Nigeria, Africa’s largest economy, offers a wealth of opportunities for entrepreneurs and investors. Registering your company is a crucial step to legally establish your business and unlock numerous benefits, including access to funding, legal protection, and enhanced credibility.
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.
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.
Step 1: Decide on the Type of Company
The first step is to determine the type of company you want to register. In Nigeria, the most common types of business structures include:
- Sole Proprietorship: Owned and managed by one person. It’s the simplest form of business but offers no liability protection.
- Partnership: Owned by two or more individuals. Partners share profits, losses, and liabilities.
- Limited Liability Company (LLC): A separate legal entity from its owners, providing liability protection. It can be private or public.
- Incorporated Trustees: Typically for non-profit organizations, such as NGOs and religious bodies.
Step 2: Choose a Name for Your Company
Selecting a unique name is essential. The name must not be identical or similar to an existing company name. You can check the availability of your desired name on the Corporate Affairs Commission (CAC) website.
Step 3: Reserve Your Company Name
Once you’ve chosen a name, you need to reserve it with the CAC. This process can be done online through the CAC’s portal. If the name is approved, it will be reserved for you for 60 days.
Step 4: Prepare the Required Documents
The documents required for company registration include:
- Memorandum and Articles of Association: Outlining the company’s objectives and regulations.
- Form CAC 1.1: Application for registration.
- Identification Documents: Copies of valid ID for directors and shareholders.
- Address of the Company: Proof of the company’s registered address.
Step 5: Register Your Company with the CAC
Submit the completed forms and required documents to the CAC. This can be done online or at any CAC office. Pay the prescribed registration fees, which vary depending on the type and size of the company.
Step 6: Obtain a Certificate of Incorporation
Upon successful registration, the CAC will issue a Certificate of Incorporation. This certificate is proof that your company is legally recognized and can commence business operations.
Step 7: Post-Incorporation Requirements
After registration, there are several post-incorporation requirements to comply with:
- Tax Registration: Register for taxes with the Federal Inland Revenue Service (FIRS) and obtain a Tax Identification Number (TIN).
- Annual Returns: File annual returns with the CAC to maintain your company’s active status.
- Business Permits and Licenses: Depending on your industry, you may need additional permits and licenses to operate legally.
Company Incorporation Distinct From Sole Proprietorship
Incorporating a company 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 companies including;
- Company limited by shares
Because most 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 Commission
- Company 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 Revenue
- Payment of filing fees
- The consent of the Attorney-General of the Federation
- Unlimited company
Unlimited 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 steps;
- Choose a number of uncommon business names (about 3).
- 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
Registering your company in Nigeria is a vital step towards establishing a successful business. By following these steps, you can navigate the registration process with ease and ensure your business is legally compliant. With its growing economy and diverse opportunities, Nigeria is an excellent place to start and grow your business.
If you have any questions or remarks regarding company registration, do not hesitate to send us a mail via info@aocsolicitors.com.ng or visit www.aocsolicitors.com.ng