58787 How Many Stops in a One-Stop Shop? 2010 A Review of Recent Developments in Business Registration Investment Climate Advisory Services I World Bank Group With funding from FIAS, the multi-donor investment climate advisory service in partnership with HOW MANY STOPS IN A ONE-STOP SHOP? A REVIEW OF RECENT DEVELOPMENTS IN BUSINESS REGISTRATION December 2009 Copyright © 2009 The World Bank Group 1818 H Street, NW Washington, DC 20433 All rights reserved December 2009 The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank Group encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. 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The Organizations (IFC, MIGA, and IBRD), through FIAS, endeavor, using their best efforts in the time available, to provide high quality services hereunder and have relied on information provided to them by a wide range of other sources. However, they do not make any representations or warranties regarding the completeness or accuracy of the information included in this publication. The findings, interpretations, and conclusions included in this report are those of the authors and do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. Cover photo credits: globe­Patricia Hord Design (also appears on chapter opening pages); photo inserts (left to right)­Robert Achinger; Neil Gould; David Lat; Bazil Raubach. Table of Contents List of Acronyms.................................................................................. vi Preface ............................................................................................... ix Acknowledgments ............................................................................... x What is a one-stop shop? ..................................................................... 1 Anomalies ..........................................................................................................2 What services might a one-stop shop provide? .......................................................2 Types of one-stop shop .........................................................................................2 One door ...........................................................................................................2 One window ......................................................................................................3 One more stop? ..................................................................................................4 Integrated functions .............................................................................................4 Online registration facilities ..................................................................................4 Investment promotion agencies .............................................................................4 Organizations responsible for the one-stop shop .................................. 6 Courts................................................................................................................6 Chambers of Commerce ......................................................................................7 Executive Agencies, Government Commissions, and Regulatory Authorities .....................7 Does it make any difference? ............................................................... 8 One-stop shop initiatives in Europe ........................................................................9 European company law .......................................................................................9 One-stop shops ...................................................................................................9 Consultation and cooperation .............................................................................11 An update ........................................................................................................12 Case studies ....................................................................................... 13 Azerbaijan ......................................................................................... 13 Before the one-stop shop ....................................................................................13 Motivation for reform .........................................................................................13 Options and consultation ...................................................................................13 Project planning and management ......................................................................14 The law............................................................................................................14 A single form ....................................................................................................15 A single number................................................................................................15 Computer systems .............................................................................................15 iii What it looks like now .......................................................................................16 What difference did it make? .............................................................................16 What happens next ...........................................................................................19 Lessons learned.................................................................................................19 Burkina Faso...................................................................................... 21 Before the (latest) one-stop shop ..........................................................................21 Motivation for reform .........................................................................................22 Options and consultation ...................................................................................22 Project planning and management ......................................................................22 The law............................................................................................................23 Forms and documentation ..................................................................................23 A single number................................................................................................24 Computer systems .............................................................................................24 The launch .......................................................................................................24 What it looks like now .......................................................................................25 What difference did it make? .............................................................................25 What happens next? .........................................................................................26 Lessons learned.................................................................................................26 Colombia ........................................................................................... 29 Before the one-stop shop ....................................................................................29 Motivation for reform .........................................................................................29 Options and consultation ...................................................................................30 Project planning and management ......................................................................30 The law............................................................................................................31 Forms and documentation ..................................................................................31 A single number................................................................................................31 Computer systems .............................................................................................31 The launch .......................................................................................................33 What it looks like now .......................................................................................33 Mobile registry .................................................................................................34 What difference did it make? .............................................................................35 Business registry and advancements in the DB agenda ..........................................36 What happens next ...........................................................................................37 Lessons learned.................................................................................................37 Egypt ................................................................................................. 39 Before the (latest) one-stop shop ..........................................................................39 Options and consultation ...................................................................................40 Motivation for reform .........................................................................................40 iv Project planning and management ......................................................................41 The law............................................................................................................41 Forms and documentation ..................................................................................42 A single number................................................................................................42 Computer systems .............................................................................................42 The launch .......................................................................................................43 What it looks like now .......................................................................................43 What difference did it make? .............................................................................43 What happens next ...........................................................................................44 Lessons learned.................................................................................................46 Mauritius ........................................................................................... 49 Before the one-stop shop ....................................................................................49 Motivation for reform .........................................................................................49 Options and consultation ...................................................................................50 Project planning and management ......................................................................50 The law............................................................................................................51 Forms and documentation ..................................................................................51 A single number................................................................................................51 Computer systems .............................................................................................51 The launch .......................................................................................................52 What it looks like now .......................................................................................53 What difference did it make? .............................................................................54 What happens next ...........................................................................................54 Lessons learned.................................................................................................55 Problems experienced and lessons learned ........................................ 57 Armenia--Applying the principles ...................................................... 59 Reviewing existing procedures ............................................................................60 Reviewing the legal requirements ........................................................................60 Reviewing the organization ................................................................................60 Reviewing technology needs...............................................................................61 Designing the one-stop shop ...............................................................................62 Planning the implementation ...............................................................................62 What happens next? .........................................................................................64 The way forward ............................................................................... 71 References ......................................................................................... 72 Annex A: Planning a One-Stop Shop .................................................. 74 Annex B: Types of One-Stop Shop ...................................................... 77 v LIST OF ACRONYMS ACRA Accounting and Corporate Regulatory Authority AISA Afghanistan Investment Support Agency AJPES Agencija Republike Slovenije za javnopravne evidence in storitve --Agency of the Republic of Slovenia for Public Legal Records and Related Services APIP Agence de Promotion des Investissements Privés APIP Agence de Promotion d'Investissement --Investment Promotion Agency ASIC Australian Securities and Investments Commission ASSEDIC Association pour l'emploi dans l'industrie et le commerce --Association for Employment in Industry and Trade BIR Bureau of Internal Revenue CAE Centro de Atención Empresarial --Business Service Centre CBR Certificate of Business Registration CEFORE Centres de Formalités des Entreprises du Burkina Faso --Formalities Centers for Businesses in Burkina Faso CFE Centre de Formalités des Entreprises --Formalities Center for Businesses CIDA Canadian International Development Agency CIEM Central Institute for Economic Management CNSEE Centre National de la Statistique et des Etudes Economiques --National Centre for Statistics and Economic Studies CNSS Caisse National de Sécurité Sociale --National Social Security Fund CPI Corruption Perceptions Index CRF Corporate Registers Forum vi CRO Central Registration Offices or Companies Registration Office CSS Caisse de Sécurité Sociale --Social Security Fund CTR Certificate of Tax Registration DB Doing Business DBRA Doing Business Reform Advisory Unit DCCA Danish Commerce and Companies Agency DED Department of Economic DIAN Dirección de Impuestos y Aduanas Nacionales --Directorate of National Taxes and Customs EBAS European Union/ACP Business Assistance Scheme EBR European Business Register ECRF European Commerce Registers' Forum EU European Union FIRST Financial Sector Reform and Strengthening Initiative GAFI General Authority for Investment and Free Zones GDP Gross Domestic Product GNI Gross National Income HM Her Majesty's ICT Information and Communications Technology ID Identification Document IFC International Finance Corporation IFU Identification Financière Unique --Tax identification number IMF International Monetary Fund INSEE Institut national de la statistique et des études économiques --National Institute for Statistics and Economic Studies IPRES Institut de Prévoyance Retraite --Pension ISO International Organization for Standardization IT Information Technology KYE Investors Reception Centres LE Egyptian pounds LLC Limited Liability Company MENA Middle East and North Africa MFSA Malta Financial Services Authority MPDF Mekong Private Sector Development Facility NERE Fichier National des Entreprises et des Regroupements d'Entreprises du Burkina --National Database of Businesses and Business Groups in Burkina Faso NINEA Numéro d'Identification Nationale des Entreprises et Associations --National Iden- tification Number for Companies and Associations NIT --tax identification number vii OBSS Office Béninois de Sécurité Sociale --Benin Office of Social Security OHADA Organisation pour l'Harmonisation en Afrique du Droit des Affaires -- Organisation for the Harmonization of Business Law in Africa OJ Official Journal OSS One-Stop Shop PEP Private Enterprise Partnership PIN Personal Identification Number RCCM Registre du Commerce et du Crédit Mobilier --Register of Commerce and Movable Assets RCS Registre du Commerce et des Sociétés --Commerce and Companies Register RUE Registro Único Empresarial --Single Business Register SA Sociedad Anónima --public company SEC Securities and Exchange Commission SEHDA Small Enterprise & Handicraft Development Authority SMBSP Small and Medium Business Support Project SME Small and/or medium-size enterprise SODRA State Social Insurance Fund Board TIN Tax Identification Number UNDP United Nations Development Programme URSSAF Unions de Recouvrement des Cotisations de Sécurité Sociale et d'Allocations Familiales -- Organisations for the payment of social security and family benefit contributions USAID United States Agency for International Development VAT Value-Added Tax VEM Vse na Enem Mestu --"all in one place" VUE Ventanilla Unica Empresarial --One-Stop Shop Network XBRL Extensible Business Reporting Language viii PREFACE Many governments have introduced one-stop shops IFC has commissioned this study to provide some as part of their reform of the business registration background and possibly a few hints for those con- process. But what is a one-stop shop? Is it like any templating setting up a one-stop shop or improving other shop? Can it really involve just one stop? one that already exists. ix ACKNOWLEDGMENTS This work has been overseen by Andrei Mikhnev, Ashot Torosyan, Head of Kentron Municipality World Bank Product Leader for Business Entry State Registry Office Reforms, and Dobromir Christow, Operations Hrant Margaryan, Head of National Center of Officer, Business Entry Reforms, World Bank Innovation and Entrepreneurship Group Advisory Services. I am grateful for their help and guidance throughout the project. This Arsen Nazaryan, Coordinator, Armenia Doing report was produced with the support of the Business Reform Project, IFC Dutch Ministry of Foreign Affairs in conjunction with the Investment Climate Department of the Azerbaijan World Bank Group. Fakhriyar Jabbarov, Legal Advisor, IFC, Azerbai- jan Business Enabling Environment Project Many people have contributed directly or indi- rectly to the case studies and the analysis. My thanks go to them all, including, but not con- Burkina Faso fined to, those mentioned below. Abdouramane Ramsès Ouédraogo, Directeur du Centre des Guichets Uniques, Ministère du Armenia Commerce Armen Gevorgyan, Head of State Registry Maître Ousmane Prosper Zoungrana, Greffier en Agency, Ministry of Justice Chef, Tribunal de Grand Instance de Ouagadougou Roland Olivier Kyedrebeogo, Administrateur Vahe Chibukhchyan, Head of Business Promo- du Fichier National des Entreprises et des tion Department, Ministry of Economy Regroupements d'Entreprises (Fichier NERE), Chambre de Commerce et d'Industrie du Gagik Mkrtchyan, Head of Department of Reg- Burkina Faso istry Procedures, State Registry Agency, Ministry of Justice Maître Jean-Célestin Zouré, Notaire x Denis Dawende, Chambers of Maître Zouré Blanca Deicy Zamora Restrepo, Subdirector Cus- tom Registry, Dirección de Impuestos y Aduanas Issaka Kargougou, Directeur Général, La Maison Nacionales (DIAN) de l'Entreprise du Burkina Faso Miguel Angel Marentes, Manager GIT Informa- Sayouba Sawadogo, Direction Générale des Impôts tion Control, DIAN E. Norbert Sawadogo, Head of Registration Sec- Alvaro Quijandria, Manager, Business Enabling tion, Caisse Nationale de la Sécurité Sociale Environment Program for LAC Lamine Traore, Directeur Général, Vision Plus Kristtian Rada, Operation Officer, Business International Enabling Environment Program for LAC Alain Tienmfoltien Traore, Program Director, Ursula Blotte, Operation Officer, Business IFC Enabling Environment Program for LAC Inoussa Ouédraogo, Associate Operations Officer, Clara Ugarte, Communication Officer for LAC Doing Business Program Ada Calderon, Communication Analyst for LAC Houmou Dabo, Team Assistant, Doing Business Program Zenaida Hernandez Uriz, Investment Policy Officer Doing Business Reform Unit Niklas Eklund, Consultant, IFC Colombia Claudia Jimena Tarazona, Team Assistant, IFC Julio Cesar Silva, Director Chamber of Com- merce, Confecámaras Egypt Mauricio Rodriguez Gallego, Technical Director, Confecámaras Hassan Fahmy Mohamed, Head of Investment Service Sector, General Authority for Investment Carlos Mario Sanchez Trujillo, National Manager and Free Zones (GAFI) CAE, Confecámaras Medhat Shoair, General Manager, Policy Advocacy Jose Ivan Nieto Tabares, Manager IT Systems, Sector, GAFI Confecámaras Alaa M. Soueif, Information and Decision Mario Antonio Cajiao Pedraza, Manager of Support Director, GAFI Planning, Bogota Chamber of Commerce Amin Haddad, Software Manager, Information Santiago Fonseca Salazar, Department Manager of Division, GAFI Public Registry, Bogota Chamber of Commerce Amr Aboul Fotouh, Establishment Follow-up Johanna Catalina Buitrago, Planning Manage- Officer, GAFI ment Analyst, Bogota Chamber of Commerce Sherif Hamdy, Project Officer, IFC Juan Rommel Rodriguez Amaya, Bogota Cham- ber of Commerce Hala El Khamissy, Associate Project Officer, IFC xi Laila Said, Project Analyst, IFC Elsewhere Hans Shrader, Program Manager, IFC Indonesia Amy Abdel-Razek, Operations Analyst, IFC Gareth Jones, Chief Executive, Companies Yehia Khedr Eldozdar, Operations Analyst, IFC House, UK Huynh Mai Huong, Project Officer, Business Mauritius Enabling Environment, IFC, Mekong Region Divanandum Chinien, Registrar of Companies Yara Salem, Doing Business project of the World Bank Group Rosemay Yeung, Chief Companies Officer, Com- panies Division Caroline Van Coppenolle, Doing Business project of the World Bank Group Zafroullah Noor Mohamed, Senior Systems Ana- lyst, Central Information Systems Division Andrew Stone, Lead Private Sector Development Specialist, Finance and Private Sector Unit, Mid- Dhanraj Ramdin, Director, Operational Services, dle East and North Africa Region, World Bank Mauritius Revenue Authority Thomas Moullier, Program Manager, Business Nirmala Jeetah, Assistant Director, Board of Enabling Environment, IFC, Private Enterprise Investment Partnership for the Middle East and North Africa Sarwansingh Purmessur, Principal Assistant Xavier Forneris, Program Manager, IFC-- Secretary, Ministry of Local Government OHADA team Numa Magalhaes, Senior Information Officer, Raj Makoond, Director, Joint Economic Council Investment Climate Department, The World Daniel Fok, Team Leader, State Informatics Bank Group Limited Declan Geaney, General Manager, Enterprise Registry Systems Limited, Ireland Mary Jane Koo, Software Engineer, Mauritius Network Services Ltd. Delphine Riou, Operations Officer, IFC PEP MENA-CME-Business Enabling Environment, Maurice Chi Kan Chun, Assistant Manager, Morocco Small Enterprises and Handicraft Development Authority Inigo Urresti, DG Enterprise and Industry, European Commission Nemraj Ramsohoy, Assistant Manager, Business Facilitation and Counseling Unit, Small Enter- Yves Gonner, Managing Director, Luxembourg prises and Handicraft Development Authority Trade and Companies Register xii WHAT IS A ONE-STOP SHOP? One of the problems in discussing one-stop shops their owners. In some countries, registration is is that everyone seems to have a different idea of the responsibility of the courts; in others, it is an what one is. There have been one-stop shops administrative function handled by a government since at least the 1920s,1 mostly in the retail trade, ministry, semi-autonomous agency, or chamber epitomized by the development of supermarkets of commerce. Registration may be a function of a and, in recent years, internet sales outlets. By the central institution or may be effected at a local 1980s,2 governments had adopted the term as level. In all these areas, there is change when it part of an effort to improve service to members of comes to implementing a one-stop shop. the public, who had undergone a metamorphosis from simply users or beneficiaries of official ser- It is hardly surprising therefore that there are vices to being customers who had a right to ex- many different views about what constitutes, or pect the same standard of service that they might should constitute, a one-stop shop. My defini- expect from a retailer. tions will be familiar to some readers. Others will have their own ideas. It is not a matter of what is This book is about one particular type of service, right or wrong. What matters is whether a par- namely, business registration, and the various ticular solution works for a particular situation. one-stop shops that exist now and might exist in the future. For present purposes, a one-stop shop is assumed to be: If there is confusion about what constitutes a one- stop shop, there are also a variety of views about an organization that business registration. In some countries all busi- nesses have to be registered, in others, only those (a) receives documents for business registration companies with a legal existence separate from and 1 Martin, G. (b) also carries out at least one other function re- 2 Sader, F. (2000). lated to business start-up 1 In most cases, the other function is likely to be The most likely of these will be tax registration. tax registration, though there are also examples of Registration for tax generally requires the same one-stop shops dealing with registration for so- basic information as will normally be required for cial security and statistical purposes and arrang- business registration. There is therefore a good ing notices in an Official Gazette. case for using a single form, as happens in Finland.5 In other countries, the business registry enters information into its own database and Anomalies passes this on to the tax authority in electronic Any definition of a one-stop shop is going to form, as in Bulgaria. result in some contentious exclusions. Business registration in New York,3 while efficient, is a stand-alone function and an applicant will need Types of one-stop shop to deal separately with other authorities. One door It has not been practical within the limited scope In seeking to establish a one-stop shop, first in- of this review to consider different practices at stincts are often to bring together representatives the subnational level. This affects not only the of different government agencies into one place. United States, but also countries such as This is often described as the "one door" or "one Vietnam, where effective one-stop shops have roof " approach. been established in several of the 64 provinces.4 It is, however, worth noting that most countries This may be relatively straightforward to imple- that have previously dealt with registration on a ment, subject to suitable accommodation. It local basis are moving toward an integrated na- would not normally require any change in legisla- tional registration system, which can still involve tion or ministerial responsibilities. What it would delivery of services at a local level. Vietnam is involve is effective cooperation between different one such country. ministries and agencies. Let us assume that the one-stop shop is hosted by the commercial registry and will also house a rep- What services might a one-stop resentative of the tax office. The official from the shop provide? tax office will be located away from his or her line The first, and fairly obvious, service that a busi- management and administrative support. ness registration one-stop shop might provide is that of business registration. There may be some This raises the question of how much authority organizations that call themselves one-stop shops such a person should have. Will the tax represen- that only provide business registration. This may tative at the one-stop shop be allowed to process be justified if the registration process previously forms and complete tax registrations? Will they involved a number of separate visits to the office. have a computer workstation linked into the tax However, the one-stop shops considered here will system? They may in practice do little more than have at least one other function. pass documents on to headquarters for others to process and return. If so, are they performing a function that requires a specialist tax official? 3 Doing Business reports for each country on the basis that registration takes place in the country's most populous city. There may well be examples of one-stop shops in other states. 5 See Doing Business and www.prh.fi/en/kaupparekisteri/ 4 Doing Business only covers Ho Chi Minh City. rekisterointipalvelut.html. 2 Of course, it will be desirable that the person at One window the one-stop shop is experienced so that they can advise applicants of any problems with their ap- If, on going through the "one door," the customer plication. But will the management of the tax of- finds not several counters, but just one (or sev- fice be willing to release one or more of their best eral, of which he can go to any one), this is a dif- people--and others, also with appropriate expe- ferent type of organization: a "one window" or rience, to deputize in their absence--if most of "one table" approach. the time they are doing little more than forward- ing papers to headquarters? Experienced people The advantage of a one-window approach is that are in demand at headquarters. the official is authorized to accept documents for government bodies other than the one that em- ploys him or her. Documents may be sent by A one-door, one-stop shop hand or courier to other offices for action, or this in Angola may be done electronically. It follows that the ap- plicant will normally only need to deal with one person and will not need to go to the tax office or In Angola, the one-stop shop is the Guiché Único das Empresas at the commercial registry, which is meet with a tax official. affiliated with the Ministry of Justice. The commer- cial registry onfirms availability of the proposed company name. After the initial capital has been A one-window, one-stop shop paid into a bank account, clerks and judges at the Guiché Único will check the company documents, in Romania which may either use a standard form or be pre- pared by external lawyers. The applicant can then The National Trade Register Office, under the aus- obtain a tax identification number from the Direc- pices of the Ministry of Justice, operates a one-stop cao National dos Impostos and submit the dossier shop (Biroul Unic) for business registration. After to the notary public, also at the Guiché Único. The obtaining approval of the company name, deposit- notary will have a meeting with the applicant to re- ing the initial capital at a bank, and obtaining a view the documentation, following which copies fiscal record for the company's associates and are made for representatives of Impresa National, legal representatives, the applicant applies for reg- the National Institute of Statistics, the tax office of istration. The Biroul Unic liaises directly with the the Ministry of Finance, the Social Security Institute Ministry of Public Finances, and the registration and the Ministry of Public Administration, Employ- certificate, which will be issued within 3 days, in- ment, and Social Security, all of which have repre- cludes a tax registration code. The Biroul Unic also sentatives at the Guiché Único. arranges publication in the Official Gazette and registration for statistics and social security. The company may also lodge an application for VAT registration. There are in fact few instances of the one-door model. The example from Angola shows a situa- The documents submitted to the Trade Registry may be in electronic format with an electronic tion where several agencies are co-located, though signature. the applicant will still need to deal separately with the commercial registry official dealing with name approvals, the clerks checking documents, The example from Romania shows effective coor- the tax official, and the notary public. dination between the registry and the tax office, the publications office, and the statistics and social Within the Angola one-door arrangement, there security departments. is, however, an example of liaison between agen- cies, in what would otherwise be regarded as a There are exceptions to the generally accepted one-window approach. principle that the commercial registry should 3 host, or at least be part of, the one-stop shop. In agency, as the functions of the offices concerned Benin, there is a Centre des Formalités des Entre- have effectively been integrated, usually using a prises (CFE), broadly following the French model, common database. which deals with the tax declaration, import license, tradesman's card, registration with the In the Russian Federation, since 2002, it has been Ministry of Trade, and affiliation with the Social the tax administration itself that is responsible for Security Office, but, before applying to the CRE, the state registration of legal entities, thus avoid- the company must first be registered with the ing the need for separate registers with similar Company Registry. information.6 Since then, the Kyrgyz Republic, Georgia, and Azerbaijan have adopted a similar Establishing a one-window, one-stop shop in- approach. volves detailed coordination of activities between agencies. Each agency involved will need to mod- Albania established a National Registration ify its procedures in order to ensure an effective Center, which became operational in September flow of documents or information. There may be 2007. The NRC provides a single-window ser- circumstances where this will require a change in vice for business registration with simultaneous legislation. The officer at the one-stop shop must registration for tax, social insurance, employ- be fully authorized--and trained--to receive ment, and statistics purposes.7 documents for other agencies. Online registration facilities One more stop? With advances in technology and increasing in- ternet penetration, many registries are making In some cases, such as the Centres des Formalités registration services available via a web site. In the des Entreprises (CFE) established in France and case of Singapore, all business registrations must several African countries, a new organization has be effected online. In other cases, online registra- been established to coordinate registration func- tion is an option. tions. This avoids the need for major restructur- ing of the bodies with primary responsibility for An online portal may provide a totally integrated registration. In terms of administrative activity, facility, as is the case in Canada, or may still re- this may be regarded as "one more stop," as it quire a separate registration for tax purposes. adds a new function without any corresponding reduction elsewhere. This means that it will in- volve an increase in the cost of the administrative Investment promotion agencies functions and will only reduce timeframes to the Governments throughout the world wish to en- extent that it allows functions to take place back- courage investment, particularly from overseas, to-back or enables the one-stop shop to cajole and to demonstrate that an investor starting up a other agencies to speed up their operations. On major new business in their territory will not be the other hand, from the applicant's viewpoint, hindered by bureaucratic obstacles. There are there is still the advantage of being able to deal some 383 agencies responsible for promoting in- with a single organization. vestment at the national or subnational level.8 These have been a particular target for the one- stop shop treatment. Enabling the investor to Integrated functions 6 Huskey, E. (2005). In some cases, it is not necessary for an official at 7 Millennium Challenge Corporation (2008). a one-stop shop to pass information to a separate 8 www.fdi.net, 25 March 2009. 4 deal with a single organization rather than nu- single windows, or single portals. While an in- merous different government bodies has obvious vestment agency will normally facilitate registra- appeal, but it has in practice been rare for one tion by major investors, some provide a service to government agency to be given all the authorities a wider range of entrepreneurs. In Bahrain, Egypt, necessary to grant the various licenses, permits, Morocco, and Gabon, the investment agency is approvals, and clearances.9 regarded as a one-stop shop for the establishment of any company.10 The types of one-stop shop investment agencies are varied, some simply providing advice, others offering a range of services and representing the 10 Doing Business database. See also Bahrain Investors investor in dealings with other parts of govern- Centre (www.moic.gov.bh/MoIC/En/More/Resources/ ment. They may in practice be single doors, BahrainInvestorsCenter), General Authority for Investment and Free Zones (GAFI), Egypt (www.gafinet.org), Centre Régional d'Investissement, Casablanca (www.casainvest.ma), Agence de Promotion des Investissements Privés (APIP), Gabon 9 Sader, F. (2000). (www.invest-gabon.com). 5 ORGANIZATIONS RESPONSIBLE FOR THE ONE-STOP SHOP Most one-stop shops are either separate agencies, difficult and contentious, as has been demon- which may or may not be attached to a ministry, strated recently with the delayed implementation or a discrete business unit within a ministry. in Bulgaria. Where there is an association with a ministry, this is usually the ministry responsible for trade or Courts are generally portrayed as ill suited to economy. However, Angola, Belarus, Estonia, carry out basic administrative functions such as Kazakhstan, the Kyrgyz Republic, and Romania business registration and it is not surprising that have one-stop shops attached to the Ministry of few have adopted a one-stop shop approach. Justice, while in Azerbaijan, Georgia, Iceland, There are however notable exceptions. Three and the Russian Federation they are within the central European neighbors--Slovakia, Slovenia, remit of the Ministry of Finance. In Switzerland and Hungary--have made the court system and Uzbekistan registration is the responsibility work effectively. of local authorities. Notaries and other intermediaries In the past, in many civil law countries, notaries Courts have coordinated company start-up procedures, effectively compensating for the failure of vari- Taking registration out of the courts has long ous government offices to work together. The been promoted by the World Bank as an impor- notary was, as far as the entrepreneur was con- tant step in improving the service provided to cerned, the one-stop shop. Estonia still describes business. Italy, Macedonia, Chile, Honduras, and the notary in this way in its latest report to the Nicaragua are among the countries that have European Commission. made the transition,11 but such a change is often As procedures become more straightforward, 11 Djankov, S. (2008). questions inevitably arise about the need for 6 Executive Agencies, Government Registration at a commercial court Commissions, and Regulatory in Hungary Authorities Application for registration at the commercial court The concept of executive agencies was developed may be through the presentation of paper docu- in the United Kingdom in the 1980s. The UK ments or by completing a standard template Companies Registration Office, renamed Com- online. panies House, became one of the first such agen- Companies must complete an application form and cies in 1988. By the mid-1990s the agency model file certain documents specified under the law. had become the principal organizational type for Other corporate documents are kept by the attorney public service delivery in the UK.12 handling the incorporation. In addition to dealing with the incorporation of The aim of executive agencies is to enable exec- the company, the court registers it with the State utive functions within government to be carried Taxation Office (for VAT and income tax purposes) and with the Statistical Office through an online out by a well-defined business unit with a clear system. focus on delivering specified outputs within a Incorporation using paper documents takes framework of accountability to Ministers. This 8 working days. Application can also be made is often presented as persuading civil service online, reducing the timeframe to 2 to 3 days. organizations to behave more like private sector companies. The type of work undertaken by company registries in common-law countries notaries in the process. Several countries, includ- lends itself to this approach and agency status ing Colombia, Portugal, and Estonia, have con- is now a feature of arrangements in many cluded that, for straightforward incorporations, a jurisdictions. notary is not necessary. In Belgium, Italy, and Spain notaries have be- In a few countries regulatory bodies have be- come key intermediaries for electronic filing. come involved in maintaining the registers. The Australian Securities and Investment Commis- In the United Kingdom and Ireland, company sion (ASIC) now deals with all types of com- incorporation agents have for many years been pany registrations13 as does the Securities and active as "one-stop shop" intermediaries and are Exchange Commission in the Philippines. finding a new role in connection with electronic Singapore has allocated the responsibility to filing, but there is no obligation to use their ASIC. services. The emphasis that these organizations have Chambers of Commerce placed on "customers" and customer service is now a feature of effective business registries The one-stop shops in Colombia, Italy and the worldwide, regardless of the particular organiza- Netherlands are administered by chambers of tional form. commerce. In Luxembourg, management of the Trade and Companies Register is the responsibility of an "Economic Interest Group," a private entity, the members (shareholders) of which are the 12 Cabinet Office (UK) (2006). 13 Businesses that are not companies (e.g., sole traders and Luxembourg State, the Chamber of Commerce, partnerships) are required to register their business name and the Chamber of Crafts. with the appropriate state/territory authority. 7 DOES IT MAKE ANY DIFFERENCE? Any attempt to categorise one-stop shops is going The table below allocates the 183 jurisdictions to present problems. Every one is different. Even covered by Doing Business 2010 to this type of so, it seems likely that the type of organisation classification. 67 countries appear to meet the would have some bearing on its performance, so criteria for their company start-up facility to be even an arbitrary classification may be justified. regarded as a one-stop shop. Comparative performance of the types of one-stop shop Average No. of No. of Ranking (out countries procedures No. of days of 183) A Commercial Registry with other bodies on the same site 7 7.0 24 99 B Commercial Registry which liaises with other bodies 20 6.7 19 61 C One-Stop Shop (not a Commercial Registry) which liaises 13 6.3 27 98 with other bodies D Integrated registration function 12 5.8 13 49 E Online registration facility 15 5.2 14 48 All countries with one-stop shops 67 6.1 19 67 F Other countries 116 9.3 46 106 Source: Doing Business database. 8 This table produces some results which seem to Despite these variations, in overall terms the go against perceived wisdom. It appears that lo- countries with one-stop shops do perform sig- cating other agencies on the same site as the nificantly better than those without. Commercial Registry does not significantly affect performance and using an organisation other Individual country data is at page 77. than the Commercial Registry to run the one- stop shop (arguably amounting to `one more stop') actually appears to get better results than One-stop shop initiatives in Europe when the Commercial Registry operates the one- stop shop itself. European company law Most company law promulgated by the Council The `same site' instances include both Saudi of the European Communities is in the form of Arabia (4 procedures, 5 days) and Angola (8 directives. While the directives impose require- procedures, 68 days). Several have high costs ments on Member States, their provisions need and/or minimum capital requirements, which to be brought into force through legislation in account for the low overall ranking. The `one national parliaments. There is thus some flexi- window' approach at B similarly masks great bility in the manner in which they are imple- variety in performance (Mauritius with 5 pro- mented. Only in the case of legislation which cedures and 6 days, Namibia with 10 proce- needs to be applied with total consistency dures and 66 days), so it is probably not sensible throughout the EU has company law been to read too much into the differences between promulgated in the form of regulations, which A and B. have direct effect. This is the case with provi- sions relating to European Economic Interest That introducing one more stop should pro- Groupings, European Companies, and European vide better performance is something of a sur- Cooperative Companies. prise, but there are reasons for this. In almost all the cases responsibility has been given to a The First Directive on Company Law14 requires new organisation or go-ahead agency which every Member State to maintain a file in a central has been effective in persuading others in- register or companies' register for each registered volved to improve their processing. There are company. Since January 2007 it has been a re- several instances where it was obviously con- quirement that applicants must be able to deliver sidered impractical to remove registration from the relevant statutory documents electronically.15 the courts and in other cases it was not felt that the Companies Registry itself could dem- One-stop shops onstrate the leadership needed to drive a re- form process. When the Lisbon Strategy for Growth and Jobs16 was relaunched in 2005, it included a specific re- quirement that Member States provide one-stop Integrating the functions and, more particularly, shops for company registration. providing an online service, show results in better performance. In fact, the effect would be greater but for a few outriders. Incorporation in Lithuania 14 Article 3, First Council Directive 68/151/EEC of and Luxembourg still takes 26 days despite hav- 9 March 1968. ing integrated systems. Even with online registra- 15 Article 3 of the First Directive as amended by Directive 2003/58/EC of 15 July 2003. tion, it takes 52 days in the Philippines and 16 The strategy to make Europe more dynamic and ompeti- 47 days in Spain. tive dates from the summit in Lisbon in March 2000. 9 By the end of 2008, 18 of the 27 Member States European objectives had established one-stop shops and the average time to set up a company in the EU had been "The Member States should establish, by 2007, a reduced to between 8 and 9.5 days, more than one-stop-shop, or arrangements with equivalent ef- the one week envisaged at the March 2006 meet- fect, for setting up a company in a quick and simple ing but still a substantial improvement compared way. Member States should take adequate mea- sures to considerably reduce the average time for to an average of 24 days in 2002. setting up a business, especially an SME, with the objective of being able to do this within one week In a separate initiative, the need for specific au- anywhere in the EU by the end of 2007. Start-up thorizations for various types of service compa- fees should be as low as possible and the recruit- nies is addressed in the Services Directive.18 This ment of a first employee should not involve more requires that businesses be able to complete all than one public administration point." formalities on line and through a single point of Brussels European Council, 23/24 March 2006, Presidency contact. Conclusions17 2008 Country assessment of compliance with the objectives set by the 2006 Spring Council conclusions for start-up procedures19 Days required to start Cost to start up a Name up a company* company* Austria WKO Gründerservice 4­19 385 Belgium Guichet agrée d'entreprises 1.5 517 Bulgaria Registry Agency 3­7 82 Cyprus OSS at Ministry of Commerce, Industry, and Tourism 7 265 Czech Republic Central Registration Offices (CRO) 30­40 345 Denmark Danish Commerce and Companies Agency (DCCA) 3 0 Estonia Notaries 2 185 Finland Trade Register 8 330 France Centres de formalités des entreprises (CFE) 4 84 Germany Starter-Center 6.5 783 Greece Directorate of Development at the prefectures (KYE) 15 1,101 Hungary County Courts 2­3 392 (Continued) 17 European Council (2006). 18 Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market. 19 There are some differences in methodology between the European Commission and Doing Business. Figures in this table may therefore differ from those quoted in the annexes. 10 Days required to start Cost to start up a Name up a company* company* Ireland Companies Registration Office (CRO) 2­5 50 Italy "Sportello unico" 4 2,673 Latvia Register of Enterprises 4 205 Lithuania Centre of Registers 6 130­289 Luxembourg Guichet unique d'entreprises 14 1,000 Malta Registrar of Companies--Malta Financial Services 7­10 450 Authority (MFSA) Netherlands Chambers of Commerce 3 1,040 Poland Tax Offices 30 735 Portugal Enterprise Formality Centres (CFE) 1 300­360 Romania Counties Trade Registers 3 100­125 Slovakia Trade license offices, companies register 14 330 Slovenia VEM 3 0 Spain Ventanilla Única Empresarial (VUE) + PAIT for Ltd. 17.5 617 Sweden Foretagsregistrering 16 222 United Kingdom Companies House and Business Link 1 54 Average 8 to 9,5 days 463 *All figures on cost and time based on information provided by Member States, which has not been fully validated. Calculation methods as described in Commission Staff Working Document SEC (2007) 129. Source: European Commission. Consultation and cooperation the European Commerce Registers Forum (ECRF) in Europe;22 and Apart from formal constraints such as those im- posed by EU or OHADA20 law, registries through- the Corporate Registers Forum (CRF), ini- out the world regularly participate in consultations tially covering Australasia and the Pacific, but aimed at identifying best relevant practices. The now extending to many other countries.23 three main international groups are The geographical distinctions are in practice the International Association of Commercial becoming blurred, as there is increasing cross- Administrators (IACA), primarily serving fertilization between the three groups. North America;21 20 Organisation for the Harmonization of Business Law in International dialogue is becoming increasingly Africa, in French L'Organization pour l'Harmonisation relevant as registries share not just experience en Afrique du Droit des Affaires, established by a Treaty but also data. The European Business Register dated 1 November 1997. Other signatories are Benin, Cameroon, Central African Republic, Comoros, Congo, Côte d'Ivoire, Gabon, Guinea, Guinea Bissau, Equatorial Guinea, Mali, Niger, Senegal, Chad, and Togo. 22 www.ecrforum.org. 21 www.iaca.org. 23 www.corporateregistersforum.org. 11 network24 now embraces the business registers Saudi Arabia of 20 countries, making it possible to obtain comparable official company information from Serbia the countries concerned formatted in any of the national languages. It offers "20-million Taiwan, China European companies at your fingertips." Togo There has also been a recognition that, because companies frequently operate across national The impact in the Central African Republic and boundaries, there is a need for registries to ac- Poland is disappointing. In each case, while the tively share information. The EBR, together with number of procedures has been reduced, it is ac- chambers of commerce, ICT companies, univer- tually taking longer than previously to complete sities, and SMEs, has, with the support of the the start-up process. This indicates that there European Commission, been exploring the po- has been little if any change in the underlying tential for using innovative technology to achieve procedures. this aim.25 Doing Business also now covers two more econo- An update mies, Cyprus and Kosovo, bringing the total to 183. The report prepared earlier this year was largely based on information published in Doing Busi- The rampant bureaucracy in Kosovo is especially ness 2009. This has now been reviewed in the disturbing. The business registry was established light of the data from Doing Business 2010. in 2002 with very straightforward procedures and a commitment to sharing data with other There are now additional one-stop shops in: agencies. It was commended in 2005 as an ex- ample of good practice in respect of business Afghanistan registration.26 At that time, registering a business Central African Republic took 0.7 days. Now the registration alone takes 10 days and the overall time for business start-up Jordan is 52 days. Poland David Walke Rwanda October 2009 24 www.ebr.org. 25 Business Register Interoperability Throughout Europe 26 Liliana de Sa, Business Registration Start-Up: A Concept Note, (BRITE) project, www.briteproject.net. IFC & the World Bank, October 27, 2005. 12 CASE STUDIES: AZERBAIJAN Azerbaijan concluded that one business register was Motivation for reform enough and that the tax authority should maintain it. Azerbaijan needed to diversify in order to reduce its reliance on oil and gas and to encourage the develop- Before the one-stop shop ment of private-sector activity in other areas. Starting a business in Azerbaijan used to involve The initiative for reform came from the top. In separate registration with the Ministry of Taxes, 2006 President Ilham Aliyev condemned the the Ministry of Justice, the Ministry of Labor and situation detailed in the latest Doing Business Social Protection of Population, the State Social assessment as "unacceptable." There followed a Protection Fund, and the State Statistics Com- Presidential Decree27 with instructions to the mittee. In 2004 the entire process involved 15 relevant state authorities. This included improv- procedures and took 106 days. The complexity of ing the business registration system and reducing the requirements, involving 13 separate pieces of the number of procedures required for starting a legislation, meant that registration of companies business. was invariably handled by lawyers. Options and consultation There have since been various reforms that have improved the situation, but in 2007 registration Strategic guidelines were prepared by the still involved five different agencies, 13 proce- Ministry of Economic Development and a work- dures, 33 documents, and a timeframe of about a ing group chaired by the Prime Minister. This month. The greatest change came at the begin- 27 Presidential Decree 567 of 30 April 2007, "On Some Mea- ning of 2008 with the implementation of one- sures Regarding the Development of Entrepreneurship in stop shops for business registration. Azerbaijan Republic." 13 working group also included the Ministry of Project planning and management Taxes, the Ministry of Justice, the Ministry of Labor and State Social Protection of Population, While the overall timetable stretched over a pe- the Social Protection Fund, and the State Statis- riod of two years, the early part of the period was tics Committee. devoted to consultation, research, and consider- ation of options. Once the final decisions were The Ministry of Economic Development con- made on the solution, implementation was ducted interviews with entrepreneurs and held dis- achieved within 60 days. cussions with the various government agencies about their respective regulatory roles. They also A budget of US$ 5 million was allocated for consulted the World Bank and the IFC. the reforms, including construction of new regis- tration offices throughout the country and pur- The working group set both short- and long-term chase of necessary facilities. goals for achieving improvements in the business environment. Areas requiring reforms to be imple- mented within 2 years included business registra- The law tion, licensing and permits, tax filing and property The working group was required to propose any registration, access to credit, and labor and investor changes to legislation that would be necessary in protection. Longer-term, there would be reforms order to implement the one-stop shop regime. relating to cross-border trade, contract enforce- The tax ministry took the lead in this process. ment, and procedures for closing a business. The group considered 13 pieces of legislation that had a bearing on the registration process and The group looked for examples of best practice in concluded that only a few amendments were nec- various parts of the world. At an early stage they essary. There would be benefits from having a concluded that a one-stop shop solution was ap- single Law on State Registration, meaning that propriate and looked at how one-stop shops had entrepreneurs would no longer need to consider been implemented in Europe, Asia, and the Com- a range of laws and regulations in order to deter- monwealth of Independent States. With substan- mine which were relevant. The group's recom- tial support and technical assistance from the IFC, mendations were accepted by the government, the review included site visits to Latvia and Georgia, submitted to parliament for approval, and signed then ranked as top reformers. into law by the President. The following legal acts were amended: In order to implement one-stop shops it was nec- essary to determine which organization should Civil Code of the Republic of Azerbaijan have administrative responsibility. While each of the ministries had a regional network, the Minis- The Law on Entrepreneurship Activities try of Taxes had recently undergone a moderniza- tion program, including the establishment of a The Law on Anti-Monopoly computer network covering its regional offices, making it the preferred candidate for the role.28,29 The Law on Official Statistics It was, however, fundamental to the project that the cooperation of other state organizations be The Law on Intellectual Property and Other guaranteed. Related Rights 28 A Presidential Decree of 25 October 2007 appointed the The Law on Seed Growing Ministry of Taxes as a State Registration Authority. 29 It was also consistent with the approach adopted in the Russian Federation and Georgia. The Law on Social Insurance 14 Azerbaijan creates a one-stop shop in 60 days30 Identify the responsible persons 1 day Prepare changes and amendments to 13 different pieces of legislation 14 days Determine guidelines for setting up the one-stop shop 14 days Identify technical tasks for automated information system 8 days Identify and test new registration software 8 days Prepare and equip work places and communications 50 days Recruit staff 15 days Define the data exchange format among the one-stop shop agencies 15 days Design and print application forms 10 days Design a video commercial 4 days TV advertising 10 days Design one-stop shop on the website of the 10 days Ministry of Taxes Publications 1 day 60 days Source: Author based on data provided by the Ministry of Taxes appointed by as a State Registration Authority of Azerbaijan. The Law on Traffic A single number The Law on Individual Registration for State It was agreed that the taxpayer number should be Social Insurance System used as the single form of identification, including as a unique identifier for legal entities, obviating The Law on State Registration of Legal Enti- the need for a separate registration number. ties and State Registry In order to identify individuals involved in the The Law on Veterinary Services management of a company, the personal identifi- cation number (PIN), which is issued by the The Law on Precious Metals and Gems Ministry of the Interior, would be used in the business register. A single form Computer systems Since the state bodies involved all required similar information, it was possible to design a consoli- The Ministry of Taxes had established a consoli- dated application form. The form includes all the dated taxpayer database system (AVIS) in 2006. information required by the various agencies for This provided for online tax filing, taxpayers' in- registration of a new legal entity. The form may formation, and compliance procedures and had also be used to notify changes by completing just the potential to become the basis for a unified those parts relevant to the change in question. business registry. The overall IT system was de- veloped with the assistance of Turkish experts. 30 Bagaudinova et al. (2008). Later, Azerbaijani experts took the lead, and for 15 the past several years the system has been oper- By setting up a one-stop shop, it has halved the ated by a local private IT company. time, cost, and number of steps required to start a business. As a result, business registrations in- The availability of this system was one of the fac- creased by 40 percent in the first six months of tors influencing the decision that the Ministry of its operation31 and 32,000 businesses were regis- Taxes should host the new one-stop shops. tered.32 The number of commercial legal entities registered with the taxation authorities during 2008 was 6,471, an increase of 30 percent over What it looks like now 2007. In total, the number of both natural and Key features of the new arrangements are: legal entities was 44,272.33 a single form satisfies the requirements of The entities in the capital, Baku, account for several agencies; 63 percent of the businesses registered using the one-stop shop system. a simple 2-page template is available for the company charter; On the basis of Doing Business criteria, as reflected in the chart above, it now takes 8 days to com- the fees structure is simple and transparent; plete the various formalities required before start- ing a business. This compares with 106 days in fees are paid at the bank, with no payments 2004. Registration at the one-stop shop at the to government officials; Ministry of Taxes is now completed in 3 days. apart from notarization, the only direct con- Limiting the number of actions between entre- tact with officials is at the one-stop shop at preneurs and officials could be expected to result the regional office of the Ministry of Taxes; in a reduction in the extent of nonofficial pay- it will not normally be necessary to use a law- ments. There has as yet been no improvement in yer or other intermediary except to notarize Azerbaijan's rating in the Corruption Perceptions the company charter; Index.34 With a score of only 1.9, Azerbaijan ranks 158th out of 180 countries.35 This may the taxpayer number is used as a unique iden- tification number for all purposes; 31 http://en.apa.az/news.php?id=88387. 32 Fazil Mammadov, Tax Minister, http://en.apa.az/news. state registration with the tax ministry should php?id=88545. be completed within 3 days and the entire 33 Zaur Fatizada, Head of Department at the Ministry of Taxes dealing with registration of businesses, cited by start-up process in 8 days; and UNDP, www.un-az.org/undp/bulnews67/ec13.php. 34 In fact, a drop of 0.2%, which is considered within the taxpayer registration is conducted as part of margin of statistical errors Miklos Marschall, Regional Director of Transparency International, http://en.apa.az/ business registration. news.php?id=89160. 35 http://www.transparency.org/news_room/in_focus/2008/ cpi2008/cpi_2008_table. The Transparency International What difference did it make? CPI measures the perceived levels of public-sector corrup- tion in a given country and is a composite index, drawing Azerbaijan is the Doing Business 2009 top re- on different expert and business surveys. The 2008 CPI scores 180 countries (the same number as the 2007 CPI) former, with the most regulatory reforms, having on a scale from zero (highly corrupt) to ten (highly clean). jumped to 33 on the list from 96 last year. For Denmark, New Zealand, and Sweden share the highest score at 9.3, followed immediately by Singapore at 9.2. Starting a Business, Azerbaijan ranked 13th (64th Bringing up the rear is Somalia at 1.0, slightly trailing Iraq in 2008). and Myanmar at 1.3 and Haiti at 1.4. 16 Azerbaijan--Procedure for registering a company Before the One-stop Shop With the One-stop Shop Obtain company's legal address Obtain company's legal address from proposed landlord from proposed landlord (1 day) (1 day) Notary notarizes Notary notarizes founding documents etc founding documents etc (1 day) (1 day) Deposit charter capital; Deposit charter capital; pay state registration fee pay state registration fee (1 day) (1 day) File documents with State registration Ministry of Justice with tax authorities (5 days) (3 days) Obtain company Obtain company seal seal (1 day) (1 day) Register with State Statistics Committee (5 days) 34 days Register with local 8 days tax inspectorate (5 days) Register with Social Register with Protection Fund Employment Centres (5 days) (2 days) Register for VAT (depending on turnover) (up to 7 days) Open a permanent Open a permanent bank account bank account (1 day) (1 day) This should be done Return notification form to Return notification by the bank but in tax office and State Social to tax authorities practice applicants Protection Fund do it themselves Obtain workbooks from Ministry of Labor and Social Protection START BUSINESS START BUSINESS 17 Azerbaijan--Documents required for registration Before the One-Stop Shop Now State Social Protection Local tax inspectorate Ministry of Labor and Ministry of Justice Social Protection One-Stop Shop State Statistics Committee Bank Bank Fund Standard application form 1 1 1 1 1 1 1 Receipt for state registration fee 1 1 Confirmation of payment of charter capital 1 n Copy of founders' IDs 1 1 n Founders' application to registration authority 1 a Statutes (charter) signed by the founders 2 1 n n n n Copy of the charter 1 1 1 1 1 Draft of seal and stamp 1 n n n n Copy of certificate of state registration 1 1 1 1 1 n n n Copy of extract from Register of Business Entities 1 1 1 1 Decision of founder/resolution of general meeting 1 1 1 1 on appointment of manager n n n Copy of certificate on statistics registration 1 1 1 n n Confirmation of legal address 1 1 1 b c Information on founder 1 1 Copy of manager's ID 1 1 1 n Copy of Tax ID (TIN) 1 1 n n Stamp and signature sample card 1 1 Authorization from tax authorities ("notification 1 1 duplicate") Authorization from State Social protection Fund 1 ("notification duplicate") Reference from Employment Center confirming 1 number of employees a Draft statutes. b Form signed by company manager and sealed with a stamp; for a company, this also includes notarized copy of the statutes, certificate of state registration, statistics registration, and TIN. c For a company only--notarized copy of certificate of registration (extract from state registry) and charter. n Needs to be notarized. Source: Author 18 Azerbaijan--Impact of business registration reforms 140 18 No. of procedures/cost (% GNIpc) 16 120 14 100 Days for start-up 12 80 10 60 8 6 40 4 20 2 0 0 2004 2005 2006 2007 2008 2009 Days required for start-up No. of procedures Cost (% GNIpc) Source: Doing Business database however be the result of a lapse in time between provide access to complete and exhaustive implementation of reforms and their perceived information about registered businesses. effect. The Ministry of Taxes is developing proposals aimed at improving procedures and overcoming What happens next problems with the legislation, including the in- The Minister of Taxes has made it clear that he troduction of electronic signatures. It is negotiat- sees the introduction of one-stop shops as a start- ing with the Ministry of Labor and Social ing point for e-government and that the reforms Protection and the State Social Protection Fund will continue. on various issues including the issue of a quan- tity of employees' workbooks to entrepreneurs as The IFC has made several suggestions to the Tax part of the business registration process. This is Ministry. These include agreed upon in principle, though there are some technical issues still to be resolved. introducing the "silence is consent" principle in the Law on State Registration of Legal The government is keen to stimulate non­oil Entities and State Registry; development and the growth in the number of registrations is expected to continue throughout simplifying the pre-registration procedure for 2009.36 legal entities by reducing the number of required documents as well as removing Lessons learned the requirement for notarization of some documents; While everybody knew that there was a problem with business registration, objective data were introducing the electronic registration sys- needed to highlight this in a way to prompt the tem; and political initiative for a solution. Doing Business reports provided this. providing access to the state register database via the Ministry of Taxes home page so as 36 www.abc.az/eng/news_22_01_2009_31486.html. 19 The intervention of the president was crucial in processes were necessary and those that were ensuring that all parties concerned worked to- could usually be simplified. gether and with an appropriate sense of urgency. An existing computer system could be modified There was relevant experience from other coun- to support the proposed new arrangements rather tries, particularly as regards the use of a single than investing in a totally new system. register for use by all branches of government. There was also advisory services and technical Despite the urgency, time was needed for consul- support available from IFC. tation, research, and consideration of options. Once there was agreement on all key issues, im- A critical review of the existing procedures was plementation could be achieved in a very short needed to reach an optimal solution. Not all time. 20 CASE STUDIES: BURKINA FASO Burkina Faso learned from the experience of a less Uniques brought together representatives of the than successful one-stop shop to become one of the trade ministry, the police, the finance ministry, Doing Business top reformers and others in one place in the country's first one- stop shop, but it was not an arrangement that was fully supported by all those concerned. Before the (latest) one-stop shop Upper Volta, as it then was,37 achieved indepen- The greffes38 at the Tribunal de Grand Instance, dence in 1960 after some 60 years of various forms who had responsibility for maintaining the statu- of French colonial administration. There followed tory register, also had other functions, including a succession of governments, mostly military and presenting cases in court. Restrictions on signing with communist leanings. The country was, and authority imposed by the law meant that all cases still is, extremely poor, land-locked, predominantly needed to be passed to the President of the Tribu- agricultural, with cotton as the major export. nal, so requiring one of the greffes to attend at the one-stop shop simply to accept applications and In 1991 Burkina Faso was emerging from the bring them to court was seen as a poor use of re- constraints of a centralized economy. The new sources. There was also concern about the need government recognized the need to actively sup- to carry money between the offices. From a career port private-sector development. It did so in part development viewpoint, the task was seen as lim- by establishing a Center for Enterprise Promotion iting the experience of the greffe concerned and in the Ministry of Commerce and Trade, with a thus his potential for advancement. remit to centralize, simplify, and rationalize func- tions and to speed up the formalities associated There were similar problems with the Ministry of with trade and investment. A Centre des Guichets Finance. The official attending the one-stop shop 37 The name Burkina Faso, "the country of honorable 38 The French greffes are court clerks who act as company people," was adopted in 1984. registrars, among other court functions. 21 might be able to provide some advice, but all arose from the need to persuade officials to make processing functions were handled at the relevant things happen within a reasonable timeframe. tax office. If he was unable to attend the office, The need to grease the wheels of the registration someone else might be sent instead. Otherwise, machine led to the growing use of intermediaries applicants would be told to go to the tax office who knew how this could best be done, effec- themselves. tively adding a further layer of complexity to an already cumbersome system. Each of the departments continued with its own procedures and its own forms. While anyone estab- The Chamber of Commerce, through the Maison lishing a new business could go to the one-stop de l'Entreprise, developed the solution to the shop in order to complete the necessary formalities, problem but implementation required a govern- they could still deal directly with each of the ment initiative. In fact, the government was re- departments and many found it more effective to ceptive to ideas for dealing with what was do so. The situation drifted for several years. One recognized as a serious problem. result is a total lack of consistency between the various registers. Options and consultation Following a World Bank seminar on how to pro- mote private-sector development, the govern- Annual meetings, chaired by the Prime Minister, ment authorized the creation of a Maison de were established between the government and the l'Entreprise at the Chamber of Commerce to pro- private sector, represented by the Chamber of vide a range of business development services for Commerce. At one such meeting the government small- and medium-sized businesses. The Maison mandated the Chamber of Commerce to develop de l'Entreprise was established in 2002 with a brief proposals for reform of the registration process. to simplify formalities. Some, but not all, of the agencies concerned were located within the A seminar in 2005 to consider the results of the Maison de l'Entreprise. latest Doing Business survey resulted in accelerat- ing the reform process. According to Doing Business, in 2005 the formal- ities associated with starting a business still in- A delegation, including representatives of the volved 12 procedures and took 40 days. The Chamber of Commerce and the ministries con- figure had been as high as 135 days. cerned, visited Bordeaux to view the Centre de Formalités des Entreprise (CFE) operated by the Bordeaux Chamber of Commerce and Industry.40 Motivation for reform A consultant from the Bordeaux Chamber subse- The government had a clear interest in economic quently undertook a feasibility study for the development and recognized the need to encour- creation of a similar facility in Ouagadougou. age the private sector, but it was the private sector itself that identified the obstacles to starting a business--unnecessary bureaucracy, delays, cost, Project planning and management uncertainty, and corruption.39 The corruption Following discussions in 2005 regarding Burkina 39 Burkina Faso scored 3.5 out of 10 on the 2008 Corruption Faso's status in the latest Doing Business report, Perceptions Index. This compares with 1.0 for Somalia, there was a determination to improve perfor- perceived as the most corrupt country in the world, mance by the next survey. There was a committee and 9.3 for Denmark, New Zealand, and Sweden: www.transparency.org/news_room/in_focus/2008/cpi2008/ cpi_2008_table. 40 www.bordeaux.cci.fr. 22 of representatives of all the parties involved, but introduction of a single form to meet the the project was driven through at speed by Issaka requirements of all the registration authorities. Kargougou, the Director General of the Maison This form simplifies matters, though there is a de l'Entreprise, and Inoussa Ouédraogo, the newly need for multiple copies and various supporting appointed Director of its new subsidiary, documents. CEFORE.41 Documents required for a legal entity: The law Manager(s)' legalized ID card The commercial law of Burkina Faso is contained Police records (not more than 3 months old) in Uniform Acts adopted by the 16 members of OHADA. The government had no wish to inter- Lease contract fere with the provisions of the Acts, which would Statutes in any case have required international agree- ment, but it was not necessary to do so in order Minutes of the meeting setting up the company to implement CEFORE. Notary document 4 completed declaration forms CEFORE was created by a Presidential Decree.42 As well as establishing the organization, this de- 4 notary documents cree set the maximum time for completion of the Cost: CFA 60,000 four formalities required in connection with the start-up of a new business at 7 days. A subsequent government decision specified the time allocated to each of the Ministries: There has been some softening of the require- ments, particularly for the sole traders who ac- count for the majority of registrations. A statement that an individual has no criminal record can be Incorporation (where applicable) and entry in the 1 day obtained from the police in his or her area, but, Registre du Commerce et du Crédit Mobilier at the Tribunal de Grande Instance since there no effective records on which to base such a statement, this has no practical relevance Issue of a déclaration d'existence and a numéro 3 days d'Identification Financière Unique (IFU) by the Tax and is seen simply as a source of income for the Administration (Direction Générale des Impôts) local police. Since the application for registration Issue of a business card for a sole trader by the 1 day already includes a statement regarding criminal Ministry of Commerce convictions, the statement serves no real purpose Granting membership in the social security system 1 day but is still required by law. It is now accepted (Caisse National de Sécurité Sociale) that, if there is a delay in obtaining the statement, the application can proceed without it, though it will still need to be produced at a future date. Forms and documentation Producing a lease contract also causes problems As well as implementing the new-style one-stop for many applicants, since they often do not own shop at CEFORE, there was agreement on the the premises from which they intend to do business and landlords frequently are unwilling 41 Centre de Formalités des Entreprises (Center for Companies or unable to produce title documents. To Formalities). 42 Décret Nº 2005-332/PRES/PM/MCPEA/MFB/MJ/MTEJ complicate matters further, much business takes du 21 Juin 2005. the form of commerce ambulant undertaken by 23 itinerant traders. Attempts have been made to es- The tax administration, the Direction Générale des tablish permanent addresses through which such Impôts, has its own computer system with a pre- people can be contacted. carious wireless network linking the 9 tax offices in Ouagadougou. The CNSS has an effective na- tional network. For the past 4 years a registration A single number system for use by courts in the OHADA coun- tries has been undergoing trials in Benin and The organizations involved discussed the possible Congo and the Tribunal de Grand Instance in use of a unique identifier for each business to be Burkina Faso is awaiting the outcome. used by all branches of government. This proved impractical to implement in the short term as The Investment Climate Facility for Africa is each organization still retained its core systems supporting a project to develop an effective inte- and procedures, which were not easily adaptable. grated system to meet the requirements of all the Everyone agreed in principle and all would have partners in the Ouagadougou one-stop shop. been content with a solution that involved the This should eventually provide a basis for services other bodies adopting their numbering system. in other parts of Burkina Faso and for other This remains a live issue. countries in the OHADA region. Computer systems The launch In 2001­02 the Chamber of Commerce received CEFORE opened its doors on 9 January 2006. support from the European Union/ACP Business There was a formal launch with radio, televi- Assistance scheme (EBAS), which provided soft- sion, and newspaper coverage. Unfortunately, in ware, hardware, and training. There was also fi- Burkina Faso the media fail to reach a signifi- nancial support from the Coopération Française cant proportion of the population. There are and technical assistance from the Chamber of relatively few televisions and radios and literacy Commerce in Toulouse. rates are low.43 In addition, despite the fact that French is the official language, it is only spoken The Chamber has now established a National by a minority. The most effective means of com- Firms Data Base (Fichier NERE ), which uses in- munication proved to be via presentations at formation from all the registration bodies. The meetings of business associations, which are software for Fichier NERE was developed in organized by the Chamber of Commerce. house without the use of external service provid- ers. When the database was first established, The reform of the registration procedures was there were 40,000 registered businesses but the one of the features leading to the Doing Business Chamber has disabled as inactive those identi- Reformers' Club's recognition of Burkina Faso fied as not having paid tax for some time or as a top reformer in 2007, which attracted wel- which have not registered any employees with come positive publicity.44 CNSS. This has resulted in an active register of about 15,000. The Chamber publishes a series of business 43 Adult literacy in 2006 was 28.7%: Ministère de l'Enseignement de Base et de l'Alphabétisation, www.insd.bf. directories, and Information from the database 44 IFC News Release, 8 November 2007. The award also is available on request. There are plans to make recognized a reduction in the cost of registering property and enforcing judgments: www.ifc.org/ifcext/media.nsf/ the service available via the internet during content/SelectedPressRelease?OpenDocument&UNID= 2009. 68187CDFBFB972808525738D00764584. 24 confirming their registration with all relevant au- thorities. The overall timeframe should not exceed 7 days, but problems with the tax offices have meant that this goal is not being met. The cre- ation of the new tax office should overcome these difficulties and there will be scope for reducing the timeframe to 5 days or less. The simplified arrangements mean that most ap- plications for individual enterprises are submit- ted in person rather than by a notary, though notaries are still involved in the incorporation of limited companies. What difference did it make? In 2005, it took 40 days to complete the 12 for- malities associated with starting a business. By 2008, the number of processes had been reduced to 5 and these could be completed in 16 days. This has been the result of a continuous process of improvement, which can be expected to pro- What it looks like now duce even better results in the years ahead. In order to meet the January 2006 deadline, there The impact on the number of companies being was hurried construction of temporary premises. registered is difficult to assess due to the lack of By February 2007, with World Bank support, consistent data for the period before the estab- CEFORE was able to move into a new and larger lishment of CEFORE. There was an increase fol- building, which will also accommodate a range lowing the introduction of the new procedures, of business development services. The tax ad- but there is still a need to reach out to businesses ministration will shortly establish its own office in the same building, allowing staff to input data Burkina Faso -- Starting a Business into the central database and obtain an IFU,45 so 40 reducing the time taken for this process from the 3 days allowed by the Government Decision 35 (which in practice is usually exceeded) to less 30 than one day. Similarly, the Ministry of Com- 25 merce and CNSS46 will have their own offices in 20 the building. 15 Applicants for registration generally only need to 10 visit CEFORE twice, once to deliver the applica- 5 tion and again to collect the set of documents 0 2005 2006 2007 2008 45 Numéro d'Identification Financière Unique (tax identifica- tion number). Processes Days 46 Caisse nationale de la sécurité sociale (National Social Security Fund). Source: Doing Business database 25 in the informal economy, which should be bene- business community, with particular emphasis on fiting from registration. increasing and developing the formal economy. There is a need for consultation within OHADA Ouagadougou--new registrations regarding simplification of aspects of company 2006 2,581 law, including the need for criminal records, lease 2007 3,189 contracts, and minimum capital. 2008 3,267 Source: CEFORE Lessons learned So far, Burkina Faso has reached only the 113th position in the Doing Business rankings for ease of Burkina Faso learned from experience that starting a business. To climb further up the rank- forming a one-stop shop by simply sending one ings, it will need to reduce the cost of starting a person from each agency to a single location business and to substantially reduce--ideally, does not itself simplify the process. It creates eliminate--the requirement for minimum capi- problems of tal. This will, however, require consultation with other members of OHADA. authority, since that person will probably have to refer back to his or her headquarters for approval of any significant decision; What happens next? consistency of service, since there may be dif- The creation of a tax office in the same building ficulties in securing a replacement to cover as CEFORE should substantially reduce the time absences; taken to register a business. personal development, since the individual Having established a successful one-stop shop concerned may be excluded from mainstream model in Ouagadougou, this concept will be activities of the parent department, which replicated throughout the country. Consider- may affect promotion prospects; and ation is also being given to extending the respon- sibilities of the one-stop shop to include licensing management, as the head of the one-stop functions. shop will not normally be the line manager for representatives of other departments. Work will proceed on the ICF project to provide an integrated information system to support all Bringing a team of people from the tax adminis- the partners in the one-stop shop. This will need tration or other government body to the one-stop to take account of parallel developments in the shop does not have the same drawbacks and this tax and social security administrations and is the approach now being adopted. OHADA. What is more important is the simplification The Fichier NERE information system will be- of procedures and documentation and, where come available via the internet during 2009. possible, elimination of those which are not serving a practical purpose. There are, how- Efforts will continue to promote the merits of ever, constraints arising from supranational registration with CEFORE among the wider legislation. 26 There was a very specific local problem in pro- associations, in an appropriate local language, moting CEFORE because the media were did, however, prove effective and this method unable to reach a significant proportion of of disseminating information will be featured the population. Presentations to business in future. Burkina Faso - Before the One-Stop Shop Before the One-Stop Shop (2) Applicant Government office Applicant Government office Deliver statutes to 1 Ministry of Commerce1 Ministry of Commerce Apply to local Tax provides opinion Office (avis) on statutes Tax Office issues Tax Collect statutes ID and fiscal existence declaration2 Apply to Chamber of Commerce1 Collect Tax ID and declaration Chamber of Commerce issues activity certificate Apply to Ministry of Labour (CNSS) Receive certificate CNSS issues Social Security ID Foreign company applies to Ministry Collect Social of Commerce Security ID from CNSS Ministry of Commerce Deposit capital of issues authorization Apply to 50m FCFA d'exercise commerce Inspection du Travail Collect authorisation Inspection du Travail issues Establishment Declaration Apply to Ministry of Justice Collect declaration Ministry of Justice makes entry in Register 3 of Commerce (RCCM) Collect documents from Ministry of Justice 2 27 Burkina Faso - Before the One-Stop Shop (3) After implementing the One-Stop Shop Applicant Government office Applicant CEFORE Government offices Apply to 2 CEFORE CEFORE copies Apply to Agence documents and du Promotion de delivers file to I'Emploi2 Ministry of Justice Agence du Promotion de l'Emploi issues Employment Ministry of Certificate2 Justice makes entry in Register Collect of Commerce Employment (RCCM) Certificate2 CEFORE collects file and delivers 1 day Apply to Ministry to relevant of Commerce Tax Office Ministry of Commerce issues business Tax Office 7 days card (ID) issues Tax ID CEFORE collects file Collect and delivers copies business card to Ministry of 3 days Labour (CNSS) and Ministry of START Commerce BUSINESS 1 day CNSS issues Social Security ID Ministry of Commerce 1 day issues business card CEFORE collects files and prepares documents for collection Collect documents START BUSINESS Notes: 1 The two elements of tax registration were combined into a single process as part of the reforms introduced when CEFORE was established. 2 Separate application to the Inspection de Travail and the Agence du Promotion de I'Emploi was also discontinued. The information required by these agencies is available from CNSS, which is part of the same Ministry. 28 CASE STUDIES: COLOMBIA In the last six years Colombia has defined and needed to complete 17 procedures at 10 different embarked on a prioritized policy effort in order to im- locations. A small company could be expected to prove the business climate. One of the areas identified fill out 45 forms. The whole process would take was a desperate need to improve business start-up proce- about 57 days48 and cost US$ 490. dures to promote the formalization of businesses. Before the one-stop shop Motivation for reform In 1971 the Government of Colombia trans- There were two major reasons for reform. First, ferred the function of maintaining the commer- Colombia was experiencing an economic crisis. cial registers from the courts to the 57 regional In 1999 GDP had fallen by 4.3 percent, unem- chambers of commerce, each of which became ployment stood at 18 percent, and investment responsible for registration within its particular was down by two-thirds. Half of the business geographical jurisdiction. conducted in the country was in the informal economy. The chambers of commerce, faced with Even so, starting a business involved much more complaints about the complexity and cost of than simply registering with the local chamber of establishing a new enterprise, pressed the govern- commerce. It was also necessary to register with na- ment to implement a program of reform. Second, tional and local tax offices and to obtain a range of the government made a concerted effort to licenses or permissions from the local authority. promote the formalization of businesses thus preparing the way for the creation of a one-stop A report produced in 199947 concluded that, be- shop for business registration. fore starting a business, a Colombian entrepreneur 48 Note that the 57 days does not include the time required to complete labor registrations. The total comes to some 47 Bogotá Chamber of Commerce. 107 days. 29 Options and consultation Phase 1 began in 2001. The aim was to develop a process that would allow entrepreneurs to register The chambers of commerce were well placed to a business in one day, with one step, in one place. represent the concerns of the private sector, and This work was led by a 3-person technical team the government could see the need for reform. from the Bogotá Chamber of Commerce, whose Confecámaras49 and the Bogotá Chamber of role was to build consensus and sign agreements Commerce looked to the Inter-American Devel- with the different entities involved, including the opment Bank (IDB) for guidance in analyzing the chambers of commerce, public officials at the na- problem and considering possible solutions. tional and local level, and notaries. The imple- mentation of this process was completed in 2004 The nature of the local government structure at an overall cost of US$ 3 million. Two key con- meant that it was necessary to consult each of cepts were introduced that helped develop and the municipalities in order to get their political improve the experience of starting a business in support for the changes envisaged. Colombia: the CAE and the RUE.53 The CAE represents the physical site or office that was es- While there was a need to lobby politicians in tablished to receive and provide support to the order to convince them of the merits of proposed entrepreneur at different locations in the new legislation, it became clear that there was participating cities. The RUE--or Registro Único also a need to monitor legislative developments Empresarial--which became operational on as some proposals being discussed in Congress 1 January 2005, is the central database that was would have increased the burden of business and set up to register all businesses and was a key fea- derailed the simplification process. ture of phase 1. Phase 2 Project planning and management A second phase was managed by Confecámaras The present system is the culmination of various and sponsored by the government of the phases, each of which was a substantial project in Netherlands. This phase began in 2006 and was its own right. completed in May 2008 at a cost of 2 million. During this phase, the network was extended to Phase 1 include a further 15 CAEs.54 This involved The Bogotá Chamber of Commerce and Con- the configuration of a National Simplifica- fecámaras presented a project proposal to the tion System, the responsibility of Confecá- Inter-American Development Bank, which agreed maras; and to support a business registration simplification program. This included the creation of Centros de the design, start-up, and operation of Atención Empresarial (CAEs50) in the 6 major CAE Simplification Systems in each of the cities,51 which between them accounted for 15 cities. 60 percent52 of the productive capacity of the country. Thirty-one CAE offices were established The implementation of this system was highly in the 6 cities during this phase. successful and completed in 22 months, fewer than 49 The Chamber of Commerce Association in Columbia. 50 Centro de Atención Empresarial (Business Service Center). 53 Registro Único Empresarial (Single Business Registry). 51 Bogotá, Barranquilla, Bucaramanga, Cali, Cartagena, and 54 Aburrá Sur, Armenia, Buga, Cauca, Cúcuta, Ibagué, Medellin. Manizales, Neiva, Oriente Antioqueño, Palmira, Pasto, 52 Confecámaras. Pereira, Santa Marta, Tuluá, and Villavicencio. 30 LAW/DECREE DATE OF EXPEDITION NOTES Law 232/1995 26 December 1995 Defines norms for the operation of commercial establishments, including the abolition of operational licenses, which had previously been required for trading activity Decree 2150/1995 5 December 1995 Abolishes and reforms regulations and unnecessary procedures that exist within public administration Law 590/2000 10 July 2000 Enacts dispositions to promote the development of micro-, small-, and medium- sized businesses Decree 898/2002 7 May 2002 Allows chambers of commerce to use computer facilities in place of paper registers Law 863/2003 29 December 2003 Establishes tax, customs, and fiscal control norms in order to stimulate economic Article 19 growth and clean up public finances; establishes a national tax register: Registro RUT Único Tributario Law 962/2005 8 July 2005 Defines conditions for the rationalization of administrative procedures for the governmental bodies and entities that exercise public functions or provide public services Law 1014/2006 26 January 2006 Promotes an entrepreneurial culture; provides that new companies of any type, Article 22 with capital below the equivalent of 500 minimum salaries and with fewer than 10 employees can be constituted either by private contract or public deed, thus removing reliance on notaries and effectively encouraging entrepreneurs to deal directly with the one-stop shop Decree 1879/2008 29 May 2008 Regulates Law 232 from 1995, article 27 of Law 962 from 2005, articles 46, 47, and 48 from Law Decree 2150 of 1995 and enacts other dispositions originally planned. Consultants reviewing the phase document (a private contract rather than a public attributed its success to "the preparation of a base deed) was also introduced for most limited com- document of high methodological quality which panies, making it unnecessary to use the services facilitated the logical and orderly deployment of ac- of a notary. tion plans" and also an effective project manage- ment team, reporting to Confecámaras.55 It is likely that the Government of the Netherlands A single number will support a third phase, involving another 15 cit- While each chamber does initially use its own ies, including some in conflict areas. numbering system for the purpose of completing its registration procedures, once a business has The law been allocated a tax identification number (NIT), this number is used by all agencies. Several significant legislative changes have con- tributed to the present arrangements. Forms and documentation Computer systems By law, each chamber of commerce maintains the Introduction of a single form was part of the business register for its own area. Computeriza- simplification process. A simpler constitutional tion has both enabled these registers to be kept in 55 Final Assessment of the Program by Oportunidad Estraté- a more accessible form and made it possible to gica, May 2008. establish a national database. 31 RUE--Single Business Register Central node Contingency External user Internet Private network Local nodes Regional node Local nodes Source: Confecámaras. The initial phase, supported by the IDB and five biggest chambers of commerce. A develop- which ended in 2004, involved the creation of ment committee, the membership of which var- 31 CAEs in 6 cities and financed their capacity ies according to the issues under consideration, building regarding information and technology. defines requirements for improved functionality. All specifications are prepared in house. RUE System Alongside the creation of the CAEs, there were Development of the various systems has been important developments in DIAN,56 the tax ad- handled by contractors, but Confecámaras and ministration, which were critical to the overall the Bogotá Chamber of Commerce retain techni- success of the changes to the business registration cal staff in house. The national database, RUE, process. Tax modernization was begun in 2003 is hosted on 9 servers at a data center managed and a single tax register (RUT) was established in by Global Crossing. The history of 11-million 2004. Online reporting was actively encouraged, businesses is stored online, occupying 4 TB of with the result that 2 million of the 6-million storage. There is a private network linking the taxpayers now make online tax declarations. A 57 chambers with RUE and internet access for strategic alliance between DIAN and Confecá- government agencies. System maintenance is the maras enabled them to promote both the new tax responsibility of Sonda de Colombia SA, which regime and the CAEs. has a further 4 servers devoted to RUE on their premises. There is a security architecture in which Portal CAE both contracting companies play a part as well as The Portal CAE was created during the second a business continuity plan. The operating costs of phase of implementation of CAEs. It was meant RUE are in the region of US$ 1 million a year. to help improve coordination and enhance the The arrangements are overseen by a technical 56 Dirección de Impuestos y Aduanas Nacionales (National Tax committee consisting of the ICT directors of the and Customs Administration). 32 sustainability of the project by providing the The launch CAEs already established with a national portal. The task involved Each launch of a CAE was a regional event ar- ranged in association with the local mayor. While mapping, revealing of information, and tech- these launches generally attracted appropriate nical analysis of the web pages and/or portals publicity, many people apparently remained un- in the 6 selected cities in Colombia; aware of the changes and tried to register under the old system. There was clearly a need for design, development, implementation, and greater investment in marketing the CAEs. allowing of the portal, intranet and external (with domain, annual hosting, maintenance, The results of the reforms and introduction of and development of specific modules); and the CAEs is apparent in looking at the graph below, as it shows the reduction in the number of training of local entities to administer and required procedures, the number of organizations maintain the portal, including training of involved, and the duration of the business for- local functionaries in charge of the system as malization process. well as developing mechanisms to ensure sustainability.57 The portal is working in only 13 cities and is Reduction in procedures, time and managed by Confecámaras. System expansion entities involved in registering and continuous improvement of the portal is the businesses responsibility of Confecámaras. The portal of- Before After fers the opportunity to obtain information and submit some applications online. In particular, a Number of procedures 17 2 customer can obtain information on types of Number of organizations 10 2 businesses, name availability, trademarks, classi- Time in days 57 3 fication of economic activities, land use (specific Source: Bogotá Chamber of Commerce. to the area in question), and costs (with a pay- ment calculator); register for taxes, prepare a constitutional document, complete a business registration form; print documents; and have the process explained. The information architecture What it looks like now of the portal is based on SOA (Service Oriented Since May 2003, businesses in the major cities Architecture) so new components can be added have been able to apply to a CAE to or altered in the architecture without difficulty. It also integrated different sources via structured register the company and commercial xml transactions. These sources include infor- establishments (if any) with the Commercial mation from RUE, local city databases, DIAN Registry; (tax), Trade and Industry, and Municipal Plan- ning. This integration (and agreements of ser- register the corporate books with the Cham- vices between the agencies) is probably the most ber of Commerce; and important technical achievement in the entire register with the National Tax Office (DIAN) technical model. and the District Tax Office to obtain the tax identification number (NIT) and the district 57 IFC (2005). tax registration number. 33 could be registered. Inspections now take place after registration. In theory, a business could be closed down at this stage if it had not complied with all statutory requirements, but in practice every effort is made to ensure that applicants for registration are fully aware of the requirements before they apply for registration. While applications can be completed online, at present it is still necessary to attend the CAE in person with original signed documents. The largest CAE, Bogotá, receives some 2,000 customers a day. Each one takes a number from a machine on entry and a clerk at the information Mobile registry desk allocates this number to the appropriate queue, depending on the type of requirement. In order to provide a service for businesses that The number is shown on an electronic display as do not have ready access to a CAE, the Bogotá soon as a relevant counter is free. The office aims Chamber of Commerce has introduced a Cámara to see all customers within 15 minutes. Móvil: a portable office with desks, chairs, and computer equipment as well as racks of docu- Since January 2005, it has been possible to check ments and promotional materials. This office is the availability of a name online using the RUE transported by a dedicated vehicle and assembled database.58 in an agreed-upon location in a municipality within 30 minutes. The mobile unit provides business registry and formalization services to some 60 clients per day on average, and the staff at the mobile unit typically consists of one lawyer/ advisor, one cashier/advisor, one assistant, and one security officer. The network technology used for accessing the central server at the Bogotá Chamber of Commerce currently connects through the cellular 3.5G network (operators Comcel and Movistar) from the USB modem­ equipped laptop. An adviser at the Bogotá Chamber of Commerce demonstrates the 24/7 self-service information terminals. One important change in practice takes place away from the CAE. It used to be the case that inspections of business premises by municipal authorities had to be completed before a business 58 www.rue.com.co. 34 Colombia--Starting a Business Before the reforms, the process took 56 days Chamber of National tax Commerce authority Banks Local tax Health authority authority Entrepreneur Local planning Fire COMPANY Notaries authority department ESTABLISHED Intellectual Enviornmental property authority control bodies And after the reforms, the process took 3 days National tax Local tax authority authority Chamber of COMPANY (80%) commerce ESTABLISHED Local planning Intellectual authority property authority (20%) Entrepreneur Notaries Source: Confecámaras and Bogotá Chamber of Commerce. What difference did it make? businesses increasing more than the number of companies. This may well be attributable to busi- It is now clearly much simpler to set up a busi- nesses that had previously operated in the infor- ness in Colombia than it was previously. It takes mal sector appreciating the need and benefits of less time and costs less. There are savings for en- registration. trepreneurs and for the chambers: Bogotá reports a reduction in the unit cost of transactions of Similarly, while the new procedures must have 87.5 percent. reduced the opportunities for unofficial pay- ments, there is no obvious significant effect Levels of registration activity have varied through- on the Corruption Perceptions Index.59 How- out the country as new CAEs have been estab- ever, substantial effort has been devoted to rais- lished. The overall effect has been a steady ing awareness of the issue. Confecámaras has increase, though this has not been consistent 59 Colombia currently scores 3.8 on the Corruption Percep- throughout the period. tions Index. This compares with 1.0 for Somalia, perceived as the most corrupt country in the world, and 9.3 for Denmark, New Zealand, and Sweden. Colombia's rating There has been a steady growth in the size of the has not changed significantly since 2001, though in 1998 registers, with the number of unincorporated it was 2.2: www.transparency.org. 35 Colombia ­ Size of Registers 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2000 2001 2002 2003 2004 2005 2006 2007 Companies Individual businesses Source: Confecámaras and Bogotá Chamber of Commerce engaged the private sector in anti-corruption the World Bank Group--Doing Business Reform initiatives, including transparency pacts ulti- Advisory (DBRA) Unit, Colombia climbed from mately adopted by 77 mayors and governors rank 66 to 53 in Doing Business 2009, becoming and an ethical code of conduct adopted by 1,855 for the second year one of the world's top ten business people.60 reformers and the Latin American region's num- ber one reformer. Colombia made great strides in reducing the steps and cost necessary to start a business, enforcing time limits for granting Business registry and advancements construction permits, cutting the number of in the DB agenda payments to social security, and streamlining procedures for import and export. In October 2007 the Colombian government re- quested assistance from the World Bank Group In comparing the Starting a Business indicator in implementing reforms in order to improve its for Colombia in the years 2004 and 2008 for ex- business regulations. Colombia had just been ample, the number of procedures was reduced selected one of the world's top ten reformers, ac- from 19 to 11, the number of days from 60 to cording to Doing Business 2008. Doing Business is 42, and the cost from 28.7 to 19.3 (percent of a World Bank annual report that compares busi- income per capita). ness regulations globally. Doing Business presents quantitative indicators on business regulations In the area of starting a business, the current focus and the protection of property rights that can be of the Colombian government is on simplifing compared across 181 economies and over time. affiliation with the social security system by Doing Business classifies each economy based on its performance in 10 areas of regulation that cover the life of a business.61 With the support of 61 The areas are starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across 60 Islam, N. (2008). borders, enforcing contracts, and closing a business. 36 Doing Business Index 2008--Starting a Business indicator Region or Procedures Cost (% GNI per Paid in Min. Capital (% of Economy (number) Duration (Days) capita) GNI per capita) Colombia 11 42 19.3 0 Latin America & 9.8 66.2 42.6 12.9 the Caribbean Doing Business Index 2009--Starting a Business indicator Region or Procedures Cost (% GNI per Paid in Min. Capital (% of Economy (number) Duration (Days) capita) GNI per capita) Colombia 9 36 14.1 0 Note: The Doing Business Starting a Business indicator measures the necessary steps to enable a small- or medium-sized enterprise in general commercial or industrial activities to operate legally--including permits, inscriptions, notifications, and inspections. Source: www.doingbusiness.org. consolidating affiliation with all relevant pension, New facilities will also be provided for the regis- health, professional risks, and other benefits into a tration of trademarks. single step. This reform would reduce four proce- dures and almost one month of the process of Procedures for the handling of insolvencies and starting a business in Colombia. In introducing removing defunct companies from the register the necessary reforms in this area, once again the will be improved. Colombian government is receiving the support of DBRA and the IFC. Lessons learned What happens next The approach adopted in Colombia to improve business start-up procedures, driven by the cham- Further CAEs will be established in order to bers of commerce, has proven effective. support business start-ups in all regions of the country. Practical experience showed that each office was different and plans for the implementation of a There are plans to further develop the portal, al- CAE needed to be tailored to local circumstances. lowing for more specific advice to be provided ac- The level of expertise within the chambers, and cording to the location of a proposed business. thus the needs in terms of capacity building, var- This is being developed in consultation with each ied, as did attitudes within local authorities. of the local authorities concerned. Further im- provements being discussed include a holistic as- It was important to review and simplify procedures, sessment of the portal usability and the refinement not only in the chambers but in other organiza- of the portal's search strategy, including the con- tions as well, before implementing major system textual and generic search functions. changes. At the end of Phase 1, it was felt that more 37 effort should have been devoted to this activity In considering legislative change, it was not suf- and Phase 2 planning took account of this. ficient to prepare proposals. There was also a need to monitor other proposals being put forward Agreements between various agencies and techni- that could adversely affect the reform agenda. cal integration in respect of service provision were key to the technical solution adopted. Overall, there was a need for strategy to be de- fined at the national level and for this to take into There was a temptation to be drawn into other account possible long-term developments. The types of reform. In the initial stages of the project, portal had not figured in the initial planning of consultants identified 980 procedures that affected the project but is now an important feature of the businesses, but it was not possible to tackle them way in which the chambers deliver their services. all. There was a need to concentrate on the main Other technological developments could well aim of improving business start-up procedures. provide the opportunity to handle tasks in a different way. The use of a company from Bogotá to provide training throughout the country proved less Integration of functions of different agencies was than satisfactory, resulting in some confusion key to the technical solution adopted. and miscommunication. Confecámaras has con- cluded that in future more use should be made This involves planning ahead. There are ques- of local resources and that efforts should be tions about sustainability: who will solve the made to retain expertise within the regions. problems and maintain the momentum after the project team leaves? These questions should be On the other hand, quality control was variable addressed at an early stage. Similarly, there is a and for the future it is felt that there should be need to plan the next phase before completing clear contracts established at the national level. the current one. 38 CASE STUDIES: EGYPT Egypt needed to encourage investment, so the invest- but a further detailed study by the General ment agency was instructed to set up one-stop shops Authority for Investment and Free Zones (GAFI) covering all business start-up formalities. confirmed that launching a new investment could involve up to 22 ministries and 78 gov- ernmental entities. Investors might need any of Before the (latest) one-stop shop 349 approvals, permits, or licenses and were expected to comply with 200 business licensing An Economic Reform and Structural Adjustment regulations.63 program had been implemented during the 1990s in collaboration with the World Bank and The government could see that the country had the IMF. This program had tackled a wide range problems attracting investment. The figures of issues related to policy and institutional reform had slumped over the past decade. The alarming with the aim of transforming Egypt into a mar- report from GAFI prompted urgent action. ket economy and curing the major imbalances The solution was to establish a one-stop shop to that the economy faced in the 1970s and the provide "all investment-related services." In 1980s.62 But before 2000 it was clear that invest- fact, there were several, the largest in Cairo, with ment was falling. others in Alexandria, Ismailia, and Assiut.64 A study in 2001 by the Ministry of State for This seemed sensible. GAFI, as the investment Administrative Development, claiming that it authority, would establish the one-stop shops, could take a year or more to establish a business, and other agencies were specifically authorized to was met with incredulity by Egyptian officials, provide services there without necessarily having 63 Stone, A. (2006). 64 Council of Ministers Decree of 6 February 2001 establish- 62 Ghoneim, A. (2002). ing the one-stop shop and branch offices. 39 to refer to their respective headquarters.65 Tem- with delegates including ministers, governors, porary accommodation was provided for the donor agencies, and entrepreneurs. The work- Cairo one-stop shop while a new building was shop accepted the benefits of the one-stop shop being constructed. approach. The following June, Parliament passed a new small and medium enterprises (SME) law But there were flaws. The one-stop shops served directing the Social Fund for Development to only those qualifying for investment incentives, establish one-stop shops for licensing across which were restricted to specific sectors.66 Others Egypt. would need to apply for registration with the Companies Authority, located in a different Meanwhile, consultation was also proceeding on building and applying a different law67 and the Investment Law. procedures. Up to 11 organizations were represented at the Motivation for reform one-stop shop, but there were many more that were not. Even for those that were located in the While there was dissatisfaction with the existing one-stop shop, there was little change in proce- arrangements and work was in hand to establish dure, with officials generally lacking the compe- one-stop shops for SMEs on the one hand and to tence or authority to issue approvals or licenses revise the Investment Law on the other, the pro- and simply referring applications to their parent cess of change was kick-started by the formation bodies. of a new government in July 2004. Between 2002 and 2004, GAFI reported at vari- The reformist agenda of the new ministers69 ous times to the Prime Minister, to the presidency, included tariff and tax changes and the practical and to the Ministry of Economy. In theory it had implementation of the new Investment Law70 the authority, but in practice it was not in a posi- passed during the previous administration. GAFI, tion to oblige other agencies to adopt procedures which previously had a mix of regulatory and consistent with an effective one-stop shop. promotional functions, was redefined as an in- vestment facilitation and promotional agency and the only body to which investors of any size, Options and consultation whether international or domestic, needed to apply in order to establish a company. The In December 2003, the then Prime Minister, Companies Authority was abolished. Dr Atef Ebeid, received a briefing on a one-stop shop project in Dakhalia.68 This briefing was The reforms did not immediately have the desired attended by the Canadian Ambassador, 4 minis- effect and there was anger at Egypt's poor rating ters, and 8 regional governors. There followed a in Doing Business 2007, which ranked the coun- national workshop, hosted by the Prime Minister, try as 165th out of 175 countries. There were questions about the validity of the methodology 65 Presidential Decree 79/2002 of 15 April 2002. Detailed rules for operation of the one-stop shops were then set out 69 These included Dr. Youssef Boutros Ghali, previously in the Prime Minister's Decree 636/2002. Minister of Economy and Trade, Economic Adviser to 66 Defined in Law 8 of 1997. the President, Governor of the Central Bank, and IMF 67 Law 159 of 1981. senior economist, as Minister of Finance; Dr. Mahmoud 68 Fahmy, S., and Brown, J. (2006). A licensing one-stop Mohieldin, an academic and economic adviser, to the new shop was established by Governor's Decree in Dakhalia in post of Minister of Investment; and Rachid Mohamed 1999. This was funded by the Canadian International Rachid, a successful businessman, as Minister of Foreign Development Agency (CIDA) as part of the Small and Trade and Industry. Medium Business Support Project (SMBSP). 70 Law 14 of 2004, amending Law 8 of 1997. 40 and credibility of the World Bank Group, but paying up to 20 percent of one's salary. While quiet diplomacy prevailed and the Minister and it was not possible to offer financial incentives the Chairman of GAFI accepted that action to staff of other agencies, all staff working in was needed to overcome particular areas of weak- the one-stop shop were also provided with ness so as to improve the ranking.71 This strategy uniforms--smart suits with the GAFI logo on a was rewarded when the following year Egypt was pin--to promote a professional environment and fêted as the world's top reformer72 and again when pride in the organization. They were also provided it achieved top ten reformer status in 2008.73 with free transport. Once the one-stop shop was established, work continued on further reform. Working with Project planning and management GAFI in Alexandria from early 2006, the IFC To put the reforms into practice, GAFI named undertook a detailed mapping of the processes a new chairman, Dr. Ziad Bahaa El-Din, and a involved in starting a business, following which new board.74 Dr. Ziad himself intervened to establish simpler mechanisms for establishing the uniqueness of Dr. Ziad was faced with the task of implement- names, obtaining a capital markets certificate, ing the reforms envisaged by the legislative and the issuance of tax cards. changes, including arrangements in GAFI for the handling of the Company Law cases that were previously the responsibility of the now- The law defunct Companies Authority. This included securing authority to publish incorporation The Investment Law75 was already in place when notices in the GAFI Investment Gazette. There the new government took office in 2004. The was also formal delegation of decisionmaking, so new law specifically authorized co-location of that only exceptional cases needed to be referred agencies and by 2006 there were 32 agencies lo- to top management. cated in the same building. Nine of these had of- ficials on site with authority to grant the necessary New staff were recruited for the front office, with approvals, though others needed to refer applica- an emphasis on the need for customer-service tions to their parent agency. There have since skills. For existing staff, training encouraged a been efforts to eliminate any rules or require- culture of professionalism, while a new promo- ments without any foundation in law. tion system was introduced, based on merit and qualifications rather than seniority. In all, there GAFI is responsible for the registration of busi- were some 400 staff working in the one-stop nesses under both the Investment Law, which shop, but only half of these belonged to GAFI. covers all types of business engaging in specified This lack of administrative authority complicated activities, and the Companies Law,76 specifically the situation, since questions of discipline or re- for companies with limited liability, whether ward were handled by the individual agencies public (joint stock) or private. It is, however, not concerned. GAFI's autonomous financial struc- responsible for registrations under the Small ture enabled the chairman to increase salaries by Enterprise Development Law,77 which are han- 30 percent and to introduce an incentive system dled by the Social Fund for Development, or the 71 Hamdy, S., and Sader, F. (2008). 72 IFC Cairo (2007). 75 Law 14/2004, amending Law 8 of 1997. 73 IFC (2008-2). 76 Law 159 of 1981. 74 Presidential Decree 316 of 2004. 77 Law 141 of 2004. 41 registration of sole proprietors, which is the the contract, the ministerial decree establishing responsibility of the courts. the company, and various other documents. While the intention is to establish a paperless sys- tem, at present the paper file still moves between Forms and documentation departments. Work is also queued through the It is no longer necessary to complete an applica- electronic system. At the establishment follow-up tion form for GAFI registration before attending stage, options for publication are entered, which the one-stop shop, though there are still separate is the only additional information required in forms for the Commercial Registry and the Tax order to issue an invoice for all fees, which are Authority. The present system involves the appli- calculated automatically. The follow-up staff use cant (usually a lawyer acting for the founders) the system to record the completion of each sub- sitting with a GAFI lawyer, who keys relevant in- sequent action, which is automatically logged formation into the computer system in order to with date and time. produce a tailored application form for signature. The system then routes the case back to the original At the next counter, the applicant states the re- establishment lawyer to produce a final version of quirements for publication in the Investment the establishment decree, and then to the manager's Gazette (number of issues and whether the notice secretary, who enters a serial number. This process needs to be in Arabic only or in Arabic and English) will eventually be automated. and, if relevant, whether the applicant will be using the services of the Lawyers' Syndicate at the one- The system then refers the case back to the stop shop. The system then calculates the total rel- follow-up department, which notifies the Com- evant fees and issues an invoice. (This procedure mercial Registry78 and the chambers of commerce, will shortly be combined with the previous one). again recording any action taken. The case is then Fees are paid at the bank. There is a bank in the classified by sector/activity. After this, it is ready same building. No cash payments are required in for collection by the customer. Final delivery is the one-stop shop. again recorded in the system. Substantially the same information is currently entered into databases in GAFI, the Tax Admin- A single number istration, the Commercial Registry, and the office of the Notary Public. There have been major There have been discussions about the allocation computerization projects in the Notary Public's of a unique identifier for each business to be used office and the Commercial Registry, which do across all branches of government, but the issue not appear to have addressed the issue of wider has not progressed beyond the discussion stage. rationalization and integration. The main statutory registry is the Commercial Computer systems Register and the data in this register is poten- tially of considerable value to the business GAFI's in-house team has developed a network- community. based system using Lotus Workflow. This operates on the principle of a single data-collection point, with a data-collection module serving 12 GAFI 78 At present, Company Law cases (as opposed to Investment lawyers. Data should not be entered more than Law cases) are still submitted to the Commercial Registry once. The system outputs an application form, by the applicant. 42 The launch relating to registration, while on the second floor there are various government organiza- There was a small media campaign, led by the tions that businesses may need to consult post- Prime Minister, when the one-stop shop was re- registration. launched in 2004/5. Hassan Fahmy, the head of the one-stop shop, was interviewed on several A key feature of streamlining has been the separa- television program and there were various articles tion of the "front" and "back" offices, with cus- in the press. There were no awareness campaigns tomers dealing with just one person and approvals or large-scale advertising. being handled by officials who did not have direct contact with applicants. Various workshops were subsequently held to en- sure an understanding of the reforms on the part The procedures are set out in the flow chart. The of both officials and business people. In 2006, one-stop principle does not apply in its entirety. GAFI organized a training course on company The applicant still has to deal with a tax official at registration for 300 young lawyers so as to ex- the one-stop shop who passes the relevant details pand the supply of qualified professionals who to the central tax office for production of a tax could assist investors. This also weakened the card. This is made available at the one-stop shop monopoly power of established firms. the following day. He will also need to sign the Notary Public register. In Companies Law cases A national conference organized by the IFC in he may also have to contact the Commercial Alexandria in November 2006 attracted several Registry, though there are plans for GAFI staff to regional, and three national, television channels handle this aspect as they already do with Invest- together with the Arabic-, English-, and French- ment Law cases. language press, to promote the reforms among the international investment community. What difference did it make? What it looks like now The number of companies being registered shows a healthy upward trend, though the figures do In January 2005 GAFI moved into new head- vary from year to year. quarters in Cairo. There is an enquiry service for intending investors on the ground floor. On the basis of published figures, the number of The first floor houses the one-stop shop facilities procedures involved in starting a business has been reduced from 13 in 2004 to 6 in 2008 and the time taken from 37 days to 7. The cost of registra- tion has fallen from 63 percent of GNI per capita in 2005 to 18.3 percent in 2008. This has been accompanied by a dramatic reduction in the re- quirement for minimum capital. In 2004, this was over 800 percent of GNI pc: the latest figure is 2 percent. These improvements have been the result of both changes in legislation and a series of bold initiatives by management. The combined effect of the reforms is demon- strated in the levels of foreign direct investment in Egypt. 43 Procedures and documents for establishing a company pursuant to the Investment Law Documents: Bank certificate proving the deposit of 10 percent of a joint-stock company's capital or total capital for limited- liability companies. Photocopy of the ID or passport of the founders or owner and photocopies of the minor's birth certificates, if applicable. Power-of-attorney from the founders to their representative. Photocopy of a lawyer's card registered at the lawyers' syndicate not inferior than a primary lawyer, signed and sealed by the lawyer (where paid-up capital exceeds LE5,000). Ownership document or any document proving land allocation to the project or an assertion to present the ownership document within a year of establishment date (i.e., proof of company premises, which may be a rental contract). Procedures: The investor presents the required documents to the establishment unit to revise the establishment contract with GAFI's lawyer. Presenting the file to the establishment follow-up officer to undertake the following: Calculate the fees. Conclude the procedures with the following bodies: Lawyers' syndicate; Capital market authority; Notary Public; Union of Chambers of Commerce; Commercial Registry. Procedures are concluded and the company registered in the commercial registry within two working days. All these procedures are performed at the "One-Stop Shop." From the GAFI website--www.gafinet.org. What happens next will be followed by adaptation of GAFI proce- dures, electronic payment (using credit cards), The implementation of a new computer system in and electronic signatures. It is likely that the the Commercial Registry opens up the possibility of Commercial Register will be made available via information being passed electronically from and to the internet. GAFI. Similarly, passing information electronically to the tax office will simplify the production of tax Under an initiative agreed upon between the cards and reduce the time involved. Both these de- Minister of Investment and the Minister of Local velopments will involve active cooperation between Development, the Ministry of Investment aims the agencies concerned. to standardize and organize all services provided by the General Authority for Investment and Free Work is about to start on making the applica- Zones (GAFI) along with those provided by gov- tion for establishment available on line. This ernorates. These services include procedures of 44 Companies Registered in Egypt 8000 7000 6000 5000 4000 3000 2000 1000 0 2002 2003 2004 2005 2006 2007 2008 Egypt -- Starting a Business 40 35 30 25 20 15 10 5 0 2003 2004 2005 2006 2007 2008 Procedures Days Source: Doing Business database. Egypt -- Foreign Direct Investment 14 12 10 US$ billions 8 6 4 2 0 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Source: Bank of Egypt, Ministry of Investment. 45 Phase I Phase II Phase III Phase IV Mobilisation Mapping/Survey Reengineering Implementation Automation establishment, endorsement of general meetings Finding the right people was important. A new and boards, licensing, land allocation, investment set of skills was required. GAFI was in the fortu- promotion, providing guidelines, monitoring nate position of being able to offer incentives for implementation of projects, surmounting barri- commitment and performance, though this raised ers, and supporting SMEs.79 issues regarding motivation of staff working for other agencies. Lessons learned Throughout, the various agencies and gover- GAFI found that effective reform required strong norates have had their own development plans. and consistent direction. Without this, the dis- Properly coordinated, this is not a problem parate aims of individual agencies would take but, with inadequate consultation, there can precedence over a common objective. Prior to be duplication of effort and conflicting solu- 2004, GAFI's uncertain position in the govern- tions. The donor agencies can inadvertently ment structure impaired its authority and ability contribute to such confusion by working with to implement change. The roles of the Minister a single counterpart and not consulting each of Investment and the Chairman of GAFI, a other. It appears that the establishment of lawyer with direct experience of the private sec- one-stop shops for SMEs under the SME Law tor, were critical to the success of the post-2004 is not wholly consistent with the responsibili- organization. ties of GAFI under the Investment Law and the Companies Law. Co-locating the various agencies did not in itself bring significant benefits for potential investors. Lastly, success and recognition has encouraged A critical examination of procedures was an es- those concerned to press ahead with the program sential part of getting things right. The standard of reform. This is now seen as a continuing pro- approach adopted by the IFC, involving detailed cess and the message is getting through that mapping prior to re-engineering and implemen- meeting customer needs can be rewarding. tation of changes, proved its worth. 79 Ministry of Investment press release, 3 February 2009, w w w. i n v e s t m e n t . g o v. e g / M O I _ Po r t a l / e n - G B / Announcements/initiative03-02-2009.htm. 46 GAFI, Cairo­Registration of a Company (1) Investor's When Applicant representative Applicant queue number Applicant Applicant assembles Applicant Applicant (normally a applies to is displayed, attends at START information pays capital applies to lawyer) Commercial applicant Establishment and into bank GAFI for applies Registry for attends at Follow-up documents account registration to GAFI for name check relevant window for registration name approval window GAFI lawyer GAFI lawyer checks legal performs initial Follow-up Establishment clerk prints validity of check for lawyer invoice GAFI name and completeness enters data and advises 2 returns and permits and prints on next annotated applicant to contract steps form to take queue applicant number Data transferred via workflow system1 Commercial Registry Other bodies Bank issues performs certificate check for confirming duplicate capital names payment and returns annotated form 1 Currently, a paper file is also transferred. GAFI, Cairo ­ Registration of a company (2) Applicant Applicant delivers bank Applicant Applicant pays confirmation signs invoice at bank slips to NP register Follow-up Department Follow-up Department deals Follow-up Follow-up Department with: Department GAFI ­Lawyers' Syndicate (if retrieves file 1 passes file to required)2 and passes to 3 Notary Establishment ­Capital Markets Authority Public3 lawyer ( Joint-Stock Companies) Other bodies Bank credits Notary Public single payment reviews file and to relevant Capital enters data into Lawyers' accounts and markets NP system, syndicate issues authority then calls confirmation applicant of payments to authenticate 2 A Lawyers' Syndicate endorsement is required where the capital is more than EGP 5,000. The applicant has the option of using the Syndicate based at the One-Stop Shop or an external Syndicate. 3 For a joint stock company, this process takes place in parallel to registration with the Capital Markets Authority. 47 GAFI, Cairo­Registration of a Company (3) Applicant applies for Applicant Applicant registration in returns to Commercial Commercial 4 Registry Registry (Companies Law the next day cases only) Lawyer Follow-up Department arranges prepares Chamber of Commerce registration Decree and passes documents to applicant Secretary Manager (Companies Law cases only) GAFI (Investment allocates 2 signs Law) or serial Certificate number Follow-up Department liaises Documents (Companies with Commercial Registry returned to Law) (Investment Law cases only) applicant Commercial Representative Commercial Commercial Other bodies Registry Commercial of Federation Registry enters Registry provides Registry of Chambers in register and enters computer- registers of Commerce provides details in printed company registers new manuscript CR copy of member copy of entry database entry GAFI, Cairo ­ Registration of a Company (4) Applicant Applicant Applicant Applicant attends attends at Tax applies END 3 at Tax Office Office again to Social at OSS the following Security day desk GAFI Tax representative Other bodies completes Tax Office form Registration representative with data from for Social provides documents Security tax card and passes to Tax headquarters 48 CASE STUDIES: MAURITIUS Starting a business was taking far too long. Business domestic and global business companies, a process registration was not actually the problem--but it that was normally completed within 2 to 3 days. was part of the solution. Even so, starting business as a company would have involved dealing separately with the various Before the one-stop shop government bodies involved with tax, social se- curity, licensing, and the issue of relevant permits In 2005 the Companies Division was performing as well as company registration. The whole pro- well. It had received awards for the quality of its cess would have taken 46 days. It was reported services and was progressing toward ISO accredita- that it could take up to two years.81 Unincorpo- tion.80 The office handled registration of both rated businesses were not registered, which was causing difficulties in planning and providing support for small businesses. An Investment Climate Survey had identified bottlenecks and barriers to investment. Motivation for reform Falling sugar prices and decline in demand for textiles following the phasing out of the multifi- bre agreement82 made it necessary for Mauritius 81 Budget Speech, June 2006. The timeframe of 46 days is reported in Doing Business 2006 and Doing Business 2007. 82 The MFA, which, through a system of quotas, gave protec- tion to the textile industries of countries facing competition from countries with lower manufacturing costs, was termi- 80 ISO 9001:2000 certification was achieved in 2006. nated with effect in January 2005. 49 to diversify. This led to an increasing role for requiring the registration of unincorporated busi- financial services. nesses, drew on the experience of Singapore. There was a determination on the part of the In considering how best to implement these pro- government, which came to power in 2005 to visions, it was recognized that there were out- improve the investment climate and establish dated procedures, especially as regards licensing. Mauritius as a center of financial repute. There There was a critical review of existing practice had been several reform initiatives over the previ- with the aim of improving performance as mea- ous 5 years, including sured by the Doing Business indicators. In 2003 the authority to issue permits was taken away A new Companies Act in 2001; from local councilors and given to officials with a major review of legislation covering corpo- clear guidelines as to how the rules were to be rate governance,83 leading to the publication applied. of the country's own code, the Taylor Code, in 2003; Key features of the agreed-upon changes were that the trading license issued by the local author- licensing of auditors and new auditing stan- ity would be replaced by payment of a fee, and dards, implemented in the Financial Report- that all statutory inspections would be carried ing Act 2004; and out after registration. It would therefore no lon- establishing standards for creditors' rights in ger be necessary to wait for the inspections before insolvency. The Registrar of Companies is starting business. chairman of the relevant committee, which has drafted a new Insolvency Act due to go before Parliament in April 2009. Project planning and management The data from Doing Business convinced the The Ministry of Finance, through the Board of government that Mauritius could and should Investment, led the reform process, working with simplify the process of starting a business. the agencies involved to identify and map all pro- cedures associated with business start-up. There Options and consultation were regular meetings of stakeholders, with the Joint Economic Council representing the inter- In considering changes to legislation, the ests of the private sector. The Mauritius Revenue Mauritius team considered the approach adopted Authority, the bodies involved in inspections and in various other jurisdictions. The Companies licensing (including the Fire Department, the Act 2001 was based on the recently enacted New Ministry of Health, and the Tourism Authority), Zealand model, which was considered helpful to and the Passport and Immigration Office were all business, simplified the documentation involved involved. In April 2006 FIAS prepared a report in establishing a company, and removed the re- with an action plan,84 which formed the basis of quirement for applications to be notarized. The an announcement in the budget speech in June Business Registration Act 2002, for the first time of that year. 83 A project undertaken by the Committee on Corporate The original intention was to implement the Governance, chaired by Tim Taylor, and the Ministry of Economic Development, Financial Services, and Corpo- Business Registration Act 2002 in January 2007, rate Affairs in Mauritius, with funding by the FIRST Ini- but in the budget statement the Minister of tiative. Advice on best international practice was provided Finance announced that the implementation by Mervyn King, then Deputy Governor of the Bank of England. The Registrar of Companies was an active member of the Committee. 84 FIAS (2006). 50 date was being brought forward. The act came provided in the Act. The application for incorpo- into force on 1 October 2006. ration is now a single form with company details, to be submitted with forms of consent signed by directors, secretaries, and shareholders. The law A new single-page form was introduced for The present arrangements are the culmination of registration of unincorporated businesses. a series of legislative reforms, starting with a new Companies Act in 2001. In 2002 a Business Registration Act was passed, for the first time A single number requiring all businesses to be registered, but this did not take effect until 2006. While the former series of tax and social security registration numbers are still in use, all agencies Following the June 2006 budget statement, a now recognize the business registration number Business Facilitation Bill was presented to and will be able to retrieve records on this basis. Parliament with an implementation date of 1 October 2006. This amended 15 items of legislation. In particular, it obliged the Registrar Computer systems of Businesses to give online access to: The implementation of the changes involved sig- the Board of Investment; nificant development of computer systems. The the Small Enterprises and Handicraft Devel- specification was handled in house with support opment Authority; from the Central Informatics Bureau and tenders invited for implementation and system mainte- any local authority; nance. In March 2005 a contract was awarded to the Mauritius Revenue Authority; and State Informatics Limited, a company with a government majority shareholding, to implement the Ministry responsible for social security.85 the new system by January 2007, subsequently There were corresponding changes to tax and so- brought forward to October 2006. The company cial security legislation, to the Local Government was familiar with the Registry's requirements, Act, and to the Planning and Development Act. having developed the earlier computer systems.87 It is also responsible for other government sys- The Act also introduced a combined Building tems, including tax and social security. and Land Use Permit86 to replace the separate requirements that had existed up to that time. The registry system is hosted on a server at the Government Online Service. The database is also accessed by the Mauritius Revenue Authority, the Board of Investment, the Ministry of Social Forms and documentation Security National Solidarity and Senior Citizens The Companies Act 2001, following the New Welfare and Reform Institutions, the Small Zealand model, abolished the mandatory require- Enterprise and Handicraft Development Author- ment for memoranda and articles. Very few private ity (SEHDA), and local authorities, meaning that companies now submit their own memoranda there is no need for the Registry to transfer infor- and articles, instead relying on the standard texts mation directly to these organizations. 85 s. 9A, Business Facilitation (Miscellaneous Provisions) Act 2006. 87 The previous system had been operating since November 86 Amending s. 98, Local Government Act 2003. 1996. 51 Mauritius--The Business Registration Network Companies division Mauritius revenue authority Tax Government online centre server central business registration database Small Enterprises and Handicraft Development SEHDA server Authority 9 local authorities Mauritius network services 50 social security offices Internet Social Security Banks On-line server customers Source: Companies Division, Ministry of Finance and Economic Empowerment The Social Security ministry downloads informa- whole range of statutory documents. Applica- tion from the central server to its own server. This is tions submitted online are accessed by staff in the done in one batch on a daily basis, though it can be Companies Registry who review the data before done more frequently if required. Once on the So- authorizing the issue of a registration certificate. cial Security server, the 50 local Social Security of- They also take account of forms of consent signed fices are able to produce reports showing businesses by directors, secretaries, and shareholders, copies (and thus actual or potential employers) located of which may be faxed to the Registry. within a specific area. Where appropriate, they then organize visits within the following 14 days. The launch The central server also receives online applica- tions via Mauritius Network Services,88 a service The new legislation, systems, and procedures provider tasked with making the service available came into effect on 1 October 2006. This in- to registered users of the online filing facility. In- cluded a new requirement for the registration of corporations are currently handled in this way unincorporated businesses as well as changes of and there are plans to extend this approach to the those for companies. The launch was preceded by a series of work- 88 Mauritius Network Services is owned by State Informatics Limited and CrimsonLogic Pte Ltd, which implemented shops to explain the changes to the businesses online business registration facilities in Singapore. affected. There was also television, radio, and 52 press coverage. The timetable was tight as the relevant fee (dependant on the activity) is paid relevant legislation was not approved until at a counter where the officer concerned enters September 2006 and there could not be absolute details into the computer system (hosted re- certainty about the provisions of the law until it motely at the Government Online Center) and had been passed. produces a business registration card. The pro- cess is generally completed within about 5 min- Promotion by the various ministers of the bene- utes, subject to any queries about the information fits of the new business registration system (pos- provided. sibly over-emphasizing some, such as facilitating access to credit) led to vast queues when the A company incorporation involves completion of Registry opened for business on 2 October 2006. an application form, which is supported by a This resulted in agitation among some of the consent form for each of the directors, secretaries, customers and capacity problems with the com- and shareholders. There is an option to draft a puter system, which became very slow, necessi- constitution, duly certified by a legal practitioner, tating an urgent upgrade of the communications but this is no longer mandatory and most private links. Procedures were revised so that only the domestic companies rely on the standard consti- information necessary for issue of a business reg- tution provided in the Act. A name may be re- istration card was entered while the customer was served in advance, but this also is optional. present, with other details being left until later. Staff had to work late into the night to clear the In addition, the applicant is required to provide a applications. utility bill, and a copy of a national identity card for each person concerned. The documents are accepted at the front desk, What it looks like now where basic details are entered into the computer Registration of companies and businesses takes system and advice on the fee to be paid is handed place at a modern office in the capital, Port to the applicant to be settled at the cash desk. Louis, with a staff of 120. In addition, one of- The documents are then reviewed and data en- ficer is stationed on the island of Rodrigues. tered in the back office. When the cashier receives the fee, this is also noted in the system. Application for registration of an unincorpo- rated business is made to the Registrar of Busi- Once the application has been reviewed and data nesses. The reception desk provides a single-page entered into the central database, an incorpora- form for completion. Once this is done, the tion certificate and business registration card are printed. Registration is generally completed within a day and the aim is to reduce this to half a day. The application can be completed online,89 but the take-up of this service has been slow. It is still necessary to provided signed consents, though these may be faxed to the Registry. The incorporation certificate can, if requested, be sent by post. 89 http://mns-services.intnet.mu. 53 Each day, the Mauritius Revenue Authority Mauritius -- Starting a Business downloads data from the central database to its 50 10 own server. All companies are immediately regis- 45 9 40 8 No. of procedures/cost tered on the register of taxpayers, but unincorpo- 35 7 (percent GNI pc) Days for start-up rated businesses are only registered as taxpayers when a trading license has been issued by the 30 6 local authority. 25 5 20 4 15 3 The Ministry of Social Security also downloads 10 2 data each day to its database of employers. This 5 1 can then be accessed by its 50 local offices. Each 0 0 office can produce a report of new businesses in 2005 2006 2007 2008 the locality and arrange to make contact within Procedures (number) Time (days) the following 14 days to obtain details of any Cost (percent GNI per capita) employees. Source: Doing Business database. There is a requirement to obtain a trading license from the local authority before commencing peak after the launch and there has been continu- business. This license is granted immediately on ing growth in the numbers since then. payment of the relevant fee. There has been a corresponding increase in the number of employers registered by the Ministry A small business may tick a box on the applica- of Social Security, from 13,000 to 15,000. tion form for it also to be registered with the Small Enterprises and Handicraft Development Authority (SEHDA), which has a representative at the Business Registry, responsibility for sup- What happens next porting the development of SMEs, and can provide There are some features of the computer system, business counseling and facilitation, training, in- notably some of the Management Information formation, and assistance with marketing. SEHDA System, which is still to be completed. Also, data is another organization that is able to access the regarding corporate insolvencies needs to be central database. added to the central database. There are plans for the further development of What difference did it make? the online system, including making the remain- ing forms available via the web site and providing There was a dramatic reduction in the time search facilities. There is a need to improve pay- needed to start up a business following the intro- ment facilities, providing the option of using a duction of the one-stop shop. The number of credit card for payment rather than having to procedures was reduced from 6 to 5 and costs fell arrange and pay for a bank transfer. by 43 percent. Consideration will be given to the introduction There has been a significant increase in the num- of document scanning and the use of XBRL for ber of incorporations, starting before the launch the delivery of accounts by public companies and of the new arrangements and coinciding with companies holding a category 1 global business publicity for the planned changes. There was a license. 54 Mauritius--Starting a business licensing activities of four ministries91 with a view as a limited company to streamlining and simplification. This approach can then be extended to other licensing bodies. Before the Reforms As It is Today Apply to registrar of Apply to the registrar of companies to reserve name(a) companies for incorporation(d) Lessons learned Throughout, there was a clear shared vision. The Collect incorporation government had set the policy. Any disagree- Apply to local authority certificate and business for trading permit ments among officials from the various agencies registration card(e) regarding the overall approach were resolved in the very early days of the project. The detail of Await inspections(b) START BUSINESS the implementation obviously took longer. Reg- istry staff were kept fully informed as the project progressed. The commitment of all concerned Notary prepares Pay fee to local was critical when the new procedures were documentations(c) authority within 15 days brought into force. Respond to approaches There was an acceptance at the outset that it was Apply for incorporation from social security and inspection authorities necessary to view the business start-up process as a whole. Company registration was not, in itself, a (d) Registrarenters information onto Central Business major problem; getting the necessary licenses and Collect incorporation certificate Registration database which is permits was. The desire to have a register of all accessed by the Mauritius businesses, which could easily have become an ad- revenue authority, the ministry of social security, local ditional burden both for the businesses concerned Apply for tax authorities and SEHDA. and for officials, was used as an opportunity to re- registration (e) Since 2006 all businesses, engineer the whole process. including companies have needed a business registration card. The technical solution, whereby the Central Apply for social security registration Business Registration Database is maintained by the Government Online Center, thus relieving the Registry of responsibility for computer START BUSINESS operations while providing a facility for relevant (a) Requirement for prior agencies to have access to registered data, has registration of a name was removed in 2006 worked well. The Mauritius Revenue Authority, (b) Sanitary authority, police the Ministry of Social Security, local authorities, department, fire services and SEHDA have been able to develop their own department, ministry of health, ministry of the environment and systems without concerning themselves with the any relevant industry-specific technical details of the business registration system licensing authorities. other than the structure of the database. (c) Requirement for use of a notary was removed by the companies act 2001. The online filing facility, while functional, is still rarely used. This may in part be due to the need Work is continuing on rationalizing business licensing.90 Consultants are initially reviewing the 91 The Ministries of Agro Industry and Fisheries; Finance and Economic Development; Health and Quality of Life; 90 World Bank, Public Enterprise Reform Project. and Tourism, Leisure, and External Communications. 55 Mauritius -- Incorporations (Monthly Data) 600 500 400 300 200 100 0 3 03 n. 3 ay 4 04 n. 4 ay 5 05 n. 5 ay 6 06 n. 6 ay 7 07 n. 7 ay 8 08 8 00 0 0 00 0 00 0 00 0 00 0 00 20 20 20 20 20 20 20 20 20 20 20 20 2 .2 .2 .2 .2 .2 n. ay . pt pt pt pt pt pt Ja Ja Ja Ja Ja Ja M M M M M M Se Se Se Se Se Se Domestic companies Global business companies category 1 (Banking and insurance) Global business companies category 2 Source: Doing Business database for constitutional documents (where applicable) Once the Business Registration Act came into and forms of consent to be submitted in paper force, there was a requirement for all businesses form or possibly by fax. There are obvious bene- to be registered. This placed extraordinary de- fits to the Registry in having applicants present mands on an office that was implementing information in electronic form, removing the major change. It would have been easier for all need for keying by Registry staff and allowing for concerned had the implementation been phased a degree of automatic verification. There may in or a grace period allowed, in which existing however be a need for some incentive, such as a businesses could be registered. reduced fee, to encourage take-up of the facility. It seems likely that the benefits of registration, in- The shortening of the implementation time- cluding the prospect of access to finance, were frame, announced in the budget speech in June oversold by politicians. Many of those who regis- 2006 and requiring establishment of the one-stop tered did not subsequently start businesses. A more shop facility by 1 October, put all concerned carefully worded brief might have avoided this. under great pressure. This increased the risk of something going wrong, but managers and staff Finally, there is a recognition on the part of all at all the agencies responded to the challenge. A concerned that the process of reform, once surge of adrenalin ensured the desired results, started, is a continuing one, which generates a though it is not clear that this would always be flow of ideas about how services can be further the case in such circumstances. improved. 56 PROBLEMS EXPERIENCED AND LESSONS LEARNED The first lesson from the case studies is that half- There needs to be a shared vision. There is clear hearted reform does not work. Setting up an merit in resolving any differences of opinion effective one-stop shop requires the active coop- among stakeholders regarding the overall ap- eration of many different parties. This requires proach at the very beginning of the project. two things: Details can be argued about later. unambiguous political support from the Registry staff are important stakeholders and highest level, and need to be informed and motivated. They are likely to need new skills. Almost everybody is a highly motivated project team. likely to need customer-service training. Setting up a one-stop shop is not an end in itself. It is only a means to an end and should be seen in There needs to be a plan. Stakeholders who are the context of a wider reform program. Concen- aware of the plan are less likely to throw wrenches trating on how the entrepreneur sees the business in the works. Formal procedures to keep the plan start-up process is an effective way of working under review will help keep the project on out what reforms are necessary. track.92 The structure is relevant. Just bringing one repre- On the other hand, it is possible to get distracted sentative of an organization into a one-stop shop by issues that are not directly related to this. is not good enough. If entire sections can be There may be all sorts of reforms that are desir- accommodated in the same place, that makes able but are outside the scope of the project. sense, but physical co-location is no longer Colombia reported that it was difficult to avoid essential. getting involved with issues that did not have direct relevance to their already very demanding project. 92 See, for instance, www.prince2.com. 57 Most organizations do not actually need paper It is not always necessary to send informa- documents, even if they think they do. They tion to other organizations. The approach in need data. It is far better for this to be transferred Mauritius--to put the information on a central electronically. database and let other organizations take what data they need--has proved a practical solution, Most organizations actually require much of the with each user being responsible for their own same data, so it is appropriate for this to be on systems development. Holding the same infor- one form and keyed in once. The first step should mation on several different databases, as in Egypt, always be to document and formally review exist- tends to result in problems of inconsistency as ing procedures, asking who does what, and why. well as in additional costs. Process mapping has unearthed various practices of which managers were unaware and which In all the case studies, the registries concerned served no useful purpose. put considerable effort into explaining to the public the nature and benefits of the changes It is worth keeping an open mind about that were being introduced and encouraging technical solutions. Possibilities such as the use the use of the new procedures. All said that of web portals and online filing now seem they wished that they had done more. It is obvious, though this was not always so. New clearly important to both prepare customers communications technology may be particularly for the change and to celebrate the opening of relevant. the one-stop shop. Celebrating the opening of a one-stop shop in Da Nang, Vietnam. 58 ARMENIA--APPLYING THE PRINCIPLES Since the earlier case studies were prepared, Ar- with the State Registry, but in 2008 the start-up menia has been considering how to implement a formalities for a company also involved a commer- one-stop shop. Could the principles discussed cial bank, the tax authorities, a notary, the Patent earlier be applied in this context? Office, the Social Security Fund, and the National Statistical Service. The State Registry has 8 offices All individuals and companies involved in entre- in the city of Yerevan and 41 other regional offices preneurial activity in Armenia must be registered throughout the country. Starting a business in Armenia 2008 No. Procedure Time to complete Cost to complete 1 Register the name of the company at the State Patent Department 2 days AMD 5,00093 2 Procure a written statement of deposited charter capital at a bank 1 day no charge 3 Procure a registration card from the State Registry Office and fill it out 1 day no charge 4 Pay the registration fee at any bank 1 day no charge 5 Register with the State Registrar 7 days AMD 12,000 6 Register with tax authorities and obtain a tax identification number (TIN) 2 days no charge 7 Obtain a right at National Police Department to order a seal for all official 1 day AMD 6,000 company transactions 8 Order a seal 2 days AMD 15,500 9 Register with statistical office 1 day no charge Source: Doing Business 2009. 93 370 Armenian drams 1 US dollar. 59 Reviewing existing procedures validate a name against the register of names maintained by the State Registry. In the short There was a need for reform of business registra- term, procedures have been improved with State tion in order to provide better service--and thus Registry offices dealing with the State Patent encouragement--to new businesses. While there Department by e-mail to check the availability of were ideas about the sort of solution that was de- proposed names. sired, it was recognized that a logical approach was needed. The reform initiative had the per- sonal support of the Prime Minister. Reviewing the organization With help from the IFC, the Ministry of Trade and Economic Development reviewed existing It has been decided that responsibility for regis- practices before embarking on major change. In tration should remain with the State Registry doing so, they questioned the relevance of each under the Ministry of Justice. The government stage in the start-up process. considered the organization of business registra- tion in various European countries, particularly A report prepared in September 200894 high- in the Balkans, and concluded that the "European" lighted the need to address the legal framework, approach, which maintained a clear distinction institutional responsibility, use of technology, between business registration and taxation, was and the prospect of e-registration. Since then, preferable to transferring responsibility for the several of these issues have been acted upon. registers to the Tax Administration as had happened in the Russian Federation, Georgia, and Azerbaijan. Reviewing the legal requirements The eight State Registry offices in Yerevan were A Government Decision in December 200895 re- poorly equipped and the statutory registers were moved the obligation for every company to have all paper based. As part of the package of reform a seal, thus effectively removing two of the nine measures, there was an opportunity to merge or procedures involved in starting a company. It also co-locate the offices at a single site with better eliminated the minimum capital requirement, facilities, improving efficiency and providing which not only reduced the initial financial out- better service to customers. lay but also reduced the need for checking of documentation to ensure that the capital require- Suitable premises were identified in the Innova- ments had been complied with. tion and Entrepreneurship National Center building (formerly the Central Scientific and Meanwhile, consideration was being given to the Technical Library of Armenia). One floor of the way in which company names were handled. The building had been refurbished to accommodate law96 requires that a business should register its the Accounting Centre for SMEs, which indi- name at the State Patent Department. Armenia is cated the potential of the building for State probably the only country in the world that has Registry purposes, and the intention was to use such a requirement. Consideration is being given the building to house several business-related to changes that would make it necessary only to services, including the SME Development National Center of Armenia and the Intellectual 94 IFC (2008-1). Property Agency. 95 Reference? 96 Law of the Republic of Armenia on the State Registration of Legal Entities (2001); Law of the Republic of Armenia While the eighth floor was suitable for office ac- on Joint-Stock Companies (2001). commodation, it did not provide the ease of 60 State Registry, Armenia--Proposed computer network Management and Administration (numbers to be determined) 8th floor Web site and e-filing facility Web server Other Support government offices workstations and regions Registry server Back-up server Communications server (off-site) Ground floor Reception Customer service desks Computers for use by customers access that would be necessary for members of passport98 generated automatically when the the public or the customer-friendly environment process is complete, while information about that the State Registry was seeking to promote. registered business is made available via the State There was, however, a large open area on the Registry web site. ground floor that could be used for this purpose. It was agreed that the public area would be lo- The draft requirement for the computer system cated on the ground floor and other administra- includes the provision of information to the tax tive offices on the eighth floor. authorities. On receiving this information, the tax system could automatically forward a tax identification number (TIN) to the State Regis- try so that this could be given to an applicant at Reviewing technology needs the same time as the company passport. In prin- Everybody recognized the need for effective ciple, an applicant should not have to provide the computerization. This needed to go further than same information to more than one part of the existing practice of simply recording infor- government and the current reforms should go mation in a database post-registration.97 The as far as possible to achieve this. proposal under consideration involves an inte- grated registration process, with the company 98 A certificate that is annotated with changes during the life of a company. Under a computerized system, a new docu- 97 All registers are currently manual, but data is entered into ment would probably be issued and the original destroyed a database at the central office of the State Registry. when any change occurred. 61 It is proposed that the data entry facility to be Proposed layout for customer service used in the one-stop shop be designed in such a workstation way that it can be readily adapted both for use by regional offices throughout the country, using a virtual private network, and for online filing by companies and entrepreneurs. Designing the one-stop shop Many countries handle large volumes of applica- tions for registration via counters in a one-stop shop. The volumes in Yerevan were not very high. It was anticipated that the one-stop shop would deal with an average of 60 registrations or other transactions per day. This meant that a relatively company passport shortly afterward from the informal approach could be employed. Such an reception desk. approach already worked in the individual regional offices, so there did not appear to be any reason to Rather than place notices above each customer- establish barriers between the customer-service of- service desk indicating the functions handled ficers and their customers. The fact that all pay- there, it is proposed that staff should in general ments were made at a bank, and the office did not be trained to handle the full range of functions of therefore have to consider the security of cash, the one-stop shop and that the reception desk supported this approach. While it would be sensi- should refer customers to the next free desk. ble to have a reception desk to deal with initial enquiries and to direct customers as appropriate, there would probably not be a need for a sophisti- cated queue-control system. Planning the implementation It has been suggested that an applicant should be The complexity of the changes--involving not able to sit alongside the customer-service officer only ensuring the timely availability of premises while details of the application are keyed into the and computer systems that met the Registry's re- computer system and the documents scanned. In quirements but also a range of consultation, staff- the case of individual entrepreneurs, registration ing, documentation, publicity, and promotional could then be completed and relevant documen- activity--meant that dedicated resources would be tation produced on the spot. For cases requiring needed in order to manage the project. It was the approval of a senior officer, the application therefore proposed that a professional project could be referred, and approval indicated, elec- manager should be recruited to oversee and coor- tronically. The applicant could then pick up the dinate all activities. 62 Implementation plan ID Task Name June July August September October November December Jan 11/05 18/05 25/05 01/06 08/06 15/06 22/06 29/06 06/07 13/07 20/07 27/07 03/08 10/08 17/08 24/08 31/08 07/09 14/09 21/09 28/09 05/10 12/10 19/10 26/10 02/11 09/11 16/11 23/11 30/11 07/12 14/12 21/12 28/12 1 Project initiation 2 Consider proposal 3 Issue government decision 28/05 4 Recruit project manager 5 Appoint project manager 04/06 6 Agree organizational structure 7 Conene stakeholders meeting 8 Premises 9 Agree works requirement 10 Procure works 11 Implementation (1) 12 Implementation (2) 13 Computer systems 14 Agree requirement 15 Procure system 16 Contract 16/07 17 Detailed design 18 Development 19 Hardware delivery and installation 20 Software delivery 21 Testing 22 Acceptance 12/11 23 Staffing 24 Define staffing requirements 25 IT familiarity training 26 Assess existing staff 27 Appoint/recruit 28 Reallocate other personnel 29 System-related training 30 Other job-related training 31 Documentation 32 Review/revise forms 33 Prepare guidance material 34 Prepare operational manual 35 Prepare promotional material 36 Public awareness 37 Announce plans 38 Publicity campaign 39 Workshop for customers 63 40 Launch One-Stop Shop 10/12 Note: This plan is indicative and subject to change in the light of management decisions. While the chart only shows activities up to the launch of the one-stop shop, there should subsequently be a project review and planning for further development. The individual selected would need to have: The project manager would need to coordinate the activities of a team of individuals from several a proven track record of delivery in a project departments. He or she would report to a project management role; board comprising senior managers of all stake- holder departments. a good understanding of government struc- tures and organization; What happens next? strong leadership skills with drive and enthu- siasm to motivate and challenge; Hopefully, the State Registry will--in 6 months or so--have its one-stop shop. We wish it well with excellent communication, team-building, and the enterprise and hope that its customers will ap- stakeholder management skills; preciate the benefits. But that will not be the end of the matter. Reform is a continuing process. We strong customer focus with the ability to can expect that regional offices throughout the translate customer needs into accurate re- country will be introduced to the network and quirement specifications; themselves become one-stop shops. We can expect that entrepreneurs will register online. We can ex- an innovative and hands-on approach with pect that businesses will come to recognize the the ability to recognize and respond to oppor- value of the information held by the State Registry tunities within the business; and and make use of this to inform their business deci- sions. And there will be all sorts of other opportu- good presentation skills. nities that we cannot even anticipate at this stage. 64 Armenia--Company Registration--Existing Process Regional state Central state Applicant Other agencies registration office registration office Pay fees at bank Name application Application for registration Persent Charter application Decision of Founders Copy of passport of Executive Director Receipt for fees E-mail name Apply to Cadastre enquiry Agency Intellectual Property Agency advises whether name is available Cadastre Agency conforms ownership of property Receive confirmation of Copy application ownership from form; Cadastre Agency Enter details in manual register; Type company passport Collect company passport; Sign register 2 2 65 Armenia--Company Registration--Existing Process (2) Regional state Central state Applicant Other agencies registration office registration office 1 1 Application letter Company passport Apply to Tax Charter Authority Confirmation of ownership of business premises Tax Authority issues TIN File forms in Receive TIN archive Register Application letter with statistical Company passport office TIN Send copy of forms to Central Office (every 10 days) Enter details in Statistical Office computer system; registers company File forms in central archive Print summaries for other agencies and dispatch START Tax Administration, BUSINESS Statistical Office etc receive prints 66 Armenia--Registration of a Company Proposed Procedure (1) Registration clerk System Other RECEIVE APPLICATION Start application; select `New company' Allocate case number; open screen for entry of details of applicant Enter name, address, telephone of applicant Verify and store details; open screen for entry of proposed names Enter proposed name(s) This process is currently conducted by an exchange of e-mails. There is a choice of names, so the Match names against IPA database first one that is identified IPA database as acceptable should be added to the company record automatically as Print receipt with contact soon as it is received. name and case number Pass receipt to applicant Display option to continue No Continue? Yes Close session (case pending) 2 67 Armenia--Registration of a Company Proposed Procedure (2) Registration clerk System Other 1 Each document should Open screen for be identified and recorded scanning of documents in the transaction history Scan documents Store images as PDF files Display option to continue No Continue? Yes Display screens for data entry Close session Enter data (case pending) Verify and store data If data has not been entered this can be done Place documents in file on the 8th floor, otherwise and send to 8th floor the case is being referred for approval 3 68 Armenia--Registration of a Company Proposed Procedure (3) 8th floor System Other 2 Documents received on 8th floor Clerk checks Display record; highlight computer record incomplete data Data entry No complete? Yes Enter Data entry data screens Name No allocated? Yes Allocate to pending Bring forward for review after set time Authorization needs to take place at a computer. It may be appropriate to Senior officer use an alternative to authorizes password verification such as a fingerprint reader. Record authorization; company is `live' 4 69 Armenia--Registration of a Company Proposed Procedure (4) Information Desk System Other 3 An application for State Registration may or may Tax No not include an application? application for tax registration. This will be evident from the Yes transaction history. Transmit details to Tax Administration Tax Administration stores data, allocates TIN and advises State Registry system TIN No received? Yes Transmit details to Statistic Agency Statisties Agency stores details Passport should be printed on special paper Print company passport on a designated printer. at Information Desk It should include the digitised signature of the authorising officer. HAND TO APPLICANT 70 THE WAY FORWARD This book has concentrated on physical one-stop In returning to the question posed at the beginning, shops, though there is an obvious trend toward the it is evident that very few one-stop shops are yet able provision of services online. Provision for online fil- to provide a truly one-stop service. Hopefully, those ing should be a feature of any new business registra- responsible will realize this and continue to have this tion system, even if this will not be implemented as their goal, the ultimate destination on their road straight away. There is in practice little difference be- map. Even so, the less-than-perfect one-stop shops tween the facility needed for an official to capture do not have reason to despair because they are in data and a facility for that same data to be keyed in general outperforming those organizations that do by the applicant using a web form. not have a one-stop shop. In recent years, there has been a move from stor- The reason that these registries perform better is ing paper to storing scanned images, but there is not simply that they have one-stop shops, it is that an increasing awareness of the value of informa- they have introduced customer-oriented reforms. tion in data format. Several countries have now Once the business registration process in any adopted XBRL99 as a standard for the filing of country is subjected to serious critical analysis, it is company accounts. invariably concluded that procedures can be sim- plified and that a one-stop shop would best meet To date, despite often-similar legislative require- the needs of the business community. Even if at ments, there has been little standardization of first this involves more than one stop, there will be systems and procedures for business registration. fewer stops than before. There are obvious candidates for standardization, such as the registries in the OHADA countries, So one-stop shops do work, which is good news but there is scope for greater use of proven prac- for the 58 countries that have adopted this ap- tices in other countries as well. proach. It is good news too for those that have yet to embark on business registration reforms, as 99 eXtensible Business Reporting Language: www.xbrl.org. they can benefit from the experience of others. 71 REFERENCES Bagaudinova, S., Khalifa, D., and Petriashvili, G. Ghoneim, A. (2002). "Competition Law and (2008). "How to Reform in 3 Months," in Competition Policy: What does Egypt Really Celebrating Reform 2008. Washington, D.C.: Need?" Paper submitted for the Economic Re- IFC/World Bank/USAID, 2008. search Forum 9th Annual Conference, 2002. Cabinet Office (UK) (2006). Executive Agencies: Hamdy, S., and Sader, F. (2008). Simplifying A Guide for Departments. Business Start-Up Procedures in Egypt: The Alexan- dria Project Memoirs. Washington, D.C.: IFC Djankov, S. (2008). The Regulation of Entry: A PEP MENA, September 2008. Survey. Washington, D.C.: World Bank, July 2008. Huskey, E. (2005). "Lowering the Barriers for Entry for Russian Small Business: Will the 2001 European Council (2006). Brussels European Law on the Registration of Juridical Persons Council, 23/24 March 2006: Presidency Make a Difference?" Paper presented at the Con- Conclusions. www.eu2006.at/en/News/Council_ ference on Commercial Law Reform in Russia Conclusions/2403EuropeanCouncil.pdf. and Eurasia, Kennan Institute, Woodrow Wilson International Center for Scholars, Washington, Fahmy, S., and Brown, J. (2006). "One-Stop D.C., April 2005. Shop: A Case Study." Paper presented at the Private Sector Development Forum 2006, World IFC (2005). "One-Stop Portal of Business Bank. Procedures for CAE (Centro de Atención Empresarial) in Colombia." Procurement Notice, FIAS (2006). "Mauritius: Operational Plan-- April 2005. Business Startup; Work Permits; Incentive Regime Reform." Working paper. Washington, IFC (2008-1). Armenia Business Registration D.C.: World Bank Group, April 2006. System Assessment Report, 30 September 2008. 72 IFC (2008-2). "Doing Business 2009 in the Arab 2008, www.mcc.gov/documents/qsr-albania.pdf. World Highlights Increased Regulatory Reform." See also www.qkr.gov.al. IFC Press Release, 10 November 2008. Ministry of Investment, Egypt (2009). "Initiative IFC Cairo (2007). "Doing Business 2008: Egypt on Decentralization of Investors' Services." Press Is World's Top Reformer of Regulation." Selected release, 3 February 2009. MENA Press Release, 26 September 2007. Sader, F. (2000). Do "One-Stop Shops" Work? IFC Mekong Private Sector Development Facility Washington, D.C.: Foreign Investment Advisory and Central Institute for Economic Management Service (FIAS), World Bank Group, 21 Septem- (2007). Simplification of the Business Start-up ber 2000, www.led.za/docs/92.pdf. Process and Procedures: A Handbook for Provinces. MPDF/CIEM, June 2007. Stone, A. (2006). "Establishing a Successful One Stop Shop: The Case of Egypt." Paper presented Islam, N. (2008). Creating Frameworks for Anti- at IMF/AMF High-Level Seminar on Institu- corruption and Ethics. Reform Case Study 0803. tions and Economic Growth in the Arab Washington, D.C.: Center for International Countries, Abu Dhabi, December 2006. Private Enterprise, 31 January 2008. World Bank (2008). Mauritius: Public Enterprise Millennium Challenge Corporation (2008). Reform Programme, Terms of Reference for Advi- Albania: Threshold Quarterly Report, August sor, www.gov.mu/portal/goc/mof/files/torper.pdf. 73 ANNEX A: PLANNING A ONE-STOP SHOP Planning a one-stop shop 1 Forget about one-stop shops ... ... at least for the time being. You want to improve business start-up procedures. Implementing a one-stop shop is just one of the things you could do. 2 Work out why you want to reform There may be several reasons, but which are relevant to the various stakeholders? Increasing investment and encouraging SMEs are ideas likely to be well received by politicians. There may well be potential benefits in terms of increasing the tax net and reducing the role of the informal sector, but these are probably not arguments that would go down particularly well with the busi- nesses affected. You probably want to minimize corruption, but this may not be something that you want to draw attention to. On the other hand, simply reducing bureaucracy, including the time and cost involved in starting a business, is unlikely to raise objections--except possibly from a few vested interests. Notaries might find that they have less work and various intermediaries may realize that they will no longer be necessary. 3 Get support from the top--the very top Case studies of successful reforms refer to changes being supported--often demanded--by presidents and prime ministers. Then nobody questions whether there should be reform and you can concentrate on how to reform. 4 Build a team You need not only a leader who will ensure that things happen, but also the active support of all stakeholders. You want a solution that benefits everybody--the business registry, the tax authorities, social security, pensions, and various licensing authorities. But especially the private sector. And more especially small businesses. 5 Ask for help If you are working in a developing country, there are various people who have relevant experience and would be only too pleased to help. You could start with the contacts on the back cover. It may be that you want a few tips on how to proceed or you may need financial support for the project. Whichever, there's no harm in asking. 6 Prepare a plan Work out what you need to do, the resources needed, and any constraints imposed by the need to change legislation, implement new computer systems, find new premises, secure funding, or anything else that could mean that the project timetable could be at risk. Monitor the plan on a regular basis and update it if necessary. 74 7 Find out what is happening now You may think you know, but detailed mapping of procedures invariably yields surprises. There are almost always processes introduced for reasons that nobody can remember, duplication of activities, and things that are unnecessarily complex. The mapping needs to take place in all the organizations involved with business start-up formalities, not just the registry. 8 Ask why you are doing this at all Don't be afraid to ask the fundamental questions. Why are you registering businesses? Does it help them? Could it help them? Who uses the information from the registers? Who would use it if it were more accessible? How far does the information duplicate other registers? Is all the information relevant or are you just collecting it because you have always collected it? 9 Don't be afraid of the law "Because it's the law" is not (in this context) an acceptable answer to the question of why you are doing something. Laws exist for a purpose. What were the politicians trying to achieve when they included a particular requirement? Did it serve the purpose? Could the requirement be repealed or simplified? Does the law still work if the technology changes, or is there an assumption that information is always going to be on paper with a manuscript signature? If necessary, be prepared to propose changes to the law, but consider the implications for the project timetable. Consider whether necessary changes can be made by regulation rather than an Act of Parliament. 10 Simplify procedures Remove processes that don't serve a specific purpose. Get rid of multiple authorizations. Streamline the processes. 11 Simplify payment Get rid of multiple fees and establish a transparent fees structure. Can one office collect fees on behalf of other agencies? Should fees be paid at the office or at a bank? Consider the benefits of flat-rate fees rather than fees based on the amount of capital in the business or the activities in which it is engaged. 12 Don't computerize ... ... until you have a clear view of how the new procedures will operate. When you are streamlining, you may of course see the potential for doing things better by using computer systems, but don't computerize outdated procedures. It's just a waste of time, money, and effort. 13 Now think about a one-stop shop ... ... because it is almost inevitably part of the solution to the problem. But where would this be located? Do you need several around the country? Who would they report to? 14 Don't set up a new agency It is generally better for an existing agency to provide the one-stop shop rather than to introduce an entirely new body, which will be in danger of becoming "one more stop." In some cases--for instance, if you are taking registration away from the courts--you may need a new organization. If so, this should replace the organization previously responsible for registration, which should no longer figure in the process. 15 Don't ask for a representative of other agencies to be based at the one-stop shop Having one person from, say, the tax office based at the one-stop shop is unlikely to be helpful. He or she is unlikely to have the authority to complete all registration functions on behalf of the parent organization and will end up simply acting as a post office, referring papers to the head office and receiving confirmation of the tax registration. This is not likely to be a career- enhancing job, even though the person concerned will be expected to be well informed about relevant statutory requirements. It is also likely that there will be problems in providing cover for any absences. If the tax office (or other agency) chooses to locate an entire section at the one-stop shop, enabling all relevant activities to be completed on site, this is of course an entirely different proposition. 16 Simplify the documentation To a great extent, government agencies require identical information about businesses. Can all necessary information be collected via a single form? Also, do you really need constitutional documents for a company or could applicants have the option of adopting a model constitution as set out in legislation? 17 Use a single number If possible, agree to use a single number to identify a particular business, whether for business registration, tax, social security, or any other government-related purposes. Even if abolishing their numbering systems proves too much of a wrench from existing arrangements in all the agencies, make sure that there is one number that will be recognized by them all. (Continued ) 75 18 Establish one point of contact A customer should really only need to deal with one person. Try to avoid one desk for business registration, another for tax registration, and a third for social security. Think about the number of desks you need to provide an effective service. Do you need more people at certain times of day? If you are dealing with large numbers of customers, do you need a queue-control or appointments system? You will need to consider whether you need a separate cashier, as you will wish to limit the number of staff handling cash. The answer may be for fees to be paid at a bank, especially if you can persuade a bank to open a branch in the same building. 19 Handle information electronically If the information received at the one-stop shop is keyed into a computer system, this can then be transmitted electronically to other organizations, meaning that there is no need to send paper documents. An alternative approach is to allow the other organizations to access the "registration" database to download the information they need. 20 Provide for online filing Even where the level of internet penetration in the country is low, it is worth including a requirement for online filing when specifying a computer system. This will provide some future-proofing and there may well be take-up from the legal and accoun- tancy professions. When planning this, consider whether it is possible to complete the process online without the need to visit the office to deliver original documents. 21 Now you can specify a computer system The decisions you have reached regarding your organization and procedures will determine what you need from a computer system. This should also take account of the systems that exist in other agencies and the need to make information available via a web site. The specification will also need to cover postregistration filings and the need to remove businesses from the register when they have ceased to operate. 22 Establish monitoring and evaluation procedures You will need management information. As far as possible, this should be provided by the computer system. In particular, you will need information about the number and types of registered businesses and the time needed to process applications. You will also need to keep track of finances. 23 Set clear targets You will presumably want to improve your Doing Business ranking. The actual ranking is dependant on what reforms are being implemented in other countries, but the number of procedures is determined by the reforms you are implementing and the time taken to process applications for registration, together with any procedures that you have not included in the one-stop shop arrangements. Work out what is achievable. Can you handle business registration while the applicant is present? Can you complete company incorporations on a same-day basis? Be prepared to go public with your targets and report publicly on your performance against them. 24 Train the staff Staff will need training in the new procedures. This will be easier if they are kept aware of the planned developments on a regular basis throughout the project, as they will then understand the concepts involved. Some may need basic ICT training before being introduced to new computer systems. Most will need customer-service training. 25 Educate the public The new arrangements will need to be promoted in a way that best reaches the business community. With hindsight, almost everybody who went through the process of establishing a one-stop shop felt that this was an area where more effort would have been justified. There will almost certainly be workshops and media coverage prior to the launch. There may be paid advertising. Don't assume that ministers will handle all the public speaking and television interviews. The business community is interested in practicalities, not just policies, and it is appropriate for senior officials to explain the detailed changes. All this needs to be supported with clear guidance material, in paper form and on the web site, and people ready to answer customer queries, whether in person or on the telephone. 26 Plan the launch Try to set a realistic date for the launch, taking account of the need for the law, systems, people, and premises to be ready. Will all the changes take effect on the same day, or is there a need for some phasing? Think about the type of event that is appropriate to launch the new one-stop shop(s). Have press packs available and enough people to answer questions. And be ready for a rush of activity when the one-stop shop opens for business. 76 ANNEX B: TYPES OF ONE-STOP SHOP (REVISED OCTOBER 2009) A. Commercial registry with other bodies on the same site Paid in Cost Minimum Ranking Proce- (% GNI Capital (out of Region or Registration dures Duration per (% of GNI 183 Economy Authority Comments (number) (days) capita) per capita) countries) Angola Commercial The tax administration 8 68 151.1 29.0 165 Registry (Ficheiro (Direccao National dos Central de Impostos) and the Notary Denominações Public are represented at the Sociais), OSS (Guichet Unico). A affiliated with the separate commercial Ministry of Justice operations permit (alvará) must be obtained from the Ministry of Commerce. Bahrain Bahrain Location of company must 7 9 0.5 195.2 63 Investment Centre be approved in advance by (BIC) the Municipality. Central Guichet Unique GUFE has representatives 8 22 244.9 507.1 159 African de formalité des from the Commercial Republic Entreprises Registry, Tax Administration, (GUFE) Chamber of Commerce and Social Security. (Continued ) 77 Paid in Cost Minimum Proce- (% GNI Capital Ranking Region or Registration dures Duration per (% of GNI (out of 183 Economy Authority Comments (number) (days) capita) per capita) countries) Jordan Company Company registration, tax 8 13 49.5 19.9 125 Registry (Ministry registration (including of Industry and obtaining a company tax Trade) number for VAT and income tax) and registration with the Chamber of Commerce or Chamber of Industry undertaken at OSS Qatar One-Stop Shop Ministry of Economy & 6 6 9.1 75.4 57 Commerce, Notary Public, Chamber of Commerce and the Municipality are represented at the OSS. Saudi Unified Registry The Unified Office includes 4 5 7.7 0 13 Arabia at Ministry of representatives from: Commerce and Companies Department, Industry Commercial Names Department, Commercial Registration Department, Chamber of Commerce, Private Bank, Publication Office and Notary Public. United Department for DED issues trade license and 8 17 13.4 311.9 113 Arab Economic commercial registration Emirates Development certificates. Memorandum of (DED) association is notarised by Notary Public at the OSS. 7 countries average 7.0 24.4 111 78 B. Commercial Registry which liaises with other bodies Paid in Cost Minimum Proce- (% GNI Capital Ranking Region or Registration dures Duration per (% of GNI (out of 183 Economy Authority Comments (number) (days) capita) per capita) countries) Afghanistan Central Business CBR obtains tax 4 9 30.2 0 23 Registry (Ministry registration number and of Commerce arranges publication and Industry) Azerbaijan One Stop Shop 6 10 2.9 0 17 Taxes Belarus State Registry 5 6 1.7 0 7 Bulgaria Commercial 4 18 1.7 20.7 50 Register at the Registry Agency Colombia Chamber of Registration with Registry 9 20 12.8 0 74 Commerce of Commerce and the National Tax Office (DIAN) at the Chamber of Commerce Ghana Registrar- The tax identification 9 34 32.7 16.6 137 General's number (certificate) is Department usually obtained by the Registrar General's Department on behalf of the incorporated company. Kazakhstan Local department State registration of legal 8 21 5.2 15.9 78 of Ministry of entity, together with Justice statistical, and tax registration takes place at the one-stop shop. There is a separate requirement for registration with the local tax office. Madagascar One-Stop Shop OSS handles registration 5 7 11 289.8 58 (Guichet Unique, of statutes, licensing and GUIDE) registration for tax and statistical purposes. Mali Registre du Notary files the statutes at 11 26 121.5 390.4 162 Commerce et du the RCCM in order to Crédit Mobilier register the company and (RCCM) get the Fiscal Identification Number. Mauritius Commercial Commercial Registry 5 6 5 0 7 Registry automatically informs the tax and local authorities (Continued ) 79 Paid in Cost Minimum Proce- (% GNI Capital Ranking Region or Registration dures Duration per (% of GNI (out of 183 Economy Authority Comments (number) (days) capita) per capita) countries) Namibia Registrar of Registrar of Companies 10 66 22.1 0 112 Companies forwards a copy of the (Ministry of Trade memorandum and articles and Industry) of association to the Receiver of Revenue, which in turns registers the company as a taxpayer and issues a tax identification number. Poland Register of During company 6 32 17.9 15.3 117 Entrepreneurs registration the applicant maintained by can also obtain: the the National statistical number Court Register (REGON), tax identifica- tion number (NIP) and entry in the Social Insurance Office (Zaklad Ubezpieczen ´ Spolecznych). Rwanda Commercial One-Stop Shop liaises 2 3 10.1 0 11 Registration with Rwanda Revenue Department Authority Romania Unique Office OSS deals with court 6 10 3.6 1.1 26 (Biroul Unic) of registration, tax code, Trade Registry publication of notice, and (Registrul registration for statistical Comertului, purposes and social BASC) security Russian Unified Register OSS deals with State 8 29 2.6 2.2 65 Federation at the Ministry of registration, tax registra- Taxation tion and registration with the State Pension Fund, the State Fund of Social Insurance and the State Fund of Compulsory Medical Insurance Taiwan, Ministry of Company and tax 6 23 3.9 0 29 China Economic Affairs registration handled at the (MOEA) for large same time. companies or city Office of Commerce Turkey Trade Registry The Commercial Registry 6 6 14.9 10.9 43 Office Office notifies the Tax Office and the Social Security Administration of the company's incorpora- tion. In practice, to expedite the registration process, company representatives follow up on whether the notification has been received. 80 Paid in Cost Minimum Proce- (% GNI Capital Ranking Region or Registration dures Duration per (% of GNI (out of 183 Economy Authority Comments (number) (days) capita) per capita) countries) Ukraine Registration By law, the State Registrar 10 27 5.5 174.2 128 Office is also responsible for registration with State Committee of Statistics of Ukraine, the state social funds, (the State Pension Fund, the Employment Insurance Fund, the Social Security Fund, and the Fund for Social Insurance) and the tax authorities for the newly registered company. In practice, registration with the Statistics Committee is usually performed by the company itself. United Registrar of Companies House informs 6 13 0.8 0 8 Kingdom Companies at HM Revenue & Customs Companies to enable registration for House corporate tax. Uzbekistan Local Authority Following registration, the 7 15 10.3 17.7 70 (khokimiyat) local authority provides the data on the company to the state statistics authorities, state tax authorities and internal affairs agencies. 20 countries average 6.7 19.1 61 81 C. One-Stop Shop (not a Commercial Registry) which liaises with other bodies Paid in Cost Minimum Proce- (% GNI Capital Ranking Region or Registration dures Duration per (% of GNI (out of 183 Economy Authority Comments (number) (days) capita) per capita) countries) Benin Company After registration with the 7 31 155.5 290.8 155 Registry (Registre Companies Registry, the du Commerce et Centre des Formalités des du Crédit Entreprises (CFE) deals Mobilier). with the tax declaration, import license, trades- man's card, registration with the Ministry of Trade, and affiliation with the Social Security Office (Office Béninois de Sécurité Sociale, OBSS). Burkina Faso Centre des CEFORE deals with 4 14 50.3 428.2 115 Formalités des company registration, tax Entreprises number (IFU), labour, and (CEFORE) social security Congo, Rep. Centre des CFE arranges merchant 10 37 86.5 96.5 166 Formalités des card (La Carte de Entreprises (CFE) Commerçant) and registration with the Chamber of Commerce and the Centre National de la Statistique et des Études Économiques (CNSEE). The company registers separately for tax. Although the CFE also organizes commercial registration at the court, in practice, it is faster for companies to register directly with the court. Egypt General Authority 6 7 18.3 2 41 for Free Zones and Investment (GAFI) 82 Paid in Cost Minimum Proce- (% GNI Capital Ranking Region or Registration dures Duration per (% of GNI (out of 183 Economy Authority Comments (number) (days) capita) per capita) countries) France Centre de CFE handles all formalities 5 7 1 0 14 Formalités des related to the trade Entreprises (CFE) register in the court (RCS, Tribunal de Commerce), statistics (INSEE), tax authorities (Centre des Impôts), social security URSSAF), labour (Direction Départemental du Travail et de L'emploi), health insurance (Caisse régionale D'assurance Maladie), unemployment insurance, pension, Association for Employ- ment in Industry and Commerce (ASSEDIC), and similar bodies. Gabon Investment APIP registers the 9 58 20.3 30.2 148 Promotion company statutes with the Agency (Agence Ministry of Finance de Promotion (Administration de d'Investissement, Domaines), completes the APIP) company registration with the court clerk (greffier du tribunal) at the Ministry of Justice and obtains the tax identification number. Alternatively, the notary or lawyer may take care of relevant authorizations. Lebanon LibanPost LibanPost arranges 5 11 87.5 57 98 registration at Commercial Registry and Ministry of Finance. Subsequently, the company's books must be stamped at the Commer- cial Registry. The company will also need to register with the National Social Security Fund. Morocco Centre Régional CRI arranges registration 6 12 10.2 52.3 62 d'Investissement with Ministry of Finance (CRI) for patente tax, with the Tribunal of Commerce, and for social security and taxation (Continued) 83 Paid in Cost Minimum Proce- (% GNI Capital Ranking Region or Registration dures Duration per (% of GNI (out of 183 Economy Authority Comments (number) (days) capita) per capita) countries) Nicaragua Unique Office 6 39 121 0 85 for Investment (Ventanilla Única de Inversiones) at the Ministry of Commerce (Ministerio de Fomento, Industria y Comercio) Paraguay Single Access SUAE arranges registration 7 35 67.9 0 82 Window with the Court of First (Sistema Instance, Ministry of Finance Unificado de (tax), local authority, Social Apertura de Security Institute, Ministry of Empresas, Justice and Labour (employ- SUAE) at ment) and General Migration Ministry of Office (residency). Industry & Commerce Senegal One-Stop OSS coordinates action by 4 8 72.7 236.2 95 Shop the tax authority, the Commercial Registry (Registre du Commerce et du Crédit Mobilier--RCCM), the NINEA to get a company identification number, the Labour Authority, Social Security (Caisse de Sécurité Sociale--CSS) and the Pension Fund (Institut de Prévoyance Retraite--IPRES). Slovakia One-Stop OSS deals with trade 6 16 3.3 30.4 48 Shop and licenses, tax registration and County health insurance. Application Registry Court to the court may be submitted electronically. The court issues the business registration number. Togo Guichet CFE handles registration with 7 75 205.0 514.0 170 Unique (CFE) the Directorate-General of Taxation, the Registre du Commerce et du Crédit Mobilier (RCCM), the Chamber of Commerce, the Labour Agency and Social Security. 13 countries average 6.3 26.9 98 84 D. Integrated registration function Paid in Cost Minimum Proce- (% GNI Capital Ranking Region or Registration dures Duration per (% of GNI (out of 183 Economy Authority Comments (number) (days) capita) per capita) countries) Albania National Single window where the 5 5 17.0 0 46 Registration entrepreneur can complete Centre company registration, tax registration, social insurance, health insurance and labour directorate registration using a single application procedure Finland Trade Register at A single form of declara- 3 14 1 7.4 18 the National tion is used for registration Board of Patents with the Trade Register and Registration and the Tax Administration Georgia Entrepreneurial 3 3 4 0 4 Register at the Tax Department of the Ministry of Finance Iceland Register of Limited 5 5 2.6 13.6 17 Companies (Director of Internal Revenue) Kyrgyz One-Stop Shop OSS handles registration 4 15 7.4 0.4 31 Republic (Ministry of for Social Fund, State Tax Justice) and National Statistics. Lithuania Company Includes registration with 7 26 2.7 35.9 74 Register State Tax Inspectorate (the Lithuanian Revenue Authority) for corporate tax, VAT, and State Social Insurance Fund Board (SODRA). Luxembourg One-Stop Shop Incorporation is effected 6 26 6.5 21.3 69 at the Chamber before a Notary Public. of Commerce The OSS handles commercial registration and tax registration. Applications can also be filed at the OSS for VAT and social security registration. (Continued ) 85 Paid in Cost Minimum Ranking Proce- (% GNI Capital (out of Region or Registration dures Duration per (% of GNI 183 Economy Authority Comments (number) (days) capita) per capita) countries) Macedonia, Central Registry Registration process includes 7 9 3.8 0 12 FYR registering the company with the Trade Register, providing the LLC statistic number, opening the LLC bank account, registering the company in the Public Revenue Office­Tax Office, and publishing the LLC formation notice on the Central Register's Web site. Niger Registre du RCCM deals with commer- 11 19 170.1 702.1 159 Commerce et du cial registration and tax Crédit Mobilier registration (RCCM) Portugal One-Stop Shop One-stop shop provides 6 6 2.9 34.3 34 (a) the company corporate tax number; (b) the company's Social Security number; (c) the commercial register of the company incorporation; and (d) the declaration of start of business operations. Serbia Serbian Business The SBRA now issues the 7 13 7.1 6.1 73 Registers Agency registration number and (SBRA) code of Republic Statistical Agency (RSA): it also receives the application for the Tax Identification Number (TIN) and issues the TIN. Switzerland Local Commer- Entry in the Commercial 6 20 2.1 27.6 52 cial Register Register includes automatic registration for tax. 12 countries average 5.8 13.4 49 86 E. Online registration facility Paid in Cost Minimum Proce- (% GNI Capital Ranking Region or Registration dures Duration per (% of GNI (out of 183 Economy Authority Comments (number) (days) capita) per capita) countries) Australia Australian Separate online registra- 2 2 0.8 0 3 Securities and tion for tax Investment Commission (ASIC) Belgium Crossroads Bank Notaries file documenta- 3 4 5.3 19.4 31 for Enterprises tion electronically Canada Corporations 1 5 0.4 0 2 Canada Online Filing Centre Cape Verde Commercial Online registration; tax ID 9 24 17.0 38.9 136 Registry provided automatically Denmark Danish Commer- 4 6 0 38.6 28 cial and Companies Agency over Webreg system Estonia Commercial Online facility available 5 7 1.7 23.7 23 Registry for commercial registra- tion. Separate registration for VAT and social security. Hungary Registration Court Simplified electronic filing 4 5 8.4 10.8 27 introduced in June 2008 Italy Register of A public deed of 6 10 18.5 9.7 53 Enterprises incorporation (atom (Registro delle costitutivo), including the Imprese) at the company's bylaws (statuto) local chamber of must be drafted and commerce executed before a public notary. New Companies 1 1 0.4 0 1 Zealand Office Norway Register of 6 10 2.1 21 33 Business Enterprises (Continued ) 87 Paid in Cost Minimum Ranking Proce- (% GNI Capital (out of Region or Registration dures Duration per (% of GNI 183 Economy Authority Comments (number) (days) capita) per capita) countries) Philippines SEC i-Register at SEC provides a web-based, 15 52 29.8 6 155 Securities and online company registration Exchange system and the option to Commission reserve a company name. SEC allocates a temporary tax registration number (TIN) but it is still necessary to register with the Bureau of Internal Revenue (BIR) Singapore Accounting and Incorporation is done 4 4 0.7 0 10 Corporate through Bizfile, an electronic Regulatory filing system. Tax registration Authority (ACRA) is also completed via a web site. Slovenia Electronic Court register and business 5 19 0.1 46.8 41 One-Stop Shop: register are technically united E-vem in one information base and are now both run by Statistical Office of Slovenia, AJPES. Separate registration is required for tax. Spain Mercantile The law states that all 10 47 14.9 13.1 140 Registry communication between notaries and the registry should be electronic (with electronic notarial signature) Sweden Swedish It is possible both to register 3 15 0.6 30.3 30 Companies the company in the Registration Companies Register and to Office apply for tax registrations (Bolagsverket) (income and VAT), employer registration and to file a preliminary tax return at the joint web site. 15 countries average 5.2 14.1 48 88