GUIDE TO COMPANY REGISTRATION IN NIGERIA AND TYPES OF COMPANIES

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GUIDE TO COMPANY REGISTRATION IN NIGERIA AND TYPES OF COMPANIES

company registration procedure in Nigeria

COMPANY REGISTRATION IN NIGERIA

Doing business in Nigeria or anywhere in the world commences with the company registration. The Corporate Affairs Commission(CAC) is the government agency in charge of the incorporation of companies in Nigeria. Business registration in Nigeria has been simplified by CAC over the years. Nowadays, the procedure for company registration is faster and efficient.

Apart from having its headquarters in Abuja, the CAC offices are located in almost every state’s capital in Nigeria. The procedure for company registration in Lagos Nigeria is also the same procedure to be followed in the CAC’s headquarters at Abuja and every other state in Nigeria.

The CAC accredited agents or lawyer can easily be contacted by anyone who requires the help of a professional to carry out the incorporation of the new company.

The law guiding the company registration in Nigeria is the Companies And Allied Matters Act, (CAMA) Laws of the Federation of Nigeria (2004). The Act is the guidelines for the formation of any types of companies in Nigeria and other ancillary matters.

Unlike the United States of America where each state has its own company registry and can individually register companies, the company registration in Nigeria is central and a company can only be registered with the CAC only.

Types of Companies in Nigeria

There are different types of company formation allowed under Nigeria’s company law. Several people seeking to do business in Nigeria, especially for the first time, often want to know what type of company is most suitable or appropriate in Nigeria. The answer to such a question is not far-fetched. A private limited liability limited is obviously the best type of company for private individuals seeking to start a business in Nigeria. Having said that, I will briefly state the types of companies that can be registered in Nigeria. Pursuant to the provisions of the Section 22 CAMA, these three types of companies can be registered in Nigeria:

  1. Private Limited Company
  2. Companies limited by guarantee and
  3. Unlimited Companies.

The Act further stated that any of the three above companies maybe private company or public company, and as such, making it six types of companies that can be registered in Nigeria in accordance with the provision of the Act. However, there are difficulties and technicalities that could make it impossible for some types of the above-stated company to be registered as public companies. For instance, it is practically impossible for any public company to be registered as a company limited by guarantee or an unlimited company in Nigeria. Therefore, it is generally believed that it is only four types of companies that one may be able to register in Nigeria. Accordingly, the CAC in its official website state such four types of companies that can be registered in Nigeria as follows:

  1. Private Limited Company (LTD)
  2. Public Limited Company (PLC)
  3. Companies limited by guarantee and
  4. Unlimited Companies.

Having stated the 4 types of companies available for registration in Nigeria, it is very relevant to further restate that among all the 4 types of companies mentioned, private limited liability companies are the most widely used form of business enterprise in Nigeria. Private limited liability company has several advantages, which include but limited to perpetual succession, limited liability and separate legal personality. Above all, it is the only form of company that can easily and be swiftly registered in Nigeria.

As it can be seen above, although there is another type of private company that can be registered known as the public limited company(PLC), the high threshold statutory requirements attached to its formation make it unattractive for individuals starting a new venture. Furthermore, public limited liability companies are also subjected to different external laws outside the CAMA for it to operate. For instance, every PLC must comply with the provisions and the requirements of the Investment and Securities Act(ISA) and other SEC Rules and codes of the corporate governance.

Additionally, one of the reasons a company limited by guarantee may not be appropriate or suitable for a business venture is the fact that a company limited by guarantee may not be set up except with the consent of the Attorney General of the Federation. Although a company limited by guarantee may also be used for profit, it is seldom used as profit-oriented in Nigeria, but rather for a special purpose such as corporate social responsibility or charity. Whereas Incorporated Trustees can be used or more suitable for the purpose.

The other type of companies, which is an unlimited liability company may only be recommended to be used to a parent company desiring to have such a subsidiary with unlimited risk. It is not in anyway suitable for individuals who seek to start up venture, as the major benefit of incorporating a company, which is the ability to limit one’s liability or risk does not feature in the unlimited company.

The procedure for foreign company registration in Nigeria is almost as the same as the procedure for domestic company registration for Nigerians except for a legal requirement that a company with foreign participation in Nigeria must be capitalized with the minimum of N10 Million share capital.

Having regards to the above, it is no longer in doubt that the most suitable type of company that may be registered in Nigeria is the limited liability company, whose registration procedure we shall extensively focus on here.

A company is a legal entity and required to be duly incorporated. Company registration in Nigeria falls under the Companies and Allied Matters Act as earlier stated. Corporate Affairs Commission is the sole agency of government responsible for incorporation of companies in Nigeria pursuant to provisions of CAMA.

The section 18 of the Companies and Allied Matters provides that it takes a minimum of 2 persons to form a limited liability company. Section 246 of the same Act mandates every company registered in Nigeria to have or maintain a minimum number of 2 directors. A single person or entity currently cannot form a company in Nigeria. However, a single parent company or foreign company seeking to form a subsidiary in Nigeria may nominate two persons as directors of the new company or subsidiary.

Procedure for company registration in Nigeria

The procedure for company registration in Nigeria are as follows:

  1. Any person proposing to register a company is advised to speak to a consultant, especially a corporate lawyer. Although CAC has made good efforts through online registration to ensure individuals are able to register companies online themselves, however, the services of accredited agents or lawyers are still requested for attestation of the incorporation documents. The following information must be furnished to proceed with a company registration in Nigeria:
  • Particulars of the name of the proposed company (two names are to be submitted by the client: the proposed name of the company and an alternative name). The proposed company’s name must not be a prohibited or restricted name under the law.
  • Particulars of the type of company to incorporate, which is usually a private company limited by shares.
  • Particulars of the object of the proposed company.
  • Particulars of the registered office address of the proposed company.
  • Particulars of the authorized share capital. (i.e. how shares will be divided among the founders)
  • Particulars of the first directors of the company.
  • Particulars of the first subscribers to the Memorandum and Article of Association of the proposed company.
  • Particulars of alien participants, if any.
  • Particulars of the matter to be provided for in the Article of Association.
  1. The availability check and reservation of the name of the proposed company must be conducted with the Nigerian company’s registration agency, Corporate Affairs Commission (CAC).
  2. The consultant or lawyer prepares the necessary incorporation documents and completes the incorporation forms obtained from the CAC. The incorporation documents include:
  • Duly verified particulars of the director and statement of share capital known as CACForm 1.1
  • Duly signed and sealed resolution of the company authorizing the subscription, where a new company’s subscriber wishes to subscribe to the memorandum and articles of association (MEMART). I.e. join in the formation of the company.
  • Duly stamped Memorandum and Articles of Association
  1. The individual completes all the incorporation documents with the input of an accredited lawyer to duly attest to the incorporation documents.
  2. The payment of the prescribed fees will now be duly made online and the incorporation documents immediately stamped online.
  3. The stamped incorporation documents will now be duly uploaded into the CAC online portal again for the final review of the commission
  4. If all the incorporation documents are well completed and executed, the commission will incorporate the company and issue an incorporation number immediately online.
  5. Certificate of Incorporation and the Certified True Copies of the other documents will be issued by CAC and received by the consultant or lawyer, usually in less than 48 hours after the company is duly incorporated by CAC

Cost of Company Registration in Nigeria

The cost of company registration in Nigeria depends on the number of the share capital of the proposed company to be registered. The higher the share capital of a company, the higher the filing fee and stamp duty payable to the government.

By and large, the CAC official filing fees and stamp duty for a typical new company of One Million Naira shares capital are as follows:

  • Name Reservation: N500
  • CAC Filing Fee: N15,000
  • Stamp Duty:   N8,000

The above fees are exclusive of the costs of an attestation by a legal practitioner and processing/professional fee. The processing or professional fees that may be charged by an accredited agent for processing the registration differs from one agent to another.

Other Types of Incorporation in Nigeria

Apart from the private limited liability company and the three other types of companies stated above, there are still other forms of incorporation that can be conducted with the CAC. These types of incorporation include business name, for a small-scale business owner, which does include separate legal personality and Incorporated Trustees, also known as Non-governmental Organization(NGO), which is relevant for the religious organization, social clubs and charitable foundation.

In conclusion, it is very clear that it is better to register a limited liability company as against other forms of companies as it holds several benefits and easy to register.

Finally, the entire process of company registration in Nigeria with CAC can be completed within 48 hours if all the necessary incorporation documents have been put in place.

 

Written by Corporate & Commercial Law Department at Resolution Law Firm, Nigeria.

Resolution Law Firm is a CAC Accredited Agent assisting individuals and entities seeking to do business in Nigeria for company registration and post-incorporation matters. The Firm can be contacted with the below contact details.

Tel:     08099223322

Email: info@resolutionlawng.com

 

3 Comments

  1. […] in Nigeria. Nowadays, the business registration process can easily be carried out online via CAC company online registration portal with the assistance of an accredited lawyer to attest to the requisite incorporation […]

  2. […] (CAC), which was created under the Companies and Allied Matters Act of Nigeria. To successfully register a company, the company must have fulfilled all the necessary requirements of the commission by providing […]

  3. […] filing and processing fee for registration of the limited liability company by through a CAC accredited agent often starts with about N60,000 dереnding on thе number of […]

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