Expanding to Madagascar is an extremely exciting venture. While taking your company across borders is certainly something to celebrate, it also requires careful thought and planning, especially when you’re still learning how to set up a Madagascar subsidiary. The incorporation process can take anywhere from a few weeks to a few months and involves learning local tax laws and following a new set of employment compliance regulations.
G-P offers an alternative. When you work with a global Employer of Record (EOR) like us, you won’t have to set up a subsidiary, and you can start working in the country in just a few days.
How to set up a Madagascar subsidiary
Your company can benefit from discussing a few elements of expansion before setting up a Madagascar subsidiary. For example, where would you like to establish an office in the country? Certain areas, cities, and regions have their own costs, availability, and Madagascar subsidiary laws that can make it either easier or more difficult to incorporate. You should research different areas and choose the one that aligns with your goals and company needs.
Another factor to consider is what type of business you want to conduct in Madagascar. You can set up your Madagascar subsidiary as one of a variety of structures, including a limited liability company (LLC), public limited company, free zone company, branch, or representative office. Each entity will give you a certain degree of freedom, but most companies choose to establish an LLC.
The steps to set up a Madagascar subsidiary as an LLC include:
- Choosing and registering a unique company name.
- Applying for licenses and statistical identifications.
- Establishing an in-country bank account.
- Depositing paid-up share capital.
- Filing a notice of constitution to get published in a daily newspaper in French.
- Registering for social security and tax obligations.
Madagascar subsidiary laws
Every subsidiary structure has its own Madagascar subsidiary laws to follow. As an LLC, you’ll need at least 1 director and 1 shareholder who can be of any nationality. You also need minimum paid-up share capital of USD 1 to go through the incorporation process.
Since French is the main language in Madagascar, all of your LLC’s financial books must be in French to stay compliant. You must appoint a resident representative to keep these books at your registered office in Madagascar. Madagascar subsidiary laws also require companies to prepare annual financial statements and submit an audit each year through an approved, appointed auditor.
Benefits of setting up a Madagascar subsidiary
Completing the Madagascar subsidiary setup process means you can finally start working in the country legally. LLCs are the most popular structure for companies expanding to Madagascar because they provide additional benefits. The limited liability structure will protect your parent company and give your subsidiary the freedom to operate differently to align with the local business culture.
Other important considerations
We recommend setting aside everything you need for the Madagascar subsidiary setup process before you start. First, you’ll need an expert in Madagascar subsidiary laws, or you’ll have to designate a current employee to learn the laws. It can take a few months to incorporate, so you should also clear your schedule for those months in case you need to travel back and forth to Madagascar.
Finally, we recommend working with your accounting department to make sure your company is prepared for the costs involved with incorporation.
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