This post was originally published at LegalNaija Blawg
The importance of registering a business can never be over-emphasized. For one, when it comes to doing serious business, many agencies will never take you serious if your company is not registered.
Secondly, you might have to discover that people and that includes you and I, feel more comfortable paying for services and products into a corporate account with the name of an organization than paying into Individual account. You may have missed an important sale because when your prospect made up his mind to buy, the account number you sent him was an individual account in your name. He thought it too risky because it was a sizable amount involved.
People feel if the account is in a corporate name, the organization can be traced if the transaction went foul. If you register your company, you can use the documents to open a corporate account with less stress.In this post, you’ll be learning simple steps you can take to register your business name with the corporate affairs commission in less than 21 days.
REQUIREMENTS FOR INCORPORATING A PRIVATE COMPANY IN NIGERIA.
The steps for incorporating a new company at the nation’s registry, The Corporate Affairs Commission, can be summarized in the following 10 steps:
i. Submission of the proposed Company Names to the CAC. This is the first step in the entire process. The promoters of the company must decide on a company name and submit for approval. The government officials reserve the right to approve or deny company names submitted for a number of justifiable reasons – availability, suitability, legality, similarity, etc.
ii. Details of Directors: Long story short, you will be required to provide the biodata of the Directors of the proposed company. This information include: Full Names, Residential Address, Nationality, Age, Valid Identification Document and Signature of the Directors. The minimum number of directors for a private company is 2 and maximum is 50. There is no maximum for public companies. There are statutory requirements for being a director, one of which is that the directors must not be less than 18 years old.
iii. Shareholders/Subscribers. The legal minimum number of shareholders in a private company in Nigeria is 2 and a maximum of 50. The shareholders subscribe to the memorandum and articles of association and are allotted shares in the company.
iv. Appoint a Company Secretary. Every Nigerian company must appoint a Nigerian Company Secretary, as it has become a legal requirement. The company secretary of a private limited company needs no formal qualifications. It is the directors’ responsibility to ensure he/she has the appropriate knowledge and experience to act as a Secretary of the company.
v. Registered Address of the Proposed Company. The company must have a Nigerian business address. This requirement needs no much explanation and not debatable either.
vi. Core Areas of the company’s business activities (Nature/Objects of company). Nigerians and Non-Nigerians are allowed to carry on all forms of business provided it’s legal and not in the “Negative List”. If the company will engage in specialist services (Hospital, Consultancy, Schools, Media & Advertising, etc), the directors may need to provide an evidence of professional proficiency. E.g. Certificate of a professional body/trade association, Academic Certificate, or both.
vii. Valid Identification. Although this requirement has been stated earlier, it is worthy of mention here again. A photocopy of Identification of all the directors is required. (E.g. National ID card, Data Page of your National Passport, Voter’s Card or Driver’s License).
viii. The Company’s Share Capital and Allotment. In simple terms, the share capital of a company (usually in monetary terms), is the amount of capital the subscribers have to carry on the business. The minimum share capital of a private company must not be less than N10, 000:00 (Ten Thousand Naira only) However, for economic reasons, it is advisable that an average Nigerian company incorporate a N1, 000,000: 00 (One Million Naira only) share capital company. A company’s share capital is also industry-dependent. For example, advertising agencies must have at least N10 million as share capital. The law also stipulates a minimum of N10 million share capital for a Nigerian company with foreign ownership. Your regulator or adviser should advice you appropriately. A minimum of 25% of the authorized share capital must be subscribed and paid for.Once the issue of share capital has been decided on, then the subscribers must also decide on allotting the shares. If there are 2 persons that formed the company, they could share it 50% each.
ix.Draft the Memorandum of Understanding and Articles of Association (MEMART). This is a legal document that spells out the business objectives and the framework on which the company intends to run its business within the acceptance of the law. This legal document also shows the particulars of the shareholders and their shares allotment.
x. Payment of Stamp Duty and Statutory Filling Fees. The total fees payable to the Stamp Duty office and the Corporate Affairs Commission is dependent on the company’s share capital.
These are the basic requirements for incorporating a private limited liability company in Nigeria.
Image source – sdflc.org