Lex Africa Guide 2012 Full - Afrer.org

40WEBBER NEWDIGATELESOTHOFirm InformationWebsite address: www.webbernew.comLanguages spoken: EnglishContact: Daan Roberts (Bloemfontein office, South Africa)Telephone: +27 51 430 1340Fax: +27 51 430 8987E-mail: dgr@webberslaw.comAwarded the PMR Africa Diamond Arrow 2011 best overallattorneys firm in Lesotho award.Country InformationThe Kingdom of Lesotho is a landlocked country entirelysurrounded by the Republic of South Africa. It is just over 30 000square kilometres in size with a population of approximately2 000 000. It is the only independent state in the world that liesentirely above 1 400 metres in elevation. Its capital and largestcity is Maseru.Political System and Investment EnvironmentLesotho has a parliamentary system and constitutionalmonarchy. The Prime Minister is head of government and hasexecutive authority. The King largely serves a ceremonialfunction. The Constitution provides for an independent judicialsystem and protects civil liberties such as freedom of speech,freedom of association, freedom of the press, freedom ofassembly and freedom of religion. Lesotho has a dual legalsystem consisting of customary and general laws.Lesotho’s economy is based on the export of diamonds, watersold to South Africa, manufacturing, agriculture, livestock and tosome extent the earnings of labourers employed in South Africa.Lesotho also exports wool, mohair, clothing and footwear. Amajor amendment to company law is expected in the nearfuture.Forms of BusinessPrivate or public limited liability companiesExternal companies (being branches of foreign corporatebodies)Partnerships (which include consortiums and jointventures)Sole proprietorshipsCo-operativesStatutory corporationsBusiness trusts.CompaniesThe private limited liability company is themost common entity used in practice:the minimum authorised and issuedshare capital is M1000 (one thousandMaloti);there must be a minimum of 2 shareholders (and amaximum of 50) with a minimum of 1 director;at least 51% of the shares in the company must be held byLesotho citizens if specific trading licenses are needed orwhere it is intended to acquire title to land by lease fromthe State (under the leasehold land tenure system whichapplies in Lesotho);the Public Officer must be resident in Lesotho unless thereis a special dispensation;the financial accounts of the company must preferably beaudited by an auditor registered to practice in Lesothoalthough the Income Tax Department accepts withoutquery financial statements from South African externalauditors;the company registration process will usually take morethan one month but not more than two months at a cost ofapproximately M6500 (six thousand five hundred Maloti)which includes all fees payable to the Registrar ofCompanies but which does not cover VAT, licensing andrelated procedures.External CompaniesA foreign company may register as an external company in termsof the Companies Act and must do so within one month ofopening a place of business in Lesotho. This will require thenomination of a chief agent (being a person who is eitherresident or maintains a full-time office in Lesotho) upon whomnotices and processes can be served, as well as the nominationof the principal place of business of the foreign company inLesotho.PartnershipsPartnership agreements must be reduced to writing and signedby all the partners before a Notary Public. These agreementsmay be registered in the Deeds Registry under the PartnershipsProclamation of 1957. A partnership agreement must also becancelled in writing. Partnerships are restricted to twentypersons. The Proclamation essentially records the common lawapplicable to partnerships.BanksThe issue of banking licenses is governed by the provisions of theFinancial Institutions Act. A minimum paid-up capital ofM10 000 000 (ten million Maloti) is required.Insurance CompaniesTheir establishment and operation is governed by the provisionsof the Insurance Act and regulations promulgated under the Act.A minimum issued share capital of M65 000 (sixty five thousandMaloti) is required. There are also requirements for the amountof working capital as well as margins of solvency. A majoramendment to insurance law is expected in the near future.TaxationThis is regulated by the Income Tax Act as amended togetherwith regulations promulgated under the Act. The tax rates are:residents: the first M37 378 at 25%. Any excess at 35%;non residents: 25%;withholding tax must be deducted at source at the standardrate on dividends, interest, royalties, natural resourcepayments and charges for a management or administrativeservice. Withholding tax is levied at 10% of the grossamount of any payment to a non-resident under a Lesothosourceservices contract;