• By : Gaby Kabue
• 2023-01-13 23:25:40

Abstract

The Congolese ecosystem is marked by rapid development of innovative companies called "Start-ups". In fact, the participation in Innovation Award competitions, access to loan, funding of innovations through crowdfunding are inexorably counted among the catalysts of these young Congolese entities engaged in competition for technological innovation. As economic business model demonstrating growth potential, the Congolese authority has put in place a legal framework applicable to Start-ups.

Keywords: Start-ups, innovations, regulations, intellectual property, fundraising, label, crowdfunding, crowdlending, crowdinvesting.

I. Legal framework

Start-ups are governed by Ordinance-law No. 22/030 of September 8, 2022, relating to the promotion of entrepreneurship and Start-ups. The Ordinance-law constitutes a reference legal text which consecrates the terminology of "Start-ups" in the Congolese legal system.

According to the legal definition, “Start-up” is a newly created innovative company, with no more than seven years of activity, endowed with a very strong potential for economic growth, and which needs significant investment funds for realization of its activity and duplication of business model.[1]

A Start-up has the legal status of individual or corporate[2]. It means that individual or company can register a Start-up.

II. Conditions for activities of Start-ups in the DR Congo

Any legal individual or company who wishes to register a Start-up in the DR Congo, must cumulatively fulfill the following conditions: to be created and registered in the DR Congo; to have a legal existence less than or equal to 7 years from the date of registration; to have a workforce of less than 50 employees ; to have total balance sheet and annual turnover of less than equivalent of 1 billion Congolese francs; to have at least two-thirds (2/3) of capital held by Congolese citizens ; to have economic model that includes strong innovative and creative dimension,  in particular the technological field or new information and communication technologies and finally, undertake activity that has strong growth potential.[3]

III. Obtaining of label

The exercise of Start-up’s activity requires to obtain the “Start-up” label. [4] The “label” is official certification granted to Start-up by ad hoc committee. The validity of "Start-ups" label is 5 years, from the date of labeling. The duration can be extended perhaps once, but its total duration cannot exceed 10 years.

Labeling not only grants recognition of Start-up quality, but also gives some prerogatives, in particular the capacity building for Start-ups, protection of Start-up innovations with national intellectual property protection bodies, […].[5]

In the DR Congo, the quality of Start-ups is granted by the national labeling committee, currently in process of creation. The decision relating to the granting or refusal of the status of Start-ups is taken and communicated to the applicant within a period which may not exceed 30 working days.[6] Failure to comply with the conditions for granting its label may lead the authority to suspend or withdraw the label.[7]

IV. Tax and customs regime for Start-ups

Start-ups benefit privileged tax regime as well as incentive measures provided by the investment code.[8] Indeed, Start-ups benefit from reductions or exemptions in relation to tax on profits, and property tax. During the period of validity of the labeling, Start-ups benefit from tax exemptions on the amounts invested by any investor, either as donations or as equity investments. In addition, Start-ups benefit from tax exemptions on amounts allocated as loans or seed advances.

As for the customs regime, Start-ups benefit from customized import-export services for operating resources and tools, about equipment related to new information and communication technologies.

Wide national or foreign groups, as well as large companies which, in application of Congolese legislation on subcontracting in the private sector, which subcontract to Start-up labeled at least 40 % of their services can request a partial exemption of up to 30 % from income tax.[9]

The tax breaks can be increased up to 50 % for Start-ups held by women, young people from 18 to 35 years-old or people living with disabilities.[10]

V. Access to funding for Start-ups

“The seed phase of Start-up activities requires significant capital, involving investors, banks and the government”.[11] In the DR Congo, the authorities take the relevant measures to guarantee and facilitate Congolese start-ups with innovative financing adapted to their needs and nature of their projects. In fact, the Congolese government is setting up special funds, innovative and participatory financing such as Crowdfunding, Crowdlending and Crowdinvesting.

References 

[1] Article 12 point 42, paragraph 2, Ordinance-law No. 22/030 of September 8, 2022 relating to promotion of entrepreneurship and Start-ups.

[2] Article 55, Ordinance-law No. 22/030 of September 8, 2022.

[3] Idem

[4] Article 87, Ordinance-law No. 22/030.

[5] Article 95, indent 2, ordinance-law no. 22/030

[6] Article 89, Ordinance-law No. 22/030.

[7] Article 106, Ordinance-law No.22/030

[8] Article 95, Ordinance-law No.22/030

[9] Article 101, Ordinance-law No.22/030

[10] Article 102, Ordinance-law No.22/030

[11] F. JULIEN, “Regard juridique sur le financement des Start-ups, [en ligne] », disponible sur: [https://www.revue-banque.fr/binrepository/0000000000000000000_RB02230_MG108129935.pdf], ( consulted on 26/11/2022).

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