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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.
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.
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.
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:
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.
Sole Proprietorship: One man business.
(ii)
Partnerships.
Partnerships.
(iii)
Limited Liability Company (LTD)
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:
the purpose of this article, we shall be examining how to setup a Limited
Liability Company. Choosing this business structure confers two major benefits:
Limited Liability
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.
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.
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.
STEPS
To
register a LLC, the following steps and information is required to be provided
to the Corporate Affairs Commission:
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.
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:
information/documents required to be submitted include:
2)
Brief Description of Business Activities
Brief Description of Business Activities
3)
Directors’ Particulars –
Directors’ Particulars –
Minimum
of Two (2) and not more than Fifty (50)
of Two (2) and not more than Fifty (50)
Founding
Directors must not be –
Directors must not be –
Under
the age of 18 years old (unless at least 2 other members are over the age of
18),
the age of 18 years old (unless at least 2 other members are over the age of
18),
Of
unsound mind,
unsound mind,
An
undischarged bankrupt, or disqualified by CAMA from being a Director
undischarged bankrupt, or disqualified by CAMA from being a Director
4)
The company’s share capital
The company’s share capital
5)
Address of Company’s Office
Address of Company’s Office
6)
Company Secretary Particulars
Company Secretary Particulars
7)
Receipt of payment of stamp duties
Receipt of payment of stamp duties
8)
Statement of compliance by Legal Practitioner
Statement of compliance by Legal Practitioner
9)
Preparation of Memorandum and Articles of Association by Legal Practitioner.
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.
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.
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.
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.
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.
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 contact@hightowerlawyers.com
social, share on your social media channels. Drop a thoughts in the comments
section below or send an email to contact@hightowerlawyers.com
Kindly
follow us on Twitter
and on Facebook to
assess real time legal tips and other relevant information.
follow us on Twitter
and on Facebook to
assess real time legal tips and other relevant information.
By: Akinyemi Ayinoluwa