Zimbabwean law has two provisions for the registration of a business or company. The first and more common form of business incorporation is the Private Limited Company (PLC). The second and lesser known (but rising in popularity) form of company registration is the Private Business Corporation.
A Private Business Corporation has certain advantages and disadvantages. We are calling them advantages/disadvantages but they may not necessarily be advantages or disadvantages depending on your particular circumstances. So in that case they are more of features.
To view a summary comparison of the two forms of company incorporation please check the link below:
Advantages of a PBC (Private Business Corporation)
- Easy and cheaper to establish and to operate.
- The life of the Private Business Corporation is perpetual.
- Members have limited liability.
- Transfer of ownership is easy.
- Fewer legal requirements than a private company.
- No need for audits.
- Allows one to register as a sole trader.
- A Private Business Corporation does not pay annual returns at the Registrar of Companies. No longer applicable under the new Act, PBCs now pay an annual fee.
- Can employ an unlimited number of employees.
- A PBC is not limited in terms of how much revenue it can make.
Disadvantages of a PBC (Private Business Corporation)
- The number of members/ shareholders/ owners are limited to 20 natural persons.
- Only individuals (i.e. natural persons) can be shareholders. This means you cannot have organisations as shareholders.
- Not as popular as the Private Limited Company.
- Not accepted everywhere, some organisations and tenders do not accept PBCs.
Key Features of Private Business Corporations
- A Private Business Corporation (PBC) is a legal entity.
- Audited financial statements are not required for Private Business Corporations.
- Meetings are not compulsory and can be held on an ad hoc basis.
- Private Business Corporations (PBCs) can become shareholders in other companies.
- The shareholders or owners of a Private Business Corporation are called members.
- All members may take part in the management of the Private Business Corporation.
- The members/ shareholders/ owners of a PBC are not personally liable for the debts of a Private Business Corporation.
- The legal procedures for the registration and administration of a Private Business Corporation are kept relatively simple.
A PBC can be converted to a Private Company Later On.
- Yes. For example, a Private Business Corporation may have grown substantially and in order to expand even further, an injection of additional capital by way of shareholders may be envisaged.
- Or, the PBC may find itself competing with large companies (PLCs) and believe that they too should become a PLC to “even the playing field” in the eyes of their market / customers. Accordingly, they decide to convert their PBC to a registered company.
Members of Private Business Corporations (PBC)
- The members of Private Business Corporations (PBC) are the registered “owners” and are listed as part of the registration process.
- Any changes in respect of the members of the Private Business Corporations (PBC) must be notified to the Department of Companies & Intellectual Property (DCIP).
- Non Zimbabweans may be members of a Private Business Corporation (PBC), provided that they have at least one Zimbabwean as a member.
- A Private Business Corporation may have a minimum of one member and a maximum of 20 members. However there are no limitations in respect of the number of employees in a Private Business Corporation.
- If a member of a Private Business Corporation (PBC) is under 21, the registration document must be signed by a parent or guardian on their behalf.