Setting Up Limited Liability Company in Cabo Verde

Setting Up a Sociedade por Quotas (Lda) in Cabo Verde: Main Prerequisites and Registration Process

The Sociedade por Quotas (Lda), or Limited Liability Company, is one of the most popular business structures in Cabo Verde, particularly for small and medium-sized enterprises (SMEs). Its simplicity, flexibility, and limited liability protection make it an ideal choice for entrepreneurs and investors looking to establish a presence in this Atlantic archipelago nation. With a business-friendly environment supported by initiatives like "Empresa no Dia" (Company in a Day), setting up an Lda can be efficient and cost-effective. This article outlines the key prerequisites and step-by-step registration process, drawing on current regulations under the Cabo Verde Companies Code (Legislative Decree No 2/2019).

Why Choose a Sociedade por Quotas (Lda)?

The Lda is designed for businesses that prioritize ease of management and limited personal risk. Shareholders' liability is restricted to their contributed capital, shielding personal assets from business debts. It's suitable for a wide range of activities, from tourism and services to manufacturing and trade. Unlike more complex structures like the Sociedade Anónima (SA), the Lda requires minimal formalities, no mandatory auditor for smaller operations, and allows for single-shareholder setups. This flexibility has made it the go-to option for both local and foreign investors, contributing to Cabo Verde's growing economy.

Main Prerequisites

Before initiating the registration, ensure you meet these essential requirements:

Number of Shareholders and Directors: An Lda can be formed with at least one shareholder (single-member Lda is permitted, making it accessible for solo entrepreneurs). At least one director is required, who can also be a shareholder. There are no residency requirements for shareholders or directors, allowing full foreign ownership in most sectors.
Minimum Share Capital: The minimum capital is symbolic— just 1 Cape Verdean Escudo (CVE), equivalent to approximately 0.01 EUR. This low threshold reduces barriers to entry. However, at least 50% of the subscribed capital must be deposited in a local bank account at the time of incorporation. The remaining amount can be paid within up to 3 years, providing financial flexibility. For practical purposes, a higher capital amount (e.g., CVE 200,000 or more) may be advisable depending on the business sector to demonstrate credibility to banks or partners.
Company Name and Purpose: The name must be unique, include "Lda" or "Sociedade por Quotas" at the end, and reflect the business's objectives. It should not infringe on existing trademarks.
Registered Office: A physical address in Cabo Verde is required, which can be a leased office, virtual address, or even a home-based setup for certain activities.
Documentation: Prepare identification documents (passports for foreigners, national IDs for locals), proof of address, and any sector-specific licenses if applicable (e.g., for tourism or fisheries).

No local partner is mandatory, and foreign investors enjoy equal rights, though certain regulated sectors may require additional approvals.

How to Register a Sociedade por Quotas (Lda)

The "Empresa no Dia" one-stop-shop service, available on major islands like Santiago, São Vicente, Sal, and Boa Vista, integrates multiple steps for faster processing. The entire process typically takes 1-10 days if using this service, or up to 4 weeks otherwise. Costs are low, ranging from CVE 5,000-20,000 (approximately 45-180 EUR), excluding notary or legal fees.

Here are the key steps:

Reserve and Approve the Company Name:

Submit a name reservation rat an "Empresa no Dia" office.
Provide founders' details and a brief description of the business purpose.
Time: 1-3 days (often instant online).
Cost: CVE 1,000 (certification fee).
Outcome: Receive a name approval certificate, valid for 90 days.

Draft and Sign the Articles of Association (Contrato Social):

Prepare the founding document outlining the company's structure, objectives, capital distribution, management rules, and shareholder rights.
This can be a private document; however, notarization is required if including non-cash contributions (e.g., equipment or property).
Engage a lawyer or notary for accuracy, especially for foreign investors.
Time: 2-5 days.
Cost: CVE 5,000-15,000 (notary fees, if applicable).

Open a Bank Account and Deposit Capital:

Open a provisional corporate bank account at a local bank (e.g., Banco Nacional Ultramarino).
Deposit at least 50% of the subscribed capital (symbolic for minimal amounts).
Provide the name certificate, draft articles, and IDs.
Time: 1-2 days.
Cost: Bank fees around CVE 2,000.
The funds become accessible after full registration.

Submit for Official Registration:

File all documents (articles, name certificate, deposit proof, and IDs) with the Commercial Registry via "Empresa no Dia" or directly.
This step includes automatic assignment of a Tax Identification Number (NIF) and Social Security registration (INPS).
Time: 1 day via one-stop-shop; 7-14 days otherwise.
Cost: CVE 2,500-5,000 (registry fees).

Publication in the Official Bulletin (Boletim Oficial):

The registry handles publication of the incorporation notice in the Boletim Oficial da República for public transparency.
Time: 1-3 months (digital versions may expedite this).
Cost: CVE 3,000-10,000, based on document length.

Post-Registration Steps

Once registered, complete these to commence operations:

Tax and Activity Declaration: Declare the start of activities with the tax authorities (integrated in registration).
Obtain Licenses: Secure any municipal or sector-specific permits (e.g., health inspections for food businesses).
Employee Registration: If hiring, enroll with INPS and the Labor Inspectorate within 15 days.
Annual Compliance: File annual accounts; appoint an auditor if turnover exceeds CVE 10 million or employees exceed 10.

summary

The Sociedade por Quotas (Lda) offers a straightforward path to business ownership in Cabo Verde, with minimal capital requirements and a streamlined registration process. Its popularity stems from the balance of simplicity, liability protection, and adaptability for SMEs.