Introduction to Company Registration in Nigeria
In Nigeria, registering a company as a separate legal entity is an essential first step for anyone looking to do business in Nigeria, especially if they do not want to have unlimited liability in the business. Thus, registering a company as a separate legal entity becomes the way forward for such business owners. The Corporate Affairs Commission (CAC) has the responsibility to regulate business activities and approve company registrations in Nigeria for interested business owners, both local and foreign. This guide outlines the steps to incorporate a limited liability company and start operations in Nigeria.
Why Should you Register a Company instead of a Business Name or Partnership?
Globally, limited liability companies are the most common business structures used to carry on business activities. In Nigeria, companies are also very popular, for several reasons. Here are some advantages of registering a company in Nigeria over other business vehicles:
- Perpetual Succession: Once a company is incorporated, it enjoys perpetual succession and can exist forever as a legal entity. Unlike partnerships, which end when a partner dies, a company’s shares can be transferred to other individuals if a shareholder passes away and the company can literally continue to be in existence in perpetuity, so long as shareholders continue to have need for its use and its operations. The perpetual succession which a limited liability company has makes it the best business vehicle, unlike partnerships and sole proprietorships which die off with the death of the owners/partners/proprietors.
- Limited Liability: In a company limited by shares or guarantee, the liability of its members is restricted to the number of shares they owned or guaranteed, as the case may be. In other words, the liabilities of the company shareholders is not unlimited. Constrast this with a situation where a sole proprietor has unlimited liability in his business.
- Attracting Investors: Worldwide, potential Investors are more inclined to invest in companies than in sole proprietorships or partnerships. That way, when they invest in companies, they can have the shareholding altered to accomodate their own ownership stake/interest in the company to the tune of their investment, unlike in partnerships or sole proprietorships where they cannot get ownership stakes in the business in question.
- Access to Funds: Banks and lending institutions prefer to extend secured loans to companies rather than any other business vehicle.
Having clearly outlined a couple of advantages that exist for having companies rather than other business structures, we will examine the steps to take to incorporate a company in Nigeria through CAC-accredited agents or firms. While individuals can register their company on the CAC’s online portal, it is often advisable to use accredited agents (like Kabbiz Global Nominees Limited) to avoid and minimize errors in the course of incorporation. The steps below outline the process of company registration in Nigeria.
Checklist of Information and Documents to provide to Register a Company in Nigeria
- Proposed Company Names: Before you can commence the company formation process, you are required to have a unique name you wish to register with the Corporate Affairs Commission. You are required to choose a name and also an additional name, then submit the two potential company names to the CAC for consideration. It is always advisable to choose unique names that reflect the business activities you intend to undertake and ensure they comply with CAC naming guidelines. Failure to do this can lead to the CAC refusing the names for reservation.
- Particulars of First Directors: According to the new regime, each company being incorporated in Nigeria must have at least one director at incorporation. The details of the directors include: their full name, address, passport photograph, signature, government-issued ID (passport, NIN card, driver’s license), telephone number, email, age, and gender.
- Particulars of Members(Shareholders): A company requires at least one member (shareholder) to subscribe to its shares. The CAC now permits single-member companies unlike in the past when a company was required to have a minimum of two shareholders. However, you can have as many shareholders as you need to subscribe to the shares of the company. If the shareholders will be more than 50, then you have to register a public company not a private company.
- Company Address: You have to provide a physically verifiable address in Nigeria for the company. If there are branch addresses, include those details as well.
- Filing and Service Fees: There are fees at various stages, from name reservation to payment for the incorporation certificate and status report. Ensure to account for these costs. If you are not registering your company by yourself, then you have to factor in the service charge to pay to the CAC-accredited Firm or individual assisting you with your incorporation.
- Authorized Share Capital**: Define the authorized share capital for your company. All shares will be considered “paid up” upon incorporation. Consult your CAC-accredited agent for advice on share capital requirements, as there are thresholds for different companies in different categories of industries, especially those operating in regulated sectors/industries.
Steps to Register Your Company
- Conduct Name Availability Search and Reserve Company Name: Your agent will check the CAC portal to ensure your chosen name is not already in use or being registered by another entity. This step helps avoid conflicts and ensures the uniqueness of your company name so that the Commission won’t reject your chosen name. Thereafter, reserve your company name and await approval to commence registration of the company in Nigeria.
- Prepare Necessary Documents: We outlined all the required documents above, and they include valid identification, passport photographs, signatures, addresses, among others. Your agent will provide a detailed checklist of all documents needed and convert them to the necessary formats.
- Commence Company Formation: Once your name is reserved and the chosen company name is approved, you have sixty days to complete the registration, during which time the name will be unavailable for any other intended registrant. If after the sixty-days window you fail to register your company, the name will become available once again and any other person or Entity interested in it can reserve it and use it. Complete and submit all forms and required details, including information about the company’s principal officers and shareholders. Submit supporting documents, pay necessary fees, and await CAC approval.
- Obtain Registration D0cuments: Upon a successful completion of the registration of your company with the Corporate Affairs Commission, the Commission will issue the following documents: E-Status Report [Form CAC 1.1], Certificate of Incorporation and Memorandum and Articles of Association [MemArt]. You are required to hold on to these documents as you require them for official purposes when dealing with businesses and Banks. You also require a registered number (which is imprinted on your certificate of incorporation) to be able to apply for and register for a TIN (Tax Identification Number) for your company.
Post-Incorporation Steps
After you successfully register your company, you have to fulfill post-incorporation requirements such as opening corporate bank accounts, ensuring tax compliance by registering with relevant tax authorities, among others. Regulatory compliance is necessary as non-compliance can and will atract penalties.
This article is a company registration guide for our Company Formation service at Kabbiz Global Nominees Limited.
If you wish to register a new company in Nigeria, and you require CAC-accredited agents to help you with same, we invite you to email us at [email protected] as we will be happy to assist you. We have registered different types of companeis for over one hundred businesses in Nigeria.
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