Investment entities may take several forms in Nigeria. Investors may set up a Limited Liability Company (LLC) to buy shares or other investment vehicles. They may also set up a Limited Liability Partnership (LLP) or even a Cooperative Society depending on the needs of the investors, the advantage a particular entity for investment has over others, or the type of investments the entities intend to hold.

A Cooperative Society is one formed by a group of persons who share common goals relating to their social and economic advancement. Although, not as popular as LLCs or LLPs, Cooperative Societies afford certain advantages that investors may find favourable.

Applicable Law and Regulation

Cooperative Societies are governed by the Nigerian Cooperative Societies Act and are registered by the Director of Cooperatives in each state. In Lagos State, the Ministry of Commerce, Industry and Cooperatives oversees the registration and regulation of Cooperative Societies.

Cooperative Societies are also exempt from the provisions of the Companies and Allied Matters Act (CAMA). Consequently, obligations required of LLCs and LLPs by CAMA such as the filing of annual returns and registration of charges and debentures do not apply to Cooperative Societies. However, returns are expected to be submitted to the Director of Cooperatives at intervals determined by the Director or such agency that regulates Cooperative Societies.

Benefits of Cooperative Societies

Similar to an LLC, Cooperative Societies are of limited liability and have a legal personality separate from that of its members. They also have the powers to hold movable and immovable property, enter into contracts, and perform such functions or actions as stated in their constitution.

Members can hold shares in Cooperative Societies, however, no individual member can hold more than 20% of the shares of the society.

Investment of Funds

Cooperative Societies may invest their funds in a bank, in federal government-backed securities, or in any other manner provided for in their constitution.


Cooperative Societies are exempt from payment of company income tax on the profit or income generated from its activities including shares or interest held in other entities. Cooperative Societies are also exempt from the payment of stamp duties and registration fees payable in relation to the registration of instruments.


Cooperative Societies are to apply to the Director of Cooperatives for registration and such application must be signed by at least ten individuals qualified for membership of the society. The bye-laws of Cooperative Societies, which will govern its affairs, are to accompany the application.


Investors are constantly looking for opportunities to increase profits while reducing expenses such as operational costs and tax liabilities. Cooperative Societies provide for lower tax exposure and less regulatory oversight than LLCs and LLPs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.