A company is a corporate structure with distinct legal personal status. It is statutorily regulated and incorporated for the tenacity of profit maximization. All companies, whether a private company limited by shares, private unlimited or a company limited by guarantee need be registered in agreement with the Companies and Allied Matters Act (CAMA), being the major law that standardizes companies in Nigeria. The requirements for registering a company in Nigeria are upfront with no complexities.
The commission in charge of the regulation and supervision of the registration and companies is the Corporate Affairs Commission (CAC) established pursuant to the provisions of CAMA. It must be well-known that the minimum number of persons required to form a company is two (2), with the age capacity not less than 18 years. The only exemption for a person less than 18 years to register a company is where there are two or more adults involved in the establishment of the company.
There are two joint options to be well thought-out when starting a business. You can either register it as a Business Name or incorporate a Limited Liability Company with the Corporate Affairs Commission. A Business Name is generally used for Sole Proprietorships (One Man Business) whereas a Limited Liability Company is maintained by Shareholders and as the name denotes their liability/ dividends are constrained to the shares they own in the company.
Also referred to as a corporation or a limited liability company, it is a type of business that offers incredible benefits over being a sole proprietor. Registering a company rather than a business name gives you a much more professional image and influence. It indicates to investors that you are committed to professional corporate governance structures that have been created. It emphasizes that the business has permanence and can be trusted.
It also makes it easier to raise capital by issuing new shares to investors. For one, there is the liability protection. Forming a corporation gives you the leeway to raise capital through the sale of shares of your company. With a company (Private Limited Liability Company), the first attractive bit is that the company is a separate legal entity from the owners. To break it down, the company is regarded as different from you.
You can be personally broke while the company is rich and vice versa. The death of the founder does not necessarily have any effect on the company as the company has a life of its own. It is worthy of note that a private limited liability company can have up to 50 shareholders!
Guidelines for registering a limited liability company
- The first step required by the applicant is to select two suitable proposed names for the company.
- After this is done, an availability check will be conducted on the CAC online portal to find out if the name is vacant and not already in use.
- Choosing the type of company to be registered whether a private limited company or private unlimited company or company limited by guarantee.
- The objectives and business of the company must be provided.
- The registered principal address of the company.
- The share capital and shareholding formula among shareholders will be required.
- The particulars of a minimum of two (2) Directors will be required. A copy of their means of identification such as voter’s card, national ID, drivers’ license or international passport.
- Particulars of the company secretary (one of the directors may also act as the Secretary of the company)
- The applicant will be required to furnish details of the shareholders of the company. Details such as names, occupation, residential address, email address, mobile phone number and means of identification such as driver’s license, international passport or national identity card. It should be noted that the directors listed can also hold the capacity of shareholders in the company if desired.
- The memorandum and Articles of association of the company to be registered which is advisable to be drafted professionally by a Legal Practitioner. Nevertheless, the CAC has provided a generic MEMART, which any new company can be adopted.
- The applicant will also be required to pay a filing fee to the CAC and stamp duty paid to the Federal Inland Revenue Service (FIRS).
Where this information is provided for, the following statutory forms will be required to be filled and submitted along with the evidence of payment at the CAC and other requirements:
- Form CAC 1- Availability search and reservation of name
- Form CAC 1.1-Pre-registration form.
Incorporation can be commenced online by an individual applicant or through a CAC endorsed agent at the CAC’s online portal. Where an individual commenced the incorporation himself or herself, such a person will still require the services of a legal practitioner for an attestation.
Benefits of company incorporation:
Reputation with Customers
Developing reputation particularly from clients and customers you’ve never done business before is very challenging. Registering your business gives your prospective customers assurance that they are dealing with a trustworthy organization. If your business is online founded and you have the option of customers paying to your company account before you can ship the goods or services, having a registered business together with a corporate account give more integrity and trust.
Account Opening in Your Company Name
Another great benefit of registering your company name is to use it to open corporate account in your company name. Having corporate account give you more trustworthiness and conviction from your clients, bank, merchants and other business associates
Legal Liability Protection
The minute you register your business as Limited Liability Company, you are a dissimilar entity from your company. You also get legal liability protection. If you incorporate, you will not be held personally responsible for certain accidents and other liabilities. If you acquired loan and you fail to pay, your bank will not take hold of your property except the company asset because you are sheltered from such occurrence.
As soon as your company is registered, gaining access to loan comes to be very easy compared to personal loan application. Using your documents, you are going to have to attest that you’re really a business. This gives trustworthiness and conviction and also warrants confidence and your investors or creditors will see that they are dealing with an establishment and will be willing to lend you money if other terms and conditions are made.
Starting a business triggers a lot of questions in the mind of the owner, questions like, what kind of business or company do I want to establish? A company that will be independent and even continue after my death or one that dies with me” The answer is evident, a company that continues even when I am not around. So if registering your business, one of the benefits is that even if you’re dead or become disabled, your business continues particularly when you have the right edifice in place.
A registered business can employ full-time employees and pay them salaries and additional benefits. You have the chance to seek for intern particularly from National Youth Service Commission that will not cost you a lot in terms of paying salaries and incentives.
Business Voyage to Other Country
One more great benefit of business registration is that you can simply obtain visa and travel to any country for business purposes. Each country always receives foreign investors who are interested in doing business in their country because such worthy investments will add value to their economy.
Conclusively, to run any company in Nigeria, such a company need be incorporated. Even though the company registration can be commenced online, the original copies of the documents used for the registration has to be submitted to the CAC before the Certificate of Incorporation can be handed out to the owners or their agent.