Deposit the legally required capital in a bank and obtain deposit evidence
Agency: Commercial Bank
Under the Money Laundering and Proceeds of Crime Act of 2001, a corporate bank account cannot be opened until incorporation documents are issued. Accordingly, the incorporator must first either open an account in his name or deposit the initial capital in the trust account of his attorney for the corporation. Incorporators must obtain proof of payment in the form of a bank statement, receipt, or other documentation of the amount paid into the company as paid-in capital.
Time and cost: 1 day, no charge
Check the uniqueness of the proposed company name and reserve a name
Agency: Corporate Registrar
The uniqueness of the proposed company name can be checked over the phone. The Corporate Registrar at the Office of the Attorney General searches the name index. In practice, few incorporators search for a company name before incorporating. Because Palau has no trademark statute, there are limited avenues for enforcement.
Time and cost: 1 day, no charge
Notarize the company deeds
Agency: Notary
Section 2.1 of the Corporations Regulations for the Republic of Palau requires that “any number of persons not less than three desiring to form a corporation shall execute articles of incorporation and acknowledge the same before a Clerk of the Supreme Court of the Republic or a notary public.” Attorneys generally prepare the incorporation documents. If professional services are used, this adds USD 1,000 to the process.
The articles of incorporation must contain: (a) the company name; (b) place; (c) purpose; (d) shares; (e) directors; (f) duration; (g) incorporators; (h) voting; (i) disposition; (j) liquidation; (k) amendments; (l) ownership, and (m) foreign ownership.
A shareholder affidavit must be notarized and set forth the following: (a) the number of authorized shares of each class; (b) the par value of the shares; (c) the names of subscribers for shares of each class; (d) the number of shares of each class subscribed to by each subscriber; and (e) the subscription price or prices for the shares of each class subscribed.
Time and cost: 1 day, USD 10
Pay the registration fee at the National Treasury
Agency: National Treasury
Payment of the registration fee is done at the National Treasury.
Time and cost: 1 day, USD 250
Register the company with the Corporate Registrar at the Office of the Attorney General; obtain a certificate of incorporation
Agency: Corporate Registrar
The time between when the company submits the documents to the Corporate Registrar to when the Office of the President issues the charter is about 2 weeks. This time varies, however, depending on: (a) how long charter issuance takes once the OCR approves the documents; (b) if there are errors in the corporate documents; and if so, (c) the time required to correct any errors.
Time and cost: 14 days, included in previous procedure
Register employees for social security and obtain an employer identification number (EIN)
Agency: Social Security Administration
Companies must register with the Office of Social Security for payment of social security tax withheld from employees. All employers or self-employed persons doing business in Palau must apply for an employer identification number (EIN) from the Social Security Administration. The applicant completes the Application for Employer Number form and pays the applicable fee (USD 15 for first-time employers, USD 10 for renewing employers). The Palau Social Security Administration will assign the applicant an employer identification number (EIN), which must be entered on the employer’s quarterly tax returns. The EIN is required to apply for a business license from the Division of Revenue and Taxation.
Time and cost: 1 day, USD 15
Apply for a business license from the relevant licensing authority
Agency: Division for Revenue and Taxation
Before a person or a firm engages in business, they must apply for a business license from the Division of Revenue and Taxation, State Government. Previously, companies were licensed by entity, but starting in 2007, companies must obtain a license for each establishment (store).
Time and cost: 5 days, USD 50
Apply for a business license from the state government
Agency: State government
The Koror state government requires a state business license. The following license fees apply:
- USD 50: For each retail store (Class A), movie theater, building contractor, furniture manufacturer, and boat building and repair shop association or corporation.
- USD 40: For each scrap-metal-collecting business.
- USD 30: For each retail store (Class B) and each non-associated or non-incorporated boat building and repair shop.
Other classes and their respective fees apply to other businesses.
Time and cost: 4 days on average, USD 50, depending on numbers and types of licenses
