Automation of the Company Registry and Associated Legal Reforms in Lesotho

The Ministry of Law and Constitutional Affairs in collaboration with the Ministry of Trade and Industry, Cooperatives and Marketing

Background“.. to harness new growth opportunities

and attract FDI, Lesotho needs to become competitive, particularly within SACU, where Lesotho performs the worst in terms of Doing Business Indicators ( position 130th in 2009). Lesotho can address this problem by removing such barriers to economic activity as a weak business environment…” Draft WB CAS, 2010

BackgroundIn 2007, the Government of

Lesotho launched a 5 year World Bank funded Private Sector Competitiveness and Economic Diversification Project (PSC Project).

The objective of the PSC Project is to facilitate increased private sector investment by improving business environment and diversifying sources of growth.

How Do We Improve Business Environment?

Company Registration and Business Licensing Reform.

Immigration and Passport Service Reform.

Improving Access to Finance.

Company Registration and Licensing Reform

Consolidation of business registration process which will enable Company Registry to improve its effectiveness to provide information to the public and private sectors.

Review of the Companies Act of 1967. Streamlining of industrial and trading

licensing regimes to reduce time and cost of doing business and to restrict the process to necessary regulatory requirements.

Review business licensing laws and associated regulations.

Computerization of the Company Registry

ActivitiesDesign and installation of an integrated and

computerized system for notification and company registration

Purchase of computer equipment and associated software

Design and conduct of training programs for the staff of the Registrar General’s Office

Operation and maintenance of the installed IT systems; Transfer of the CR from Law Office to OSS at the Ministry

of Trade.

Expected Results◦ A modern and efficient Company Registry established

and consolidates all business registration processes;◦ The time required for registration significantly

reduced.

MAIN SCREEN

Main Additions & Enhancements

Name ReservationsCompany Status TrackingImproved Information about

shareholdersMiscellaneous Management

Reports

Key DeliverablesFully Functional Database SystemData Storage ServerLocal Area NetworkAntivirus protectionEnd-User and Management

TrainingSupport contract (on-going)

Project AchievementsComputerization of records and

operationsTrained Staff and ManagementImproved InfrastructurePotentially enhanced operational

efficiency

ChallengesData Capture not yet completed.The System not yet used

optimally in the operations.Full system usage on a daily

basis.More management commitment

required.Regular review of system and

project progress needed.

GATEWAY FOR KEY SYSTEM MODULES

SECURE RECORDS MODIFICATION

NAME RESERVATION

COMPANY REGISTRATION

MEMBERS OF AN ASSOCIATION

CERTIFICATE OF INCORPORATION

A sample of a report of registered companies

SAMPLE COMPANIES LIST

SEARCH FACILITY

Progress on Companies Bill

Companies Bill: The Process The process has taken more than a

decade.The latest effort to finalize the Bill

started through World Bank’s assistance in 2006.

The draft Bill was presented to Cabinet in March, 2010.

The Bill to be presented to Parliament by May, 2010.

Enactment by September, 2010.

Features of the Companies BillThe Bill is more elaborate as it clearly

defines the relationship between shareholders and directors;

It brings out the aspect of protection clearly;

It addresses responsible and efficient management;

It removes the controlling aspect of the company/directors and introduces fair dealings between the shareholders and directors.

Features of the Companies Bill Cont.Legal assistance is not required

to register a company as the procedures are now easier and simpler.

Less paper work. The structure of the Bill allows for

easy navigation.

Features of the Companies Bill Cont.Removes cumbersome

requirements in the Memorandum and Articles of Association. Only one document is required, namely, Articles of Incorporation.

Features of the Companies Bill Cont.A Woman is entitled to act as a

promoter or to be a director of a company without her spouse’s consent.

Features of the Companies Bill Cont.Companies are entitled under the

new law to file electronically. This expedites the application process.

Features of the Companies Bill Cont.Dealing between company and

other persons – The Bill does away with the principle of constructive notice or knowledge and relaxes the ultra vires doctrine.

The principle of ultra vires restricts companies to engage in those business activities contained in their Memorandum and only those related to such activities.

Next StepsSupport and Maintenance of the

Company Registry.Refresher Training for Company

Registry Staff.Enactment of the new Companies

Law.IT/Business Process Alignment

(i.e., tailoring the database to the upcoming new Companies act) and integration with the OSS.