes of the Act. This form of company is not particularly suitable for commercial purposes and is most commonly used by associations not for gain.

The following are the most important distinctions between public and private companies :

  • the minimum members of a public company is seven whereas of a private company is one;
  • a public company must have at least two directors whilst a private company need only have one;
  • the prohibition of allotment or shares unless the minimum subscription has been received applies only to public companies which have issued a prospectus;
  • the annual financial statements (including every document required by law to be annexed thereto) which a public company is obliged to lodge need not be filed in the case of a private company unless such private company is a subsidiary of a public company.

Other distinctions exist in regard to proxies at meeting, quorums at meetings, voting rights and appointment as auditors. A private company may convert itself into a public company and a public company may convert itself into a private company.

The Act makes provision for the registration of external companies to operate in Botswana which would be either private or public.

The Act also allows registration of associations not for gain. Such associations are always public companies not having a share capital with the liabilities of its members limited. The memorandum of a company limited by shares has to be in the English language and must state the name of the company with "Limited" as the last word in its name and if the company is a private company with the term "Proprietary" added before the "Limited". The memorandum among other things must also state the liability of the members is limited. In the case of a company limited by a liability the memorandum has to be in the English language and must state among other things the aim of the company, objects and that the liability of the members is limited.

For purposes of the Act, a private company is a company which by its articles amongst other things restricts the right to transfer its shares and limit the number of its members to fifty, not including persons who are in the employment of the company and persons who, having been formerly in the employment of the company where while in the employment and have continued, after the determination of that employment to the members of the company; and prohibits any invitation to the public to subscribe for any shares or debentures of the company.

Apart from the registration of Companies under the Companies Act there is also registration of business names under the registration of Business Names Act Cap 42:05 of the Laws of Botswana. Any registration under this Act does not confer the status of a company but allows the person so registered to operate under that name and style and also protect that name from being utilised by any other person once so registered.

The content of this article is intended to provide general information on the subject matter. It is not therefor a substitute for specialist advice.

Minchin & Kelly (Botswana) - Gaborone +267 312734