Brief: Before you choose the type of business structure to register, make sure to find out if your business needs a license or permit to operate. This is because licenses are non-transferable in Cameroon
A license or a permit is an official permission given by authorities to use, do or own something. The document that is issued to officialize permission is also called a license or a permit.
Licenses or permits in Cameroon
In Cameroon, some businesses need to obtain a license or permit before operation. In such a case, you will be carrying out an illegal business without having a license in certain sectors. In order to be on the safe side, entrepreneurs need to verify with the necessary ministry or the Cameroon Chamber of Commerce, Industries, Mines & Crafts to find out if their business needs a permit to operate.
There are also cases where a license is issued by authorities which allows a business or individual to carry out an activity that would otherwise be forbidden. This may require the business to pay a fee or show proof that they can undertake the activity.
Validity & territoriality of permits
A license or permit in Cameroon is usually valid for a specific period of time. This helps to preserve and ease the enforceability of the license such that it doesn’t extend beyond the terms of the agreement. It also protects the government in case market conditions change or the value of the license increases.
Businesses that have these permits or licenses in Cameroon are required to update the authorities on the activities carried out. This gives the institution involved in issuing the license the opportunity to set conditions or limitations.
There are some licenses that stipulates a specific territory allocated for the owner. A license may limit you to work only within a specific region or boundary. This will help the government to regulate the use of the license by the licensee.
Licenses are non-transferable in Cameroon
It should be noted that a license or permit is a promise by the authorities not to sue the business or licensee. However, the government needs to control it so owners of such can use it under the prescribed agreement. If your business operations needs a license or permit, you should know these:
- They cannot be rented out;
- They can’t be used as collateral or ceded to pay a debt and most of all
- Licenses are non-transferable in Cameroon
The structure of your business and permits
If you know your business needs a license or permit to operate, you need to think well before choosing the form. If a permit is non-transferable, it means it cannot be passed on to others.
Take for instance, if the permit is issued to you as the sole proprietor of your business, it immediately expires when you die. This means your heirs may not be able to use the license to continue with your business.
One of the main disadvantages of a sole proprietor is unlimited liability – there is no legal difference between the business and the individual. The business is registered in the name of the owner even though they may use a business or trade name.
A license becomes invalid with the death of the sole owner
Another of such disadvantage of a sole proprietor business is that the business ends with the death of the owner. This is because there is no distinction between the owner of the business and the business itself.
However, this does not mean operations may cease immediately the owner dies. The heirs or personal representative may choose to continue the business. This can either be as a new sole proprietor or a different business form.
The license or permit, automatically becomes invalid upon the death of the owner. The heirs or representative will have to apply for a new license using the new business form which can be a sole proprietorship or other.
How do you solve such a situation?
Instead of registering as a sole proprietor when your business needs a license, you should rather incorporate your company. With this business form, you can overcome the non-transferability limitations without breaking the laws.
Limited liability companies are legally distinct from the owners. This means that the liabilities of the owners is limited to their investment or shares put in. In case of debt, the owner’s property is not liable.
How can you transfer the license to others?
It is simple –
- you can sell the shares of the company in the case where the permit was issued in the name of the company.
- the heirs or representative of the company can still continue to run it in case the owner or owners die.
However, in the first case, you need to follow the right procedures to transfer the shares of a company from one person to the other. You may also have to pay certain taxes or fees during this process.
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