Papua New Guinea provides several business forms for investors, of which the main forms include:

Company (Public Limited Liability Company or Private Limited Liability Company);
Partnership (General or Limited Partnership);
Sole Proprietorship;
Foreign Business (Subsidiary or Branch or Representative Office); and
Joint Venture.

Company

Companies can be formed as public or private Limited Liability Companies ('LLC').

The key aspects of a Public Limited Liability Company include:

Shareholders' liability is limited to their contribution to the company;
Minimum 1 shareholder and 1 director are required;
Shareholder and director can be an individual or a company, and need not be resident in the country;
Shares can be offered to the public;
There is no minimum capital requirement; and
Statutory audit is mandatory.

The key aspects of a Private Limited Liability Company include:

Shareholders' liability is limited to their contribution to the company;
Minimum 1 shareholder and 1 director are required;
Shareholder and director can be an individual or a company, and need not be resident in the country;
There is no minimum capital requirement;
Not permitted to offer shares to the public; and
Statutory audit is mandatory.

Partnership

A partnership is formed when two or more persons agree to carry on a business for profit as co-owners. Partnerships can be formed as a general partnership or limited partnership.

Under the general partnership, the partners are jointly and severally liable for the obligations of the partnership firm.

A limited partnership is formed by one or more general partners and one or more limited partners. General partners are liable for all the debts and obligations of the firm, whereas, the limited partners are liable to the extent of their capital contribution to the firm.

Sole Proprietorship

A sole proprietorship is formed by an individual who is liable for all the debts and obligations of the company.

Joint Venture

A joint venture is a contractual arrangement between two or more entities whether incorporated or not to pursue a common business activity.

Foreign Business (Subsidiary, Branch, Representative Office)

Foreign companies can conduct their operations in Papua New Guinea through the constitution of a Subsidiary or Branch Office or a Representative Office. A Subsidiary can be formed as an LLC with 100% foreign holding, subject to certain restrictions. If the foreign holding is more than 50% in the LLC, then a certification from the Investment Promotion Authority (‘IPA’) is required.

Branch is not considered a separate legal entity in Papua New Guinea. Its operations are pre-defined by the foreign parent company.

Representative Office is not regarded as a separate legal entity in the country. It is not permitted to carry out business or commercial activities in the country. It is only permitted to conduct market research and to promote products and services of the parent company within Papua New Guinea.

Further information on the general investment, tax, and regulatory regime of the country is available at the following external references:

“Doing Business” report from World Bank – click here;
Reports and publications from OECD – click here;
Reports and publications from IMF - click here;
Reports and news from Tax Justice Network – click here;
Taxation System in Papua New Guinea– click here; and
Overview of Mining Law in Papua New Guinea – click here.

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