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Incorporation

Setting up a company in Papua New Guinea

When setting up a company you may want to consider these factors:

  1. Business factors

    Companies should consider business factors such as:

    • The industry and type of business
    • Nationality of the headquarters/individual(s) and
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

  3. Regional language

    Regional language may be an influence. There are over 850 languages used in PNG, which is the most linguistically diverse region on Earth. There are three official languages alone – English, Tok Pisin, and Hiri Motu – of which the second is most frequently spoken.

Your Options

The most popular type of company entity set up in Papua New Guinea is the limited liability company. While representative offices of foreign companies can be set up, they are not permitted to carry out business, and may only conduct market research. Finally, branches can be set up for companies incorporated outside of PNG and may engage in trade and issue invoices.

Limited Liability Company

Setting up a business in Papua New Guinea is relatively cheap.

Unlike most other countries, a company in PNG is not required to have any articles of association or memorandum, and a constitution can be adopted at any time.

The basic steps are as follows:

1. Obtain a company seal

2. Reserve a company name and complete registration process

3. Register with Tax Authorities and Employment Register

4. Apply for a trade license

5. Open an Authorised Superannuation Fund account

6. Register workers for private work injury insurance

In order to set up a company in PNG, it must have:

  • A name which does not contravene any law, be misleading or identical to the name of another company
  • One or more shares and shareholders
  • One or more directors, of which one must be a resident of PNG. A company is not required to appoint a secretary, although this is optional
  • A physical address in PNG i.e. no PO boxes

Detailed instructions of the process, as well as times and costs involved, are explained below.

1. Obtain a company seal

Companies are not legally required to make a company seal, although a seal is necessary to meet the Companies Act requirements for the issuance of share certificates to enter into deeds and contracts. Seal makers will charge different service fees but most can be obtained within a week or applied for online.

Time: 4 days

Cost: PGK 40-80

2. Reserve a company name and complete registration process

Companies must submit a registration application to the Registrar of Companies. Standard Form 1 must be submitted as well as three proposed company names, the registered office’s postal and street address, and the number and names of the directors, shareholders and secretaries.

In addition, the following documents must included in the application:

  • Certified copy of the company constitution, if there is one available
  • Form 2, the consent of all directors, including their full name, nationality, date of birth, postal and residential addresses
  • Form 3, the consent of any secretary, including their full name, nationality, date of birth, postal and residential addresses
  • Form 4, the consent of each shareholders, including their dates of birth, full or corporate name, nationality or country of incorporation, postal and residential addresses, number and class of shares, and consideration for shares
  • Form 6, an application for name reservation

Companies are not required to present a memorandum or articles of association, saving significant legal advisory costs. Companies may elect to adopt a constitution but this is not legally required.

The total cost payable is comprised of the application to register the company (PGK 150), the application to reserve a company name (PGK 50) and stamp duty (PGK 60 + PGK 40 if the company has a constitution).

Time: 19 days

Cost: PGK 560

3. Register with Tax Authorities and Employment Register

The Income Tax Act requires a company continuing business or deriving income in PNG to appoint an PNG resident as a public officer. This appointment must occur 3 months form the date the company commences business operations or begins earning income in the country, via written notice to the Internal Revenue Commission.

Tax notices and forms are filed to the attention of the Internal Revenue Commissioner. The forms may be submitted in a single filing, and the procedure takes between one week to a month.

If companies employ one or more employees on a weekly salary of more than PGK 126 per week, they must register as “group employer” through written notice to the Internal Revenue Commission.

Businesses or individuals with annual turnover exceeding or expected to exceed PGK 100,000 are required to register for goods and services tax (GST) by completing Form 1 with the Internal Revenue Commission. This form requires the company’s business name and description of its proposed main business activities along with the street and postal address of the registered office, and a statement of its monthly sales and liabilities.

Time: 9 days

Cost: No cost involved

4. Apply for a trade license

Companies in Port Moresby are required to obtain a trading license from the National Capital District Commission.

Time: 20 days

Cost: PGK 50

5. Open an Authorised Superannuation Fund account

The Superannuation (General Provisions) Act 2000 requires a company with 15 or more employees to contribute to an Authorised Superannuation Fund (ASF – a superannuation fund that has been approved and licensed by the Central Bank).

Employers must remit their employer contributions to the ASF within 14 days of the end of each calendar month during which the relevant contribution is due for deduction for an employee’s pay. It is considered an offence for employers not to make contributions, and the Central Bank has the power to instigate proceedings against any person committing such an offence.

Time: 7-10 days, completed simultaneously with previous procedure

Cost: No cost involved

6. Register workers for private work injury insurance

There is no registration requirement, but it is an offence for employers to employ any worker without an insurance or indemnity policy issued by a licensed insurer for injury arising during or out of employment.

Time: 10-30 days, completed simultaneously with previous procedure

Cost: PGK 200

Branch

Branches are often preferred over incorporating subsidiaries by companies wishing to consolidate their financial results.

Setting up a branch is in many ways quite similar to incorporating a new company in PNG. There is an application form to be filled in, in accordance with the Companies Act, which is relatively simple and the only real step in setting up the branch. However, there are stricter guidelines around financial reporting, alterations to the constitution and other activities that become a concern once the branch is set up.

The following must be provided:

  • The name of the overseas company
  • The full names and addresses of the parent company’s directors
  • The full address of the place of business in the parent country, or its principle place if there is more than one
  • Evidence of incorporation of the overseas company and copy of its constitution, if applicable, and an English version of any documents
  • The full name, residential address and postal address of one or more persons resident of incorporated in the country authorised to accept service in the parent country
  • Details of the activity the parent company intends to carry out via its branch

Time: Several weeks

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Papua New Guinea, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in PNG they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities. A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in PNG
  • the company needs help with tax, employment, immigration and payroll compliance in PNG

The complexity of employment regulations in Papua New Guinea makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in PNG allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in PNG.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into PNG. Read more about outsourced employment through Shield GEO.

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