SME’s is believed to be
catalysts for economic growth and national development both in developing and
developed countries.
Nigeria as a developing
country has a host of opportunities to be tapped into and utilized by its
citizens. Majority of these has seized such opportunities to startup businesses
as a means of livelihood in order to ameliorate hardship in these volatile
economic times and also as an alternative to joblessness which is common in the
country; however, more often than not, people undermine the need and importance
of giving a legal protection to their businesses. A lot call themselves
business owners and entrepreneurs without giving their businesses the standard
legal protection that it needs, this trend is wrong and at times catastrophic.
The first step to take to
protect your business while starting up involves
1.
REGISTRATION
OF YOUR BUSINESS WITH THE CORPORATE AFFAIRS COMMISSION (the commission)[1].
The commission is the authorized agency empowered by
law to regulate and supervise the affairs of companies in Nigeria.
There are different types of companies which can be
registered in Nigeria. There includes partnership[2],
company limited by shares, company limited by guarantee and an unlimited
company[3],
the intending business owner can choose the type suitable for him/her, depending
on nature of business the person is willing to undertake. It is also very
important to note that certain legal considerations must be undertaken to form
a company. The prospective business owner must be up to 18, be of sound mind,
must not be bankrupt etc.[4]
The importance of registering your business cannot be
over emphasized as it runs deep into the progress or failure of your business. Registering
and starting up a company might seem like a big step however it is accompanied
by several rosy benefits.
Benefits
of Registering a Business
As stated earlier, the
benefit(s) of registering a business is enormous. The benefits include:
1.
It gives you a unique identity to the
exclusion of all others
2.
It validates your business: In this time
an era where fraud rate is high, Investors and customers need vendors they can
trust.
3.
It protects you from Liability: When you
register a limited liability company, your risks are limited to the number of
shares taken.
4.
It has perpetual succession: You can pass
your business from generation to generation. Leave your footprint in the sand
of time, the importance of continuity cannot be over stated. Your business can become
another SHELL OR JULIUS BERGER
5.
It helps in establishing a corporate bank
account. It is more professional to give your clients a business account
for payment instead of your personal account which has your own full name.
6.
It is more convenient to obtain loan with
a registered business: You are taken more seriously, Investors want to know
that your business is structured, exists legally and is separate from your
personal account.
7.
It gets you that desired contract. While
bidding for a contract, a registered business always gives your company
priority over others.
8.
It prompts funding when opportunities
arise from government. There are lots of sustainable processes set up by the
government capable of building the prospect of small and medium scale enterprises
and consequently can be a path to national recovery of the Nigeria ailing
economy. But you need to be seen as someone who is ready.
It may cost you some
money, time and effort but it’s really a small price to pay to avoid costly
damages and regret down the road. START
SMALL, START SMART, REGISTER YOUR BUSINESS NOW.
LINDA
NNAMANI
Corporate Law
TRIAX SOLICITORS
Photo Credit – The Guardian Newspaper
[1]
The Company and Allied Matters Act, Cap 59, Laws
of the Federation of Nigeria, (LFN), 2004, s.1 provides that the Company and
Allied Matters Act shall establish the Corporate
Affairs Commission, which shall provide for the incorporation of companies and
incidental matters, registration of business names and the incorporation of
trustees of certain communities, bodies and associations.
[2]Ibid, s. 656 (1) succinctly provides that Every
individual, firm or corporation having a place of business in Nigeria and
carrying on business under a business name shall be registered in the manner
provided in this Part of this Decree if – (a) in the case of a
firm, the name does not consist of the true surname of all partners without any
addition other than the true forenames of the individual partners or the
initials of such forenames; (b) in the case of an individual the name
does not consist of his true surname without any addition other than his true forenames
or the initials thereof; (c) in the case of a corporation whether or not
registered under this Decree, the names does not consist of its corporate name
without any addition.
[3]
Ibid, s.21 provides that
an
incorporated company may be either a company-
(a)
having the liability of its members limited by the memorandum to the amount, if
any, unpaid on the shares respectively held by them (in this Act referred to as
“a company limited by shares”); or (b)
having the liability of its members limited by the memorandum to such amount as
the members may respectively thereby undertake to contribute to the assets of the
company in the event of its being wound up (in this Act referred to as “a
company limited by guarantee”) or (c)
not having any limit on the liability of its members (in this Act referred to
as “an unlimited company”).
(2)
A company of any of the foregoing types may either be a private company or a
public company.
