Start A Business In Africa

Country Guide: Lesotho

Company Formation in Lesotho

A complete guide to navigating the One-Stop Business Facilitation Centre (OBFC). Learn the requirements, structures, and timelines for establishing a corporate entity in Southern Africa’s premier apparel and export-manufacturing hub.

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The Role of the OBFC and LNDC

Business registration in the Kingdom of Lesotho is streamlined through the One-Stop Business Facilitation Centre (OBFC) under the Ministry of Trade and Industry. The OBFC centralizes company incorporation, tax registration, and trading licenses to significantly reduce the time it takes to legally start a business.

For foreign investors, particularly in manufacturing, textiles, and agriculture, the Lesotho National Development Corporation (LNDC) is a vital partner. Lesotho is uniquely positioned within South Africa and offers duty-free access to the US market via AGOA and the regional SACU market.

3 – 7 Days

Average OBFC Turnaround

25%

Standard Tax (10% for Mfg)

AGOA & SACU Advantage

Duty-free export access to the US and Southern Africa

Types of Companies You Can Register

Lesotho’s Companies Act provides modern, highly functional corporate structures.

Private Company (Pty Ltd)

The most popular vehicle for both local entrepreneurs and foreign investors. It requires at least one director and one shareholder. It provides limited liability protection and cannot offer its shares to the general public.

External Company (Branch)

Foreign corporations can register an External Company to do business in Lesotho. This establishes a branch office rather than a separate legal entity. You must file certified copies of the parent company’s charter and a memorandum of its directors.

Non-Profit Company

Designed for charities, NGOs, and civil society organizations. These entities are heavily regulated to ensure funds are exclusively utilized for their public benefit objectives and not distributed to members as profit.

The OBFC Registration Process

01

Name Search and Reservation

Submit a proposed name to the Registrar of Companies at the OBFC. Name clearance is usually quick. It ensures your business name is unique and does not conflict with existing registered trademarks or companies in Lesotho.

02

Filing Articles of Incorporation

Prepare and submit the prescribed incorporation forms, along with certified copies of the directors’ and shareholders’ national IDs or passports. If a parent company is the shareholder, corporate resolutions are required.

03

Tax Registration (RSL)

Once incorporated, the company must be registered for taxes (Income Tax, PAYE, and VAT) with Revenue Services Lesotho (RSL) — formerly known as the LRA. This is a mandatory step before any commercial activity begins.

04

Obtaining a Trader’s License

A critical post-incorporation step. You cannot legally open your doors without a valid Trader’s License (or Manufacturing License) from the Ministry of Trade and Industry. This requires lease agreements, tax clearances, and physical inspections.

Foreign Investors & LNDC

Foreign ownership is highly encouraged in Lesotho. The Lesotho National Development Corporation (LNDC) is the primary vehicle for promoting foreign direct investment, offering factory space, tax incentives, and logistical support.

Companies engaged in manufacturing can qualify for a highly competitive 10% corporate tax rate (compared to the standard 25%). Expatriate staff and directors must secure Residence and Work Permits through the Ministry of Home Affairs before commencing employment.

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Compliance to Watch

  • ⚠️ Tax Clearance Certificates: Lesotho places a high emphasis on Tax Clearance. You will need a valid clearance certificate from RSL to renew your Trader’s License annually or to bid on any tenders.
  • ⚠️ Reserved Businesses: Be aware that certain small-scale commercial activities (such as small retail shops, hair salons, and specific logistics) are reserved strictly for Basotho citizens.
  • ⚠️ Labor Laws: If operating in the manufacturing/garment sector, strict adherence to Lesotho’s labor codes and union regulations is heavily monitored by international buyers and local authorities.

Need Professional Assistance?

Navigating the OBFC, securing Trader’s Licenses, and coordinating with the RSL requires on-the-ground expertise. Let our local corporate advisors handle the bureaucracy and complete your Lesotho setup.

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