Countries of the World/COUNTRYS.BIN/dp/0059/00596.txt

Text File | 1991-06-25 | 14.8 KB | 364 lines

$Unique_ID{COW00596}
$Pretitle{406}
$Title{Brunei Darrussalam
Establishing a Business}
$Subtitle{}
$Author{Embassy of Brunei Darrussalam, Washington DC}
$Affiliation{Embassy of Brunei Darrussalam, Washington DC}
$Subject{companies
brunei
company
darussalam
development
million
required
act
foreign
private}
$Date{1990}
$Log{Table 3.*0059601.tab
Table 4.*0059602.tab
Table 5.*0059603.tab
}
Country:     Brunei Darrussalam
Book:        Brunei Darussalam Business in Perspective
Author:      Embassy of Brunei Darrussalam, Washington DC
Affiliation: Embassy of Brunei Darrussalam, Washington DC
Date:        1990

Establishing a Business

Setting Up a Company

     In Brunei Darussalam a business may be set up in any of the following
forms:

     - Sole Proprietorship

     - Partnership

     - Company

     - Branch of Foreign Company

     All businesses must be registered with the Registrar of Business Names or
Registrar of Companies except those using the full name of the owner. Under
the Miscellaneous Licences Act (Cap 127), licences are required for certain
businesses, e.g., retail shops, timber stores and furniture factories,
workshops, motor vehicle dealers, petrol stations, coffee shops, boarding
houses etc. Licences are also required for businesses such as banks, finance
companies, moneylenders, pawnshops and motor insurers.

     Professionals, e.g., lawyers, accountants, medical practitioners, have to
be approved by the government before they are allowed to practice in Brunei
Darussalam.

Sole Proprietorships and Partnerships

     Sole proprietorships and partnerships are not subject to tax in Brunei
Darussalam, but they may be required to register with the Registrar of
Business Names. The Registrar of Business Names must approve the name of the
business prior to the start of business activity.

     In line with the government's policy of encouraging local business
participation, applications by foreign individuals are subject to prior
clearance by the Immigration Department before they are registered.

     The maximum permitted number of partners is twenty. The Contracts' Act
governs partnership laws in Brunei Darussalam.

     A partnership may consist of individuals, local companies and or branches
of foreign companies.

Companies

     Companies that are incorporated in Brunei Darussalam are governed by the
Companies Act (Cap 39) which is based on the U.K. 1929 Companies Act.

     Under the Companies Act (Cap 39), four types of companies may be
incorporated:

     Companies limited by shares.

     Companies limited by guarantee.

     Companies limited both by shares and guarantee, and

     Unlimited companies.

     The companies so incorporated may be either private or public companies.
A private company must, by its constitution (Articles of Association),
restrict the right of members to transfer shares, limit its membership to
fifty, and prohibit any invitation to the public to subscribe for shares or
debentures.

     A public company is one which may issue freely transferable shares to the
public and is not bound by any of the above restrictions relating to a private
company.

     A least half the number of the directors in a company must be either
Brunei citizens or ordinarily resident in Brunei Darussalam.

     Public companies must have at least seven shareholders and private
companies at least two. Shareholders need not be Brunei citizens or residents,
and a subsidiary company may hold shares in its parent company.

Branches of foreign companies

     Companies incorporated outside Brunei Darussalam wishing to establish a
place of business in Brunei Darussalam are required to register under section
299 of the Companies Act (Cap 39) subject to payment of fees prescribed by the
Act.

COMPANIES ACTS (CAP 39)

Formation Procedures

     The principal requirements for the incorporation of a Brunei Darussalam
company are as follows:

     # The Registrar of Companies must give approval for the name of the
company prior to incorporation.

     # Memorandum and Articles of Association must be submitted to the
Registrar of Companies, together with other incorporation documents in the
prescribed forms.

     # Two or more shareholders must exist, each subscribing to at least one
share in the proposed company.

     # A limited company, other than a non-profit company, must have the word
"berhad" at the end of its name. If the company is a private company, the word
"sendirian" must be added before the word "berhad".

     The companies may be registered by the Registrar of Companies after the
compliance imposed by the Government.

     The Companies Act (Cap 39) also stipulates the requirements for the
registration of a branch of a foreign company in Brunei Darussalam. The
documents required to be filed with the Registrar of Companies, however,
differ from those required for the registration of a Brunei Darussalam
company. The filing documents required for registering a branch are as
follows:

     # A certified copy of the Charter, Statutes or Memorandum and Articles
of Association or other instruments defining the constitution of the foreign
company duty authenticated and, when necessary, with English translation.

     # A list of directors together with their particulars and the names and
addresses of one or more persons residing in Brunei Darussalam authorised to
accept notices on the company's behalf.

Statutory Records

     The Companies Act (Cap 39) requires companies incorporated in Brunei
Darussalam to keep 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.

Books of Account

     Each company is required under the Companies Act to prepare each year
a profit and loss account and balance sheet, accompanied by a directors'
report. The books of account should be kept at the registered office.

Audit and Accounts

     All companies must appoint auditors who are Brunei Registered Auditors.
The auditors are to report to the shareholders annually whether they have
obtained all the information and explanations that they have required and
whether the balance sheet submitted to the annual general meeting of the
shareholders gives a true and fair view. Branches of foreign companies should
prepare branch accounts. These accounts, which need not be audited, are
required to support the tax computation.

Reporting requirements

     Companies incorporated in Brunei Darussalam, other than public companies,
are not required to file their annual accounts with the Registrar of
Companies. However, most business organisations are required to submit
accounting data annually to the Economic Planning Unit for statistical
purposes. Fines can be imposed if the returns are not submitted promptly.

     Branches of foreign companies are required to file the annual financial
accounts of the company with the Registrar of Companies.

     Annual returns, containing information on directors and shareholders,
must be made by companies incorporated in Brunei Darussalam. There are
provisions in the Companies Act for penalties for the late filing of annual
and other returns.

Registration Fees

     Registration fees based on a graduated scale and on the authorised share
capital of the company are payable. As an example, for a company having an
authorised capital not exceeding $25,000, the registration fee payable is
$300.00 not including charges for filing of documents.

REGISTRATION OF TRADEMARKS AND PATENTS

     Trademarks are registrable provided the requirements laid down in the
Trademarks Act (Cap 39) are satisfied. Once registered, they are valid for an
initial period of seven years and are renewable for a further period of
fourteen years. Any person who obtained a grant of a patent in the U.K. or
Malaysia or Singapore may apply to the Ministry of Law within three years from
the date of issue of such grant to have such grant registered in Brunei
Darussalam under the Invention Act (Cap 72).

     There is no specific legislation for copyright protection, but U.K.
legislation would apply where necessary.

INVESTMENT ENVIRONMENT

Foreign Investment and Commercial Involvement

     Brunei Darussalam welcomes foreign participation in development,
industrial and commercial activities principally through the establishment of
joint-ventures with Brunei citizens or residents.

     The government is committed to an expected industrialization programme,
and it is determined to create an environment wherein the private sector may
flourish. Industrial policy is geared to the promotion of import-substitution
and export-oriented industries. Industries which have been identified for
development are in the areas of agriculture and livestock, fisheries,
forestry, manufacturing and tertiary services. Emphasis is given to the
promotion of private investment in the manufacturing sector and the following
areas are particularly suitable for development.

     i) Food processing and manufacturing

     ii) Furniture

     iii) Potteries and Tiles

     iv) Textile

     v) Plywood and wood panelling

     vi) Glass

     vii) Chemicals & Dyes

General guidelines

     i) Foreign investment is welcomed as long as it beneficially contributes
to the economic growth and development;

     ii) Foreign investors are encouraged to form joint-ventures with the
local citizens and residents;

     iii) Joint-venture companies are required to train local staff on
management and technical levels;

     iv) Joint-venture companies should have active local participation in
both the areas of capital investment and management.

     Generally there is no restriction on foreign participation in equity
except in the case of newly established firms engaging in car dealerships
after January 1986.

Government Investment

     During the formulation of the FIVE-YEAR NATIONAL DEVELOPMENT PLANS, it
was estimated that to achieve a 6% growth in the Gross Domestic Product in the
non-oil sector, the government would have to invest $500 million for the
period of 3rd Five Year National Development Plan and $1,334 million during
the 4th National Development Plan. Total actual government development
expenditure for the period 1975-1979 amounted to $534 million, just slightly
over the targeted amount; whilst for the period 1980-1984, the expenditure
amounted to $1.590 million or about 19% over the target. The main reason for
such a large increase in the actual development expenditure for the period
1980-1984 as compared to the targeted amount at the beginning of the Plan was
that the original estimate did not take into account the development
expenditures of the police and the army.

[See Table 3.: Investment of Public Sector]

Private Sector Investment

     During the last decade, total private sector investment grew at an
average rate of 13.3% per annum from $426 million in 1975 to $866 million in
1984. The bulk of the private sector investment came from the oil sector with
89.6% out  of a total of $2,197.4 million during the 3rd Plan and 88.5% out of
a total of $4,658.9 million during the 4th Plan. The non-oil private sector
investment grew from $22.6 million in 1974 to a level of $75 million in 1975,
then further to $96.1 million in 1984, giving an annual average growth rate of
29.4% for the period.

The Fifth Five-Year National Development Plan (1986-1990)

     The Fifth National Development Plan was launched in December 1985. It
provides for the expenditure of B $3,730 million for various development
projects over the period 1986-1990. The sum will be allocated as follows:-

     (i) Industry and commerce will receive $373 million or a ten percent
share of the total development allocation, of which five percent will be
earmarked for industrial promotion.

     (ii) Social Services, specially facilities for educational purposes,
will receive $1,068 million or twenty nine percent of the allocation.

     (iii) The Public Utilities sector will receive $746 million or twenty
percent while Public Buildings and Security will each receive $373 million or
ten per cent of the total development allocation.

     The Development Plan aims to diversify the economy through the
development of industries other than those related to oil and gas, to
accelerate development of human resources, to maintain full employment, to
improve the level of productivity and to sustain an economic growth of six
percent.

Employment Regulations

     The annual survey carried out by the Labour Department showed a total of
29,973 salary and wage earners being employed in the State on the 31st
December 1986 compared with 32,519 a year earlier. These figures, however, do
not include members of the Armed Forces, persons employed by the government,
or domestic servants (amahs) in private employment. Details of the industrial
occupational distribution, sexes and residential status of the salary and wage
earners covered by the survey are given below;

[See Table 4.: All Workers by Major Industrial Division, Sex and Residential
Starus]

     Immigrant workers represent about 36% of the total workforce. The flow of
immigrant workers into Brunei Darussalam is controlled by means of Labour
Licenses and employment passes issued by the Commissioner of Labour and the
Controller of Immigration respectively. Before employment passes are granted,
mandatory deposits are required by the Labour Department at the rates stated
below.

[See Table 5.: Mandaotry Deposits for Foreign Workers]

     There is no minimum wage legislation. All employers are expected to train
their employees and plans must be made to assure that Bruneians acquire the
skills and expertise required to assume positions at all technical and
management levels.

Industrial Relations

     The Trade Disputes Act (Cap 129) accords to trade unions the customary
immunities and protections in respect of acts done in furtherance of trade
disputes. It prescribes procedures for conciliation and, subject to the
consent of the parties, arbitration in disputes where machinery within the
industry concerned does not exist or has failed to achieve settlement.

     Trade Unionism of either the employers or workers is not extensively
practised in Brunei Darussalam. As has been already observed, the industrial
structure consists almost entirely of small-scale enterprises. This state of
affairs and the nature and cultural characteristics of the population are
conductive to accommodation and a "give and take attitude" rather than a
confrontational attitude. Except in the oil industry, the system of collective
bargaining has not emerged.