As a lawyer, it is important that I understand my client’s brief before filing a case or rendering any kind of service. I can safely say the process is the same for other professionals, and entrepreneurs. They all have a process, albeit with slight difference.
To figure out which business structure would fit their proposed entity, in both short term and long term, it is important that would-be entrepreneurs understand the preliminary stages of pre-incorporation of companies. As such, here are my thoughts on how to start a company in Nigeria.
The Company and Allied Matters Act (CAMA) is the law that regulates incorporation of companies in Nigeria. It regulates the types of company structures permissible. Headquartered in Abuja, the Corporate Affairs Commission (CAC) is the regulatory body in charge of implementing the provisions of the CAMA. It however has branches across the country.
According to some quarters, the current downturn in Nigeria’s economic fortunes will cause the demise of jobs, and, as a result, many will embrace entrepreneurship as a last resort. But, that is an argument for another day. Long before now, Nigerians have always been industrious and dealt with all manner of trade or commercial activities.
In these modern times, however, there are tons of considerations when a person decides to start a business. One of this is choosing a structure that best serve his interest as an individual and the future of the enterprise. In Nigeria, an entrepreneur often has to choose either of these business structures:
(i) Sole Proprietorship: One man business.
(iii) Limited Liability Company (LTD)
For the purpose of this article, we shall be examining how to setup a Limited Liability Company. Choosing this business structure confers two major benefits:
By law, a company is deemed to be a separate legal entity with different personage to its promoters, owners or directors. It can sue, be sued and has powers to enter into contracts, purchase and own property etc. With this structure, your profit or loss is limited to the equity contributed to setting up the company. An entrepreneur is rest assured that his personal assets are safe from the Company’s indebtedness and bankruptcy.
Perpetuity in Business.
The business has a life of its own and will survive its promoters or directors upon their death. What this means is that the death of the entrepreneur doesn’t summarily cause the demise of the business. The business can remain a going concern for several years after the death of its founders.
To register a LLC, the following steps and information is required to be provided to the Corporate Affairs Commission:
1) Reservation of Name: Choose two names central for both legal and marketing purposes. The names must be unique and original to the company. It must be distinguishable and not similar to those already in use by existing companies. If it is similar to other names, the Registry will refuse such entries, and peradventure it is accepted, Trademark issues could be lurking around. The registry will accept one of the two names submitted.
Other information/documents required to be submitted include:
2) Brief Description of Business Activities
3) Directors’ Particulars –
Minimum of Two (2) and not more than Fifty (50)
Founding Directors must not be –
Under the age of 18 years old (unless at least 2 other members are over the age of 18),
Of unsound mind,
An undischarged bankrupt, or disqualified by CAMA from being a Director
4) The company’s share capital
5) Address of Company’s Office
6) Company Secretary Particulars
7) Receipt of payment of stamp duties
8) Statement of compliance by Legal Practitioner
9) Preparation of Memorandum and Articles of Association by Legal Practitioner.
10) All Directors must sign the filled forms and Memorandum and Articles of Association before filing for Stamping and Verification.
11) After stamping and verification has been done by the CAC, you will be issued a certificate of incorporation.
Only accredited individuals can register companies, and the only professionals eligible for accreditation are Lawyers, Chartered Accountants and Chartered Secretaries.
EASE AND DURATION
With the advent of new technologies and other social media channels it is easier to instruct lawyers to help with the process of incorporation. This instructions can communicated from far-flung corners of the globe to attorneys domiciled in target countries. This process can be completed within 3-4 weeks in Nigeria.
We are happy to provide free company registration advice. Even if you are not in need of a company registration, this blog contains valuable information about doing business in Nigeria and the regimes that regulate it.
Be social, share on your social media channels. Drop a thoughts in the comments section below or send an email to email@example.com
Kindly follow us on Twitter and on Facebook to assess real time legal tips and other relevant information.
By: Akinyemi Ayinoluwa