Forming a Not-For-Profit Charitable Organization in Botswana

Would you like to start a charity in Botswana? 

You have three options.  First option  is to form a company limited by guarantee under the Companies Act of Botswana.  Second option is to form a society under the Societies Act.   Third option is to register a trust under the Trust Property Control Act.  The choice depends on the sophistication of governance requirements.

Company Limited by Guarantee

Companies Act is basically meant for profit oriented companies.  It has nationally (and perhaps universally) accepted laws and regulations relating to registration, ownership, directors, meetings, accounts, management, company secretaries, auditors, liquidation, etc.  So forming a company limited by guarantee under Botswana Companies Act gives the charity the most formal status.  Governance expectations by the society is high.  The conditions are that you cannot declare dividends and you should use the whole profits for furthering the objectives.  If the number of guarantors become more than 25, then it becomes a public limited guarantee company and should observe more elaborate corporate governance procedures and processes.  The directors’ duties and responsibilities are well defined.  Meetings can be held by electronic presence and statutory registers may be kept electronically.  A company limited by guarantee need not use the words “Proprietary Limited” as part of its name.  National Food Technology Research Centre, for example, is a company limited by guarantee.

SOCIETY

A society is formed under the Societies Act.  It is suitable where like-minded people or members of specific interest group join together and form themselves into a society.  At the time of formation, at least twenty members should submit a resolution to form themselves into a society.  A society needs to have its own Constitution as part of the registration documents (but this is not necessary to form a company limited by guarantee).  Constitution provides for objectives, office bearers, their duties and responsibilities.  For example, Chambers of commerce, religious organisations, Charities like Lions Clubs, Sports associations, etc. are formed as societies.  Most burial societies are formed under Botswana Societies Act.  Societies are closely controlled by the Registrar of Societies who has powers to de-register a non-compliant or illegal society.  Registrar’s office functions as a part of the Ministry of Nationality, Immigration and Gender Affairs.

TRUST

Third alternative is to form a Trust.  Trust is not a company.  It does not have corporate status.  It is simply an arrangement in terms of which the trustees agree to perform certain tasks or fulfil certain objectives private or public for the benefit of a certain family or group of people or general public or specific interest groups.  Every trust should have a trust instrument.  The trustees, beneficiaries, trust instrument and trust properties should be registered with the Master of the High Court under Trust Property Control Act.  Trust Instrument can have trust-specific provisions when it comes to governance, accounts, audit, meetings, etc.  For example the trust instrument does not have to provide for meetings.  Most common purpose of the Trust is to distribute income and to manage simple businesses such as collecting rent from properties or acting as governors for public schools, hospitals, etc. 

For further information and clarifications of a general nature please email [email protected].  

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Authors

Guru Gurumoorthi
Chairman (Role: Oversight | Client and Human Relations and Development | Governance, Risk and Compliance)