It is no news, startups
are springing up in Nigeria faster than we can say “Jack Robinson”. The entreprenual
power, wealth and opportunities in Nigeria are so enormous, the sky is big
enough for everyone to fly and that’s why international companies are breaking
legs just to get a foot in.
Having a startup goes well
beyond having an idea, implementing and executing your business plans and
strategies with adequate legal and commercial advice is another step in making
your business a success. I suggest you pay attention to the following legal
tips as it may be what makes or breaks your business.
You have a great business
idea and you have picked the perfect brand name for your enterprise. It is
advisable that you register that business name or at least find out if it is
available for registration at the Corporate Affairs Commission before you roll
out your campaign. I have a friend who had picked a wonderful name for his
business and had gone out to print material and represent himself to local and
international clients with the name. He was really upset when informed after
conducting a search at CAC that the name he chose was not available for registration
because the name had been pre-registered. He had to spend so much money
changing his brand and re-introducing the new brand to clients. Therefore,
register your business and secure your brand name as soon as you can.
Many startups when
allocating shares in their companies sometimes do not provide for investment
shares which can be sold to would be investors. Also, some make the mistake of
having an inadequate share capital for the type of business they are into. For
instance, registering a company with 1 million Naira share capital is fine if
your business catering, however, if you want to start a sport’s betting company
or a tech firm that intends to build phones and other gadgets, your share
capital should be about 30 million.
After registering your company,
there are a number of post-incorporation obligations which your company must
observe. For instance, filing your tax returns and notifying CAC of any change
in your status. This is why The Companies and Allied Matters Act mandates every
company registered in Nigeria to have a company secretary who is usually a
Your industry may be
regulated by government agencies and policies. For instance, if your business
is the making of food and beverages or medicine, it is mandatory that you
obtain a NAFDAC registration number for each product. Also, your business model
may involve certain transfer of technology between countries, in such situation
you will be required to get a license from the National Office for Technology
Acquisition and Promotion (NOTAP). It is important that you identify the
relevant government agencies involved in your sector and ensure strict
compliance with all policies. Doing otherwise may result in sanctions which may
affect your business badly. The
consequences for not having your legal house in order can be expensive.
Have an ironclad contract
that allows you legal recourse against a client who refused to pay. Also ensure
that your contracts clearly state the rights and obligations of each party to
the contract. This will prevent your company from liability that is unwelcome.
Also carefully peruse the clauses in any agreement before signing them and do
not hesitate to seek legal clarification from a lawyer on any clauses you may
not understand. It is generally advisable to allow a lawyer read all your
contracts as terms may have a different meaning to a lawyer than a lay person.
This will save you millions of naira in the long run and it protects you from
disputes in the future. You need to have something in writing to outline terms
and conditions. This protects both you and the person or company with whom you
essential. Taking the time to get your paperwork in order ahead of time pays
off big as your company grows, so make sure that you get all of your initial
legal work correctly pulled together and carefully maintained. This includes
offer letters, confidentiality agreements, option agreements and, most
importantly, your initial customer contracts. It is usually prudent to have an
off-site storage for copies of all your files. In case of loss, this will help
you retain all valuable piece of documentation.
Ensure your register your
patents and trademarks before going into business. Don’t get two years into
your business and then find that you have to change the name of a popular
product or even your entire company because someone has just realized that
you’re using a variant of their name and wants to sue you. This is similar to
ensuring your company name is registered.
a Trustworthy Lawyer
Retaining the services of
a good and trustworthy lawyer is as important as every other tip for startups.
Your lawyer could be the saving grace that prevents you from making a really
bad company decision. It is also important to educate yourself on legal issues
in your industry. Legal fees could end up being a large upfront investment when
you start your business but the advantages are immense.
your trade secrets
A trade secret is information,
including a formula, pattern, compilation, program, device, method,
technique or process, that derives its economic value from not being
generally known to the public and is protected by reasonable efforts to
maintain its secrecy.
Information such as
customer lists, process methods or other formulas that you’ve developed,
they can be protected as trade secrets as long as you use reasonable
efforts to keep them secret. This could include storing the information in
a password protected place, only disclosing the information on a need-to-know
basis and making sure the information isn’t posted in a public place.
your workplace policies and procedures to protect your business. In order to
protect yourself, ensure that your polices restrict employee abuse (accessing
restricted websites or sharing confidential information).
Adedunmade is the Managing
Partner of Adedunmade Onibokun & Co., a corporate commercial law firm
located in Lagos, Nigeria.
Many people have always toyed
with the idea of registering their own companies and organisations, with SMEs
sprouting up like wildfires in Nigeria and the drive for self- employment
gaining momentum. Whether your start-up is about IT, legal or business services
or you are considering starting your own NGO; one of first things you will have
to do is register your company or organisation. That’s where this article comes
Registering your organisation or company
in Nigeria is fairly easy and not as difficult as some believe it is, the
process begins at Corporate Affairs Commission (CAC), the CAC is in charge of
regulating company affairs and conducting company registration in Nigeria.
There is a CAC office in every state while Lagos State has two.
INCORPORATION OF COMPANY
(PRIVATE OR PUBLIC)
Incorporating a company or corporations
is distinct from sole proprietorships and partnerships in a number of ways. The
most obvious difference between a corporation and other business structures is
the ability of corporations to raise large sums of money by selling stock
shares to investors. Instead of being centered on a single person or a small
group, ownership of an incorporated business is spread out among stockholders,
who have the right to vote on key business decisions. There are 3 major forms of
limited by shares
companies are limited by shares, this ‘stake’ usually refers to the shares held
by the company’s shareholders. In such a company, the shareholders’ obligation
is to pay the company for the shares they have taken in it. The individual puts
money into the company, and in return the company gives it a percentage of
ownership, in the form of shares (how much of a company the individual in
question owns depends on how many shares he/she has in comparison with the other
people, if any, who own shares in that company). Requirements for registering a corporation in Nigeria include;
- Availability and Reservation of Name
- Payment of appropriate Stamp Duty to Federal
Board of Inland Revenue
- Submission of Memorandum and Articles of
Association together with statutory forms for verification and assessment
- Payment of filing fees at the Corporate Affairs
limited by guarantee
In a company
limited by guarantee, there are no shares – hence there are no shareholders.
Instead, the company will have ‘members’. The members of a company limited by
guarantee are bound by a guarantee in the company’s articles of association,
which requires them to pay the company’s debts up to a fixed sum. Requirements for Incorporation of a Company
Limited by Guarantee include:
- Availability and Reservation of Name
- Memorandum and Articles of Association
- Completion of Statutory Forms
- Payment of Stamp Duty to Federal Board of Inland
- Payment of filing fees
- The consent of the Attorney-General of the
company is a private company whereby the owners or the partners accept
unlimited and personal liability for its debts in order to avoid double
taxation of a limited company. This type of company is exempted from publishing
their annual account with public authority. Simply registering a business name
is often favoured by Sole proprietors i.e. an individual proprietor who owns
and manages the business and is responsible for all business transactions. The
owner is also personally responsible for all debts and liabilities incurred by
the business. Partnerships may also conduct their business by simply
registering a business name. You can register your busy name in very easy
Choose a number of uncommon business names
Conduct a search at the CAC to find out if the
name is available.
Submit a duly completed statutory form with two
passport sized photographs of each applicant attached to the form.
Pay filing fees at the CAC
Reservation of name at the CAC cost N500 (Five Hundred
Naira) while registering business name cost N10, 000 (Ten Thousand Naira). Note
that the proposed name of your business must be clearly written on the form and
individuals can register a business name without the services of a lawyer.
NON – GOVERNMENTAL ORGANISATIONS
A non-governmental organization
(NGO) is any non-profit, voluntary citizens’ group which is organized on a
local, national or international level. Task-oriented and driven by people with
a common interest, NGOs perform a variety of service and humanitarian
functions, bring citizen concerns to Governments, advocate and monitor policies
and encourage political particpation through provision of information. Some are
organized around specific issues, such as human rights, environment or health.
They provide analysis and expertise, serve as early warning mechanisms and help
monitor and implement international agreements. Registration of Incorporated
Trustees (NGO’s) takes the following procedure;
- Availability of name
- Procurement of application form which contains a
memorandum for guidance of application.
- Publication of notices in three (3) national
dailies, one being a local newspaper widely circulated in the area where the
organization is based.
- Submission of the duly completed application
form in triplicate which should be accompanied by the following.
- A formal letter of application
- The original newspaper publications
- 2 copies of Applicant’s constitution
- Minutes of the meeting whereat the trustees were
appointed, having the list of members present and absent and showing the voting
pattern, signed by Chairman and Secretary of the Board.
- Minutes of the meeting where the special clause
rules was adopted into the constitution of the organization; signed by
Secretary and Chairman.
- Trustees (Applicants) have to attach 2 passport
sized photographs of themselves.
- Trustees have to sign against their names on the
application form (encld) and furnish permanent residential addresses.
impression of the common seal should be affixed on page 11 of the form and draft
of 20,000.00k in favour of CAC and made payable in Abuja.
- Two copies of the application form.
- Application form duly signed by Secretary and
Chairman of the Board.
For futher information on company
registeration, log on to the CAC Website on www.cac.gov.ng.