DOING BUSINESS IN SELECTED COUNTRIES

Setting up business in selected countries

This section attempts to give a glimpse of setting up business in selected countries based on the desk top research. Reference were also made form CIDB .

Bahrain
Ordinarily, the carrying on of any commercial activity in the Kingdom of Bahrain (“Bahrain”) by a foreign company or individual requires the establishment of a formal corporate presence (and will typically necessitate the participation of a local company or individual).

It is not permissible to provide services locally without authorisation from the appropriate regulatory authority.

It is now possible for 100% foreign ownership of Bahrain incorporated companies (and certain types of corporate entities) to be registered in certain circumstances, depending upon the intended activities of the new company.

Bangladesh
To form any type of enterprise the incorporation or registration is done by the Registrar of Joint Stock Companies and Firms, Dhaka. In all cases, the promoters must register the Memorandum of Association with the Registrar of Joint Stock Companies and Firms in Bangladesh. The Memorandum of Association constitutes the basis for the existence of the company as a corporate body and determines the ambit of its power, inter alia. It is to be accompanied with the Articles of Association. In brief, the procedures may be outlined as follows:

- Selection of a Company Name and verifying its availability
- Preparation & Filing of Memorandum of Association (MOA) & Articles of Association (AOA).

Application for Registration - For Private Companies a declaration on Registration, notice of situation of registered office, consent of directors to act, list of persons consenting to be directors and particulars of directors, managers and managing agents are also to be filed. For Public limited companies further requirement is the agreement to take qualification share.

India
In India, structures typically used by foreign businesses are:

a) Wholly-owned subsidiaries
Foreign companies are permitted to establish wholly owned subsidiaries. Such companies can be established as a private limited or public limited company subject to the requirements of the Companies Act 1956. Foreign equity ownership can generally be up to 100% in most sectors, except in certain specified sectors. The Indian company must register with the ROC and is subject to the same laws as domestic companies.

In comparison with the branch office and liaison office, a subsidiary company provides the maximum flexibility to foreign investors for conducting business in India. However, the exit procedure norms of companies are more cumbersome as compared to other forms of business such as branch, liaison and project offices, which can be exited more conveniently.

b) Joint ventures
As with wholly owned subsidiaries, foreign companies are permitted to incorporate a company locally in India as a joint venture company with an Indian partner/other shareholders as either a private limited or a public limited company. Equity ownership restrictions apply to certain industry sectors, as mentioned above.

c) Liaison office/representative office
Foreign companies wanting to establish am initial presence in India often set up a liaison/representative office. Such offices are normally established by foreign corporations to promote their business interests in the country by spreading awareness of their business and exploring opportunities prior to setting up a more permanent presence in India.

Indonesia

1)Type of Business Entities / Forms In Indonesia.

3 types of companies:
- Limited Liability Company – where the personal liability of shareholders is limited to the tier shares;
- Partnership – is business from incorporated by 2 (two) or more persons through contribution for the purpose of profit sharing;
- Cooperative – is a business unit, which has persons or cooperative(s) as its members. Cooperative serves as one of agents of
   Indonesia’s economic growth.

A" Perseroan Terbatas Terbuka" is a company which is permitted to raise capital from the public and it includes those companies listed on the stock Exchange.

A proprietary company is not permitted to raise funds from the public.

2.Other Forms of Business Organization.

3 (three) types of Representative Offices are recognise:
-  Representative Office under the Ministry of Trade and Industry, which may only undertake promotional activities, market
   research and information gathering functions.
-  Representative Office under the Ministry of Settlement and Regional Infrastructure. This type of Representative Office allows a    foreign contracting company to enter into a Joint Operation Agreement with a local contractor to execute a public works
   contract of limited scope and duration. One company may be the main contractor with the other as the sub-contractor.
-  Regional Representative Office under the Investment Coordinating Board, which may only supervise and coordinate the    affiliates/branches/subsidiaries for, and on behalf of, its parent company.

Iran

The most common form of commercial enterprises in Iran and the one most frequently used by foreign investors is forming joint venture companies. In this type of enterprise, the liability of shareholders is principally limited to their share of capital investment. The private joint stock company is an independent legal entity that may enter into contracts, may sue and may be sued. Shares can be transferred in joint stock company, though principally they may not be offered for public subscription or trading.

Laos

Structures Typically used by Foreign Businesses

The Foreign Investment Law permits two forms of foreign investment; joint ventures and wholly foreign-owend enterprises.

i) Joint Ventures
The Foreign Investor who invest in a Joint Venture must contribute a minimum portion of 30% of the total equity investment in that Venture. The licence will have a maximum life of 20 years and may be extended if approved by Department of Domestic and Foreign
Investment (DDFI). Foreign investment involving exploitation of natural resources and energy generation must be joint ventures. This restriction may be extended by government decree.

ii) Wholly foreign-owned enterprise
A wholly foreign-owned enterprise may take the form of either a new company or representative office of a foreign company. The licence for a wholly foreign owned enterprise will have maximum life of 15 years and may be extend if approved by DDFI. Apart from representative offices investment must have a minimum registration capital of US$100,000.

Qatar

In Qatar, a foriegner may establish a privately held company, whereby the liability of its shareholders is limited to the amount of issued capital. It is established on the basis of a Memorandum of Association, written in Arabic and executed by the founding shareholders and authorized by a notary public. The company is incorporated under the CCL by being entered into the Commercial Register maintained at the Ministry of Economy and Commerce. A LLC is not permitted to issues shares to the public.

Characteristics:
Minimum capital QR200,000.
Minimum nominal share value QR 10
Minimum/Maximum number of shareholder A LLC may have not more than 50 and not less than 2 shareholders
Name: Must be followed by “Limited Liability Company (LLC).”
Level of foreign ownership: Up to 49% of the share capital – though this can be increase up to 100% for certain allowed activities with a Ministerial resolution under the foreign Investment Law.

A LLC may engage in most commercial, industrial and service activities, with the exception of insurance, banking or investment management activities whether as a principal or an agent.

Saudi Arabia

In SaudiArabia, a foriegner may establish a temporary commercial registrations and Representative Offices:
Foreign businesses who have obtained a contract from the Saudi Arabian government agency are entitled to a temporary Commercial Registration, enabling them to perform the contract in Saudi Arabia. Until June 2001 the registrations were issued by the Ministry of Commerce, since then the last task has been shifted to SAGIA. An application for a temporary Commercial Registration must be lodged within thirty days of the signing contact. Under this arrangement, the foreign business entity’s activities in the Kingdom must be limited to the specific project, and it may not solicit other business in the Kingdom. Where a foreign entity performs several concurrent government contracts in Saudi Arabia, it may establish a representative office to supervise its activities in the Kingdom.

Technical and Scientific Services Offices:
Resolution No.1532 of 1991 of the Minister of Commerce and Industry makes it possible for foreign companies with specific technical and scientific skills to obtain licenses to open technical and scientific service offices in Saudi Arabia. However, such offices may not engage in commercial activities, and are meant to give technical support to the parent-company’s Saudi Arabian agent or distributor, to conduct market surveys, and to undertake product research.

Professional Partnership
Pusuant to Order No.41 of 1991 of the Minister of Commerce non-Saudi entities engaged in the “free professions”, which includes accountants and lawyers, may establish, in partnership with a Saudi entity engaged in the same profession, a presence in the Kingdom under a license from the Ministry of Commerce. Such professional partnerships may not have limited liability, and must have a Saudi minority interest. The foreign entity must have been in existence for at least ten years, and must have acquired an ‘excellent reputation” in its field.

Sri Lanka

Foreign companies may prefer to conduct business in Sri Lanka by establishing a subsidiary company. A subsidiary can be established as a private, public or public listed company. The preferred form is usually that of a private company because incorporation is easier, less expensive and may be accomplished with fewer formalities. Subsidiaries must comply with all statutory requirements which apply to domestic companies under the Companies Act. Unlike in the operation of branch, the liability of a subsidiary is limited to its own assets and does not extend to the foreign company. Operating a business through a subsidiary gives the business a degree of credibility and permanence and allows it to enter into contracts more freely.

The Companies Act (No.17 of 1982) contains the rules, procedures, accounting and reporting requirements for companies incorporated or registered in Sri Lanka. The registration of companies, filing of accounts and annual returns are done with the Registrar of Companies. As a distinct legal entity, companies can purchase, hold and sell property, enter into contracts, sue and be sued. They have perpetual existence and cannot normally be involuntary terminated except by their creditors in the event of default.

A private company must consist of at least two and not more than fifty members and at least one director. It cannot offer its shares for public subscription. A private company can commence business immediately on incorporation and must always include the word ‘Private’ in its name.

United Arab Emirates

There are several ways for a foreign entity to conduct business in UAE. The most common of these are listed below:

- Branch office of a foreign entity
- Established in one of the Free Zones, in which 100% foreign ownership is permitted. Please note that such entities may not generally   operate on the mainland without first obtaining a license from the relevant authorities.
- Participation in an LLC as a 49% minority shareholder.

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