FORMS OF BUSINESS ORGANIZATION IN NIGERIA
A business entity is responsible for using its economic resources to provide goods or services to customers for profit. There are different types of companies and business structures in Nigeria.
Business organizations in Nigeria come in different forms of
ownership and these include:
Proprietorship: one person, who bears the risk and faces
unlimited liabilities of the business, usually owns this type of business
organization. It is easy to set up and this form of business is usually adopted
by small business entities. This is usually the cheapest and most used form of
business organization. All decisions of the business is carried out by the
owner who is responsible for all profits and loss of the business. This form of
business should be considered where one intends to work alone and have complete
control of the business.
proprietorship is usually registered as a business name with the Corporate
Affairs Commission. And Nigerian residents can only register it.
- Partnership: this form of business is owned by two or more persons who contribute resources together to create a business entity. The partners bear the risk and liabilities of the company equally. They also divide the profit of the business among themselves. Partnership can be divided into limited and general partnership. In a general partnership, all profit and loss are shared equally among the partners, while in a limited partnership, only one partner has control of the operations of the business while the other person (s) contributes money to receive only part of the profits.
is also registered as a business name with the Corporate Affairs Commission.
- Corporation: a corporation is also a form of business organization that has a separate legal personality from its owners. An example of a Corporation is a joint stock company. It provides limited liability to its investors with its legal rights to own a company. It is a legal entity that can sue, be sued, can own properties and pay tax. A corporation may be a form of Private Limited Liability Company or Public Limited Liability Company (PLC).
of Companies in Nigeria
limited by shares: this is a company where the liability of a
member to contribute to the company’s assist in the event of liquidation or
winding up is limited to the amount unpaid by its shares. A company limited by
shares can be a private limited or a public limited liability company. It is a
corporate structure where members of the company cannot be personally liable
for company debt or liabilities. According to the Nigerian law, it must be
registered with the Corporate Affairs Commission (CAC), it requires that the
articles of the company must be filed also with the CAC. It consists of a
minimum of 2 members and maximum of 5o members for private company and an
unlimited number of members for a public company.
limited company by shares separates the business assets of the company from the
personal assets of its owners. It states in its memorandum to be a private or public
Limited by Guarantee: this is usually called a non-profit
organization. It is a form of business organization whose objectives are to
promote educational, religious, sports or charitable purposes. Its hall not be
incorporated with the object of carrying on business for the purpose of making
profits for distribution for its members. Any money that earned in the
organization cannot be distributed to members or trustees of the organization
rather it is usually kept to pay for expenses or programs.
registering a Company limited by Guarantee, it shall not be registered with a
- Unlimited Company: with this type of company, the liability of a member is unlimited and shall be liable to the full amount of the company’s debt. An unlimited liability company is not the best or advisable form of enterprise. There are only a few unlimited liability companies in Nigeria. A renowned unlimited Liability Company in Nigeria is the Mobil Producing Nigeria Unlimited.
Finally, it is important to that
out of various types of companies in Nigeria, a private limited liability
company is still the most recognized and preferred form of business
organization in Nigeria. Additionally, a private limited liability company is
the most suitable form of business organization for foreigners seeking to do
business in Nigeria.
By Resolution Law Firm