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1.1.1. Main Forms of Doing Business

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

  • Company (Limited Liability Company or Public Limited Company)
  • Free Zone Company
  • Foreign Business (Subsidiary, Branch, Representative Office)

Company

Companies can be formed either as Limited Liability Companies (‘LLC’) or as Public Limited Companies (‘PLC’).

The key aspects of Limited Liability Company (SARL) include:

  • Shareholders’ liability is limited to their contribution in the company
  • Minimum capital requirement is USD 1
  • Minimum 1 shareholder and 1 director, of any nationality, are required
  • Shareholder & director can be an individual or a company
  • Mandatory to maintain books of accounts in the French language at the registered office in Madagascar
  • Mandatory to appoint a statutory auditor and submit audited financial statements to the relevant authority

The key aspects of Public Limited Company (SA) include:

  • Shareholders’ liability is limited to their contribution in the company
  • Minimum capital requirement is USD 800
  • Minimum 1 shareholder and 1 director, of any nationality, are required
  • Shareholder & director can be an individual or a company
  • Shares can be offered to the public
  • Mandatory to maintain books of account in the French language at the registered office in Madagascar
  • Mandatory to appoint an approved statutory auditor and submit audited financial statements to the relevant authority

Free Zone Company

Free Zone Companies (‘FZC’) are companies formed in Madagascar under the Free Zone regime. Free Zone regime is applicable to the companies which are exporting at least 95% of their production and invest in certain specific activities. FZCs are eligible for certain tax benefits which are available to both, foreign and domestic investors (See Sec. 10).

Foreign Business (Subsidiary, Branch, Representative Office)

Foreign companies can conduct their operations in Madagascar through the constitution of a subsidiary, branch office or a representative office. Subsidiary can be formed as an LLC or PLC with 100% foreign holding, subject to certain restrictions.

Branch of a foreign entity is not regarded as a separate legal entity in Madagascar and its operations are defined and controlled by the foreign parent entity. However, it is permitted to engage in commercial activities in Madagascar. Branch office is required to appoint at least 1 resident representative on behalf of the foreign parent entity.

A representative office is not considered as a separate legal entity in Madagascar. It is not allowed to engage in commercial or business activity in Madagascar. It is permitted to conduct market research or promote the business of the foreign parent entity within the country. Representative office is also required to appoint at least 1 representative on behalf of the foreign parent entity.

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