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1.1.1. Main Forms of Doing Business

Eritrea provides several business forms for investors, of which the main forms include:

  • Company (Limited Liability or Public Limited);
  • Partnership / Sole proprietorship;
  • Foreign Business (Subsidiary or Branch or Representative Office).

Company

Companies can be formed as private limited or public limited companies.

The key aspects of Limited Liability Company include:

  • Shareholders' liability is limited to their contribution in the company;
  • Minimum capital requirement is ERN 15,000;
  • Minimum 1 director and 1 shareholder of any nationality are required;
  • Shareholders and directors can be an individual or a company;
  • Mandatory to submit audited financial statements to the commercial registry.

The key aspects of Public Limited Company include:

  • Shareholders' liability is limited to their contribution in the company;
  • Shares can be offered to the public;
  • Minimum capital requirement is ERN 50,000;
  • Minimum 1 director and 1 shareholder, of any nationality, are required;
  • Shareholders and directors can be an individual or a company.

Sole Proprietorship

A sole proprietor is a natural person who conducts business in his / her own name. The liability of the sole proprietor is unlimited.

Partnerships

A partnership is a form of business where two or more persons come together to carry out activities of common interest and to share profit and loss arising out of such activities.

Foreign Business (Subsidiary, Branch, Representative Office)

Foreign companies can conduct their operations in Eritrea through the constitution of a subsidiary or branch office or a representative office.

A branch is not considered as a separate legal entity in Eritrea, and its operations are pre-defined by the foreign parent entity. The branch office is required to appoint a legal representative or agent resident in Eritrea on behalf of the foreign parent entity. The branch office is required to have a registered office and maintain statutory records in the office in Eritrea.

A Representative office is also not regarded as a separate legal entity in Eritrea. It is not permitted to engage in commercial or business activity in the country. It is only permitted to conduct market research and promotional activities in respect of the foreign parent entity in the country.

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