Selecting and reserving an entity name
When you go into business, you need to choose a structure for your business that suits the way you do business and the type of business activity that you do.
Choosing a structure for your business
There are two structures for businesses in Botswana — business names and companies.
When selecting the right structure for your business, please consider the following:
- The size of your business and operations.
- Your share of profits
- Your degree of ownership and accountability
- Your legal liability
- Funding options
If you are unsure which structure to choose, seek professional advice from an accountant, lawyer or company secretary before you make a decision.
Types of companies
When you set up a company, you are creating a separate legal body to carry on business. A company can do many of the same things as an actual person — hold property in its own name, enter contracts, sue and be sued.
All companies incorporated in Botswana have the same basic elements:
- a company name
- at least 1 shareholder and 1 director
- contact addresses.
There are several different types of companies. You need to choose one that suits your business model.
A private company is formed with the intention of making a profit, and has a maximum of twenty-five (25) shareholders. This type of company does not make any offer to the public to subscribe to its shares or debentures. The name of a private company ends with (Proprietary) Limited, e.g. Carbo (Proprietary) Limited.
A public company has an unlimited number of shareholders (any number) and is usually listed with the Botswana Stock Exchange. The shares of a public company are made available to the public for sale. A public company is identified with a designation of ‘Limited’ at the end of the name, e.g. ROC Limited.
A Close Company
A close company is formed by one or more individuals, not exceeding five, who qualify for membership. No corporate body or trustee shall directly or indirectly hold a member’s interest in a close company. Every person who is to become a member upon registration shall make to the company an initial contribution of money, property, or services rendered in connection with the purposes of the formation and incorporation of the company. It may not be established for or carry on business of banking, or insurance but may otherwise be formed to carry out any lawful business. The designation ‘CC’ must be added to the name. e.g. CIPA CC. Unlike other company types, a Close Company is not expected to meet international financial reporting standards, but it has to keep books of accounts.
A Company Limited by Guarantee
This type of Company is an entity that does not declare dividends or share profits amongst members. When applying for a company limited by guarantee, it is necessary to describe as clearly as possible what the Company is being formed to do, who the donors are, as well as any projects that are already in place. Please note that the proceeds of the company shall be issued to promote the objects of the company and only support the objectives of the company.
A Business name gives an identity to your business or business line. This is the trading style; the title to your business; a description under which you carry on business; your tag name for the business you operate. Please note that a Business name is not an entity under law and it is you, its proprietor, who is carrying on business. A proprietor can be an individual or a company and you assume all the responsibility and liabilities related to the business.