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1.1.1. Main Forms of Doing Business

DRC stipulates the following legal forms for doing business in the country:

  • Company (Limited Liability or Public Limited or Joint Stock or Free Zone Company);
  • Private Partnership (Defacto Company / Société en Nom Collectif);
  • Foreign Business (Subsidiary, Branch, Representative Office); and
  • Mining Industry.

Company

Commercial companies (except non-registered companies) are required to be registered with Registre de Commerce et du Crédit Mobilier (RCCM).

Companies can be formed either as Limited Liability Company (SARL), Simplified Joint-Stock Company (SAS), Public Limited Company (SA) or Free Zone Company.

Limited Liability Company

Key aspects of a Limited Liability Company (SARL) include:

  • Minimum 1 shareholder is required (individual or company);
  • Liability of the shareholders is limited to their contribution;
  • Minimum 1 director is required who need not be a resident of the country;
  • No minimum capital required (capital freely determined by shareholders);
  • Mandatory to appoint a statutory auditor where:
    • a company’s share capital exceeds USD 20,000;
    • annual turnover exceeds USD 50,000; or
    • it employs more than 50 employees; and
  • Mandatory to submit annual financial statements and tax returns every year.

Public Limited Company

Key aspects of a Public Limited Company (SA) include:

  • Minimum 3 shareholders (individual or company) of any nationality are required and need not be resident of the country;
  • Liability of the shareholders is limited to their contribution;
  • Minimum capital required is the equivalent of USD 20,000;
  • Shares can be offered to the public if share capital exceeds USD 200,000;
  • Mandatory to appoint a statutory auditor;
  • May-be managed by a general manager or a board of directors, depending on the number of shareholders; and
  • Mandatory to submit audited annual financial statements every year.

Simplified Joint Stock Company

Key aspects of a Simplified Joint Stock Company (SAS) include:

  • Offers more flexibility in transferability of shares;
  • Minimum 1 shareholder (individual or company) is required;
  • Liability of the shareholders is limited to their contribution;
  • Minimum 1 director is required and need not be a resident of the country;
  • No minimum capital requirement; and
  • Mandatory to submit annual financial statements every year.

Free Zone Company

Key aspects of a Free Zone Company include:

  • The company required to be registered with an industrial park or a special economic zone;
  • Minimum investment required is USD 200,000;
  • Requirement to create additional jobs in DRC;
  • Eligible for tax benefits; and
  • Minimum 1 director and 1 shareholder are required.

Private Partnership (De Facto Company / SNC)

An organization is considered as a company created de facto when two or more persons or entities act as a partner without having formed between themselves one of the companies recognized by the Revised Commercial Companies Uniform Act. The rules relating to partnerships (SNC) in the Revised Commercial Companies Uniform Act are applicable to such an organization recognized as a company created de facto.

Key aspects of a Private Partnership include:

  • All partners are jointly liable for the debts of the company; and
  • No minimum or maximum number of shareholders is required.

Foreign Business (Subsidiary, Branch, Representative Office)

Foreign businesses can conduct their operations in DRC through a subsidiary, branch office or a representative office (RO). A subsidiary company can be registered as one of the company forms given in mentioned above.

A representative office and a branch are not regarded as separate legal entities in DRC. There is no capital requirement for branch office and RO.

A branch can carry out all or part of a parent entity’s functions, may engage in business or commercial activity. A branch can only be registered for a maximum period of two years. Pursuant to the revised OHADA rules, the branch must be converted into a subsidiary within 2 years of operations. The conversion obligation may be postponed by ministerial authorization for a similar period of 2 years but only once and only for companies subject to a “special regime”. Prior to the 2014 revision of the OHADA rules, the conversion obligation could be postponed by ministerial authorization multiple times and without the limitation to those entities benefitting from a “special regime”.

An RO is permitted to engage only in market research and promotional activities on behalf of the parent. Similar to a branch office, local regulations of DRC does not permit an RO to be registered for more than two years in DRC.

Mining Industry

A new Mining Code was promulgated on 9 March 2018 and further explicated by a Decree of 8 June 2018. The new Mining Code brings about substantial modifications to various business law rules affecting the mining industry. Important changes include the following:

  • The minimum capital of mining companies may not be less than 40% of the investment envisaged for the project;
  • At least 10% of the capital of mining companies must be held by DRC natural persons;
  • Only companies held in majority by DRC persons can act as sub-contractors to mining businesses;
  • The part of the capital of mining enterprises attributed to the State for no consideration is increased from 5% to 10%. The share of the State is increased by a further 5% on each renewal of the mining license; and
  • Foreign exchange receipts from the exportation of minerals must be repatriated to DRC for at least 60% or 100% of their amount (depending on the progress stage of the investment project).

Further, the new Mining Code abolished the practice of entering into bilateral covenants with specific mining companies covering inter alia their tax treatment. Henceforth, all mining operations, including those of sub-contractors to the mining industry and operators of quarries, are to be subject to the standard tax regime introduced by Chapter IX of the March 2018 Mining Law. The Law also ended the 10-year stabilization clauses (whereby economic operators are shielded from any tax increases for a period of 10 years) included in existing covenants. The 10-year period was brought back to 5 years for existing operations and abolished for all new investments.

Further information on the general investment, tax and regulatory regime about the country is available at the following external references: