21–30 of 34 posts
30% of the entire company must be locally owned? That seems unlikely to work out. Does any country have local ownership rules of this kind?
Yes, Zimbabwe introduced a similar rule of 51% ownership and shortly afterwards their economy utterly collapsed (that and they seized white owned farming land to redistribute to blacks citizens).
30% of the entire company must be locally owned? That seems unlikely to work out. Does any country have local ownership rules of this kind?
Eg: A foreigner can't own a taxi or handicraft business. If you want to start a business in the fisheries sector, you need 30% local ownership and there's a minimum investment $ amount (I believe USD$250k).
Full list of Reserved and Restricted Businesses: http://imgur.com/a/zx31r
I suspect that every-time something like this is done, it is the triumph of the combination of stupidity and greed in the government (or those influencing it and expecting to profit from it). I very much doubt the economics here ever benefit the average citizen (actually it will likely weaken the economy) - if anyone has references of similar experiments that point to the contrary, I would be very interested to know.
This is really another form of what the Chinese practice - transfer of technology. Want to do business here (in China)? Agree to transfer some of that fancy technology of yours. So far, it's worked so well for the Chinese. This should be no different. Helps to keep more of the money in the local economy.
I suspect that every-time something like this is done, it is the triumph of the combination of stupidity and greed in the government (or those influencing it and expecting to profit from it). I very much doubt the economics here ever benefit the average citizen (actually it will likely weaken the economy) - if anyone has references of similar experiments that point to the contrary, I would be very interested to know.
This is really another form of what the Chinese practice - transfer of technology. Want to do business here (in China)? Agree to transfer some of that fancy technology of yours. So far, it's worked so well for the Chinese. This should be no different. Helps to keep more of the money in the local economy.
> The new law will not be applied retrospectively – meaning the Act does not apply to existing foreign companies already registered in Kenya, said Mr Ouma.
Regardless though, this won't have any real effect immediately.
well, it can be worst, in Cuba is 50%, "if" they allow you to create your company
Imagine the ownership structure of company A1:
A1 = { X:70%, local:30% }
Imagine a chain of ownership that looks like this:
A1 = { X:70%, local:30% } A2 = { X:70%, A1:30% } A3 = { X:70%, A2:30% }
In that case, A3 the compounded ownership for local is: 30%^3=2.7%. Hence, the compounded ownership of A3 is:
A3 = { X:97.3%, A2:2.7% }
Therefore, if you want to restrict local ownership to a maximum of M, you will need a chain of ownership with n nodes, with:
n >= ln(M) / ln(0.3)
Therefore, if they want the rule to be more difficult to circumvent than that, they will have to either prevent chains of ownership and/or beef up initial incorporation charges and/or periodic incorporation maintenance fees.
For large business activity, it could still be worthwhile to set up a 25-node chain or so.
Another way to make the rule ineffective, is to accept local ownership but only if the local owner deposits a sufficiently large amount in escrow in a third country, say, South Africa. Of course, you would have to pay the local owner for doing that, but if he ever misbehaves, you can repossess the amount escrowed in South Africa, where both of you are foreigners, and where being a local Kenyan has no particular advantage over being a non-Kenyan.
Earlier quoted context omitted.
Yes, the UAE requires 51% Emirati ownership for all companies not located in free zones. It's a terrible policy which has significantly stifled entrepreneurship. Most businesses skirt around it by either funneling their revenue through a free zone or hiring an Emirati "owner." These sorts of policies are classic populist maneuvers which seem like a good idea, but impose a tax on business activity which outweighs any…
But UAE has free zones - plus lots of oil money going around...
The rule is not that simple to apply. Can a company be owned by another company? I would assume so. If yes, what the "localness" status of a local company? Is it also "local"? If it is, the rule can easily be circumvented: Imagine the ownership structure of company A1: A1 = { X:70%, local:30% } Imagine a chain of ownership that looks like this: A1 = { X:70%, local:30% } A2 = { X:70%, A1:30% } A3 = { X:70%, A2:30% } I…
Not really, this sort loophole is trivial to avoid while writing the law: just calculate by local ownership percentage of total shares and/or total capitalization.
In your example, A3 would have 2.7% of its shares be owned by Kenyans and so wouldn't be local.