capital gains tax applies subject to certain exemptions;value added tax is payable on most goods sold and servicesrendered at the rate of 14%. Basic foodstuffs are zerorated.The registration threshold is turnover in excess ofM500 000 per year.Exchange Controls, Treaties and Membership of InternationalOrganisationsLesotho is part of the Rand Common Monetary Area. Exchangecontrols apply and are subject to the provisions of the ExchangeControl Order and Exchange Control Regulations administeredby the Central Bank of Lesotho, which functions in conjunctionwith the South <strong>Africa</strong>n Reserve Bank. The commercial banks inLesotho are appointed as authorised dealers in foreign exchangesubject to certain limits. Lesotho is also a member of thePreferential Trade Area (PTA), the Southern <strong>Africa</strong>nDevelopment Community (SADC), the British Commonwealth,the United Nations (UN) and the Southern <strong>Africa</strong>n CustomsUnion (SACU).Trading LicensesThe issue of licenses is governed by the Trading EnterprisesOrder and the Trading Enterprises Regulations. Certain licensesare restricted to local citizens or companies controlled by localcitizens.Intellectual PropertyProtection is provided by statute (there is a public Registry atMaseru) for patents, trade marks and designs. Protection is alsoprovided by statute for copyright.41
projects.MADAGASCARJOHN FFOOKS & CO PROJECT FINANCE AND NATURALRESOURCES ADVISORY FIRMFirm InformationWebsite address: www.jwflegal.comLanguages spoken: English, Malagasy, FrenchContacts: John Ffooks and Richard GlassTelephone: +261 20 224 3247Fax: +261 20 224 3248Email: contact@jwflegal.comCountry InformationMadagascar is the world’s fourth largest island covering a totalarea of 587,000 square kilometres. Each region has its ownclimate varying from a temperate climate in the centralhighlands to an arid one in the southern regions. The easternregion is hot and humid. The west is dry and the north is fairlywet. The urban population accounts for 29% of the wholepopulation whose origin is mixed Malay-Indonesian and <strong>Africa</strong>n-Arab.Political SystemThe principal institutions of the Republic of Madagascar are apresidency, a parliament, a prime minister and cabinet, and anindependent judiciary. The president is elected by directuniversal suffrage for a 5-year term, renewable twice. The lastpresidential election was held on December 3, 2006.On March 17th 2009, democratically elected President MarcRavalomanana stepped down and handed the government overto the military, which in turn conferred the presidency ontoopposition leader and Antananarivo mayor Andry Rajoelina.Rajoelina has refused to form a power sharing government inaccordance with an agreement (previously agreed to by him)brokered by the Southern <strong>Africa</strong>n Development Community(SADC). A referendum on a new constitution was held inNovember 2010 .On 28 October 2011, Jean Omer Beriziky wasappointed as Prime Minister of consensus, on the proposal ofthe party of the former President Albert Zafy. He took office on 2November 2011.Latest GDP FiguresGDP (real): US$10 billion (2011).Inflation Rate7.8 % (2011).Investment ClimateThe last decade has seen the enactment of several laws andregulations that have considerably improvedMadagascar’s image as a foreign investmentdestination. Enactments of the CompanyLaw, Investment Law and laws specific tohigh-growth areas such as mining have allcontributed to some major world-class42The former President Marc Ravalomanana aggressively soughtforeign investment and implemented policies to combatcorruption, reform land-ownership laws, encourage the study ofAmerican and European business techniques and activelypursue foreign investors. This contributed to the removal ofadministrative hurdles, improved treatment of national andforeign investors, the creation of a one-stop office to perform allinvestment procedures and the reduction of certain tax rateswhich have all contributed to a vastly improved investmentclimate.However, the current political instability following a March 2009coup has had a negative impact on foreign investment in thecountry. Overall foreign investment declined by 17 percentduring the first three quarters of 2009 compared to the sametime period in 2008.Forms of BusinessCompany law provides for several business vehicles but themost attractive for investors are:a société anonyme (SA) which is a limited liability companywith either a board of directors or a unique shareholder.Unlike a limited public company, an SA may not list itsshares;a société à responsabilité limitée (SARL) which is similar toan English limited liability company and is administered byone or more directors called “gérants”.A sole proprietorship is also possible under the Company Lawbut it is not recommended for anything other than to small scalebusinesses. Joint ventures are often formed in the mining andpetroleum sectors.Formation of a CompanyA company is incorporated by registering all documents at a”one-stop” office in Madagascar called the EconomicDevelopment Board of Madagascar (EDBM).The following documents are required:name, activities, and registered office of the futurecompany;incorporation documents of the company initialled on eachpage;amount of the company’s expected share capital;proof of residency/domiciliation contract;declaration of existence;identification of shareholders, residence certificates, longtermvisas and attestation of no criminal convictions with abirth certificate for foreigners;capital investment form;fiscal identification form.Once all of these have been submitted, the EDBM issues:registered incorporation documents;an extract from the Commerce Registry;a company number;a fiscal identification number.Lastly, the company must make an announcement in the officialjournal or in a legal announcement journal.
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