When you expand to a new country, you have the option of establishing a subsidiary. While setting up a new entity can be challenging, it comes with its benefits. When you work...
Read MoreWhen you expand to a new country, you have the option of establishing a subsidiary. While setting up a new entity can be challenging, it comes with its benefits. When you work with Globalization Partners, you can enjoy these advantages and sidestep the process of Eritrea subsidiary setup.
Reading Time: 3 minutes
When you expand to a new country, you have the option of establishing a subsidiary. While setting up a new entity can be challenging, it comes with its benefits. When you work with Globalization Partners, you can enjoy these advantages and sidestep the process of Eritrea subsidiary setup.
To start the subsidiary setup process, you’ll need to open a bank account in the country and deposit your investment capital. After depositing your investment capital, you’ll need to conduct a name search and reserve your company name at the Business License Office.
Next, you’ll need to prepare for incorporation by writing your articles of association and getting signatures from your shareholders in the presence of a notary. With these documents, you can register your company with the Commercial Registry.
The Ministry of Information will publish your incorporation notice in the official journal. If it goes uncontested, you can move forward with your company needs, like tax registration, tax clearance, and business license application.
When you apply for a business license, you’ll also undergo an inspection by the Ministry of Trade and Industry for zoning purposes. After you receive your license, you can apply for approval from the municipality you operate in and apply for tax receipts from the Inland Revenue Department. After you complete all these steps and gain the necessary approval, your company can start operating.
One of the primary subsidiary laws is the required investment capital. In the first step for incorporation, you need to open a bank account to provide proof of this startup capital. For private limited liability companies, the required amount is 15,000 Eritrean nakfa. The commercial registry will perform a financial audit to ensure you have to correct fund amount available.
Another requirement for your subsidiary is the memorandum and articles of association. These documents act as a constitution for the way your business operates, and they should include information like your director’s responsibilities and how you plan to appoint new directors.
When you start company incorporation, the two essential resources you need are time and money. In Eritrea, the incorporation process can take up to three months. Processing times for business licenses and tax applications may take a couple of weeks alone. Your incorporation notice also needs to be posted for 30 days to give protesters time to contest if they wish.
Alongside time requirements, you’ll need investment capital, application fees, and a building for business operations. You should also consider extra expenses like notary fees and the cost of a lawyer if you choose to work with one.
Your company must have the appropriate resources for establishing a subsidiary before you begin the process. Confirm your business is ready for the commitment before you take the first steps.
While subsidiary setup can be a challenging process, having an official entity in the country comes with benefits. With your Eritrea subsidiary, you’ll have a separate operation from your parent company.
This separation will give your subsidiary the chance to develop a unique business culture from your parent entity. It can create its own processes and reflect the country’s professional environment. It will also have a separate legal presence. If your subsidiary runs into any legal trouble, your parent company will not be responsible, helping you reduce your losses.
With subsidiary outsourcing from Globalization Partners, you can enjoy the benefits of an in-country entity without establishing one. As an Employer of Record, we’ll hire your team through our subsidiary, offloading all the legal risks from your shoulders to ours.
At Globalization Partners, our goal is to streamline your expansion so you can focus on growth. Reach out to our team today to learn more.
If you’re ready to grow your business, or you have questions about a specific country, complete the form. One of our experts will be in touch shortly.
