In the 90s, the success of the Association of Southeast Asian Nations (ASEAN) region has become the envy of most of the economic groupings around the world. High economic growth and increased prosperity coupled with the abundance of human and natural resources will see continued growth in this region.
Although small in terms of size and population, Brunei Darussalam has a very important role to play in the ASEAN, particularly in the recently established sub-regional growth area - the Brunei, Indonesia, Malaysia, Philippines - East ASEAN Growth Area (BIMP-EAGA). Brunei is strategically located in the ASEAN. It is the hub to all the ASEAN countries. Hence, the Sultanate can play an important role as a communication and transportation hub and at the same time, promote and develop other non-oil and gas industries like the eco-tourism industry.
The country has a very stable political and economic environment with very good infrastructure, conducive for foreign investors. His Majesty’s Government has always welcomed foreign investors to establish a business partnership in Brunei.
Common questions asked by investors interested in coming to Brunei are:
How do we do business in Brunei?
What type of company to set up?
What are the procedures for setting up a company?
Do we need a branch or local limited company?
What are the local statutory requirements for companies operating in Brunei?
What forms are required to be completed?
What are the filing requirements in Brunei?
The following is a brief overview on how to establish a company in the country.
COMPANY LEGISLATION
1. FORMS OF BUSINESS OPERATORS
Business enterprises in Brunei may be organized in the form of: a. Sole Proprietorship b. Partnership c. Private Limited Company (Sendirian Berhad) d. Public Company (Berhad) e. Branch of Foreign Company
Generally speaking, there is no restriction on the types of business that may be set up. However, businesses where the public interest is directly affected such as banks, finance companies, motor vehicle insurers, money lenders and travel agents must obtain special licenses from the appropriate Government agency. Lawyers, auditors, doctors and other professionals also have to be approved by the Government.
Sole Proprietorship and Partnership
Sole Proprietorships and Partnership are not subject to tax in Brunei and must be registered with the Registrar of Business Names unless the full name of all individuals concerned is used for the business.
Registration approval is generally not granted to foreigners. A partnership may consist of individuals, local companies and branches of foreign companies, but the number of partners must not exceed twenty.
Private Limited or Public Companies
The following are the various types of companies that can be registered under the Companies Act 1956 (Laws of Brunei, Chapter 39):
i) A company limited by shares.ii) A company limited by guarantee and not having a share capital.iii) A company limited by guarantee and having a share capital.iv) An unlimited company having a share capital.
The above companies may be either Private Limited (Sendirian Berhad) or Public (Berhad). The private company limits its maximum number of members to fifty, restricts share transfer, and prohibits public invitation for subscription to its shares or debentures. All companies are required to have a minimum of two directors, and at least half the number of directors must be citizens of Brunei Darussalam. Corporate bodies can act as directors unless specifically prohibited by the Articles of Association.
Public companies must have at least seven shareholders and private companies at least two. Shareholders need not be Brunei citizens or residents, and a parent company can hold shares in its subsidiary company.
Branch of Foreign Company
Foreign companies which establish a place of business in Brunei and do not incorporate a local company are required to register as a branch of foreign company. Branches of foreign companies have the same powers and authority as Brunei Companies.
2. FORMATION PROCEDURES
The principal requirements for the formation of a Brunei company are as follows:-
Name approval and reservation of name
The Registrar of Companies (ROC) generally requires Form A to be submitted for approval and reservation of name for a company to be incorporated in Brunei Darussalam.Two or more shareholders each subscribing to at least one share in the proposed company.
Submission of documents
Once the ROC has approved the reservation of the proposed name of the company, the following documents will have to be lodged with the ROC. i) Memorandum and Articles of Association ii) Letters of consent from the Directors iii) Form X iv) Notice of the Situation of Registered Office The certificate of incorporation will be issued by the ROC after compliance with all the above requirements.
Registration fees on capital
Brunei registered companies are required to pay from B$300 where the capital does not exceed B$25,000 to a maximum of B$35,000 where the capital is in the region of B$150,000,000. In view of this graduated scale, many companies tend to incorporate with limited amounts of authorized share capital.
Duration of registration
The whole procedure takes approximately one to two months.
Branch of a foreign company
a. Registration of branch of a foreign company
The procedure for registering a foreign branch is similar to incorporating a local company but registration expenses are slightly less than that for incorporating a local company.
b. Name approval & reservation of name
The proposed name of the branch must be approved by the ROC prior to the approval for registration of a branch.
c. Submission of documents
The documents required to be filed by the ROC differs from those required for the registration of a Brunei company. The filing documents required for registering a branch are as follows:
A certified true copy of the Memorandum and Articles of Association of the foreign company (this has to be notarized by a Notary Public, and if non-English, to be translated into English).
An original copy of the Board Resolution approving the registration of a branch (this has to be notarized by a Notary Public, and if non-English, to be translated into English).
A list of directors together with their names, passport numbers or identity card numbers, occupation and residential addresses (this has to be notarized by a Notary Public, and if non-English, to be translated into English).
Submit name and address of person residing in Brunei Darussalam (Section 299 of the Companies Act) authorized to accept notices on the company’s behalf on a prescribed form.
d. Registration fees on capital
Registration fees payable in respect of the registration of a branch are 50% of the fees payable for Brunei registered companies. The registration fees are computed based on the authorized capital of the holding company and then reduced by 50%.
e. Duration of registration
The whole procedure normally takes approximately 6 to 8 weeks before the certificate of incorporation is issued.Once the branch is incorporated, Form IV (F) will be required to be filed should there be any changes in the particulars of directors of the company incorporated outside Brunei.
3. STATUTORY RECORDS
The Companies Act 1956 requires companies incorporated in Brunei Darussalam to maintain the following records:
Minute Book of Members’ Meetings
Minute Book of Directors’ Meetings
Minute Book of Managers’ Meetings
Register of Members
Register of Directors and Managers
Register of Charges
4. BOOKS OF ACCOUNT
In addition to the above statutory books, the company is also required to maintain proper books of account which will adequately reflect the transactions and financial position of the company to facilitate the preparation of a Balance Sheet and Profit and Loss Account. The Books of Accounts can be kept at the registered office of the company or in any place the directors consider appropriate.
5. AUDIT AND ACCOUNTS
All Brunei Darussalam incorporated companies, whether private or public must appoint Brunei Darussalam Registered Auditors who are authorized by His Majesty the Sultan in Council to practice in Brunei.
The Auditors are to report to the shareholders whether they have obtained all the information and explanations required and whether the Balance Sheet submitted to the Annual General Meeting of the shareholders gives a true and fair view. The disclosure requirements set out in the Companies Act are minimal with the format and manner of accounts presentation not prescribed. There are, however, international firms of accountants in Brunei and, in general, accounts comply with International Accounting Standards, with certain allowance for local companies.
Branches of foreign companies should prepare branch accounts which do not require to be audited but are required, however, to support the tax computation.
6. LOCAL EQUITY PARTICIPATION
His Majesty's Government strongly encourages local participation in both the ownership and management of Brunei companies. Although there is no specific restriction on foreign participation in equity, local participation can be of considerable assistance with regards to operating in Brunei, especially when tendering for contracts with either His Majesty's Government or Brunei Shell Petroleum Company.
7. REPORTING REQUIREMENTS
Every Brunei company having a share capital is required to submit an annual return in the prescribed form to the Registrar of Companies within 28 days of its annual general meeting.
For a public company, the return must be accompanied by a copy of the latest accounts. Private companies, however, are not required to file their annual accounts with the Registrar of Companies.
Branches of foreign companies are required to submit, in every calendar year, a copy of their head office annual accounts to the Registrar of Companies for registration.
In addition to the above, most businesses are required to submit financial and non-financial details each year to the Department of Economic Planning and Development for statistical purposes.
8. COMPANY OR BRANCH
The main benefit of setting up a local company rather than a branch is that the local company is a separate legal entity and ,accordingly, the parent is not chargeable with its liabilities. As the differences in Brunei are not that significant, the deciding factor as to which type of entity to choose is likely to depend on tax and related considerations in the home country.
RELATED ACTS
COMPANIES ACT (CHAPTER 39)
The Companies Act is the main Act which provides for the incorporation and registration of companies in Brunei Darussalam. It provides for the conditions under which companies incorporated outside Brunei Darussalam may carry on business in Brunei Darussalam. The Act also controls the functioning of companies within Brunei Darussalam in related matters.
BUSINESS NAME ACT (CHAPTER 92)
Pursuant to Section 138(2) of the Companies Act (CAP 39) two or not-less-than half of the number of directors (whichever is greater) shall be nationals of Brunei. Nationals of Brunei in this context do not include permanent residents. This Act provides for the registration of firms, individuals and corporations carrying on business under business names and not a company with liability. It further provides as to the names, styles, titles or designations under which business can be carried on and for purposes connected therewith.
MISCELLANEOUS LICENSES ACT (CHAPTER 127)
This Act provides for the licensing, regulations and control of certain commercial places and activities and for incidental purposes. Miscellaneous licenses are renewable annually.
EQUITY REQUIREMENTS
Brunei Darussalam is flexible towards foreign equity requirements. One Hundred percent foreign equity can be considered for export-oriented industries with the exception of industries based on local resources, industries related to national food security and car dealerships whereby some level of local participation is required.
LAND CODE (CHAPTER 40)
Foreign land ownership is not allowed in Brunei Darussalam except with prior approval in writing of His Majesty in Council.
Source: Setting Up A Company in Brunei Darussalam Ministry of Industry and Primary Resources
