Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government.
Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Malawi. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.
| No. | Procedure | Time to Complete | Associated Costs |
|---|---|---|---|
| 1 | Initiate a company name search. | 1 day | MWK 500 |
| 2 | Submit application for a Certificate of Incorporation to the Registrar General, Ministry of Justice. | 3-7 days if done in person, 14 days by mail | MWK 1,000 + MWK 100 for first MWK 1,000 of capital, and MWK 15 for every MWK 2,000 or part of capital thereafter |
| 3 | Register for payment of income tax with the Malawi Revenue Authority | 1 day if application is hand delivered | no charge |
| 4 | Obtain a company seal | 3-4 days | MWK 19,000 |
| * 5 | File an application form to obtain a license from the City Assembly | 29 days including time of publication, simultaneous with procedure 4 | MWK 400 Blantyre City Assembly |
| * 6 | Inspection of premises for the issue of the license | 14 days, simultaneous with procedure 5 | no charge |
| * 7 | Pay license fee upon approval of license and obtain license | 1 day, simultaneous with procedure 5 | 20,000 |
| * 8 | Apply for a registration of the workplace | 28 days, simultaneous with procedure 5 | MWK 1,000, depends on the number of employees |
| * 9 | Inspection of premises by the Occupational Safety, Health, and Welfare Department | 7 days, simultaneous with procedure 5 | no charge |
| * 10 | Register for PAYE and fringe benefit tax with the Malawi Revenue Authority by mail | 1 day | no charge |
* Takes place simultaneously with another procedure.