The law regulating the registration of companies in Nigeria is the Companies and Allied Matters Act (CAMA). The Act also regulates the formation and operation of other types of business associations in Nigeria. CAMA in its part A established a regulatory body known as Corporate Affairs Commission (CAC) and saddles it with the responsibility of registering companies in Nigeria.
TYPES OF COMPANY
By the provisions of section 21 of the CAMA, the various kinds of company that can be formed under the Act are as follows:
(a) Company Limited by Shares
This is a company in which the financial liability of its members is limited by their shares, hence, they are known as shareholders i.e In the event, the company winds up or becomes insolvent, they will not be liable unless the member if any, that has not fully paid up the value of shares held.
(b) Company Limited by Guarantee
This is a company in which the financial liability of its members (known as guarantors), in the event of it being wound up or insolvent, is limited up to the amount guaranteed to be contributed to the assets of the company, which cannot be less than N100,000. The amount guaranteed can only be demanded at the time of it being insolvent. This type of companies requires the consent of the Attorney General of the Federation for its registration and are not formed to make profits to be distributed to the members but for the promotion of commerce, art, science, religion, sports, culture, education, research, charity or other similar objects i.e. they do not distribute their profits to their members but rather apply them solely for the promotion of its objects or use them for some other charitable purpose. They are also exempted from paying taxes in Nigeria.
(c) Unlimited Liability Company
An unlimited liability company in Nigeria is the one where its members' financial liability in the event of it being wound up has no limit. Where the financial liability of the company exceeds its assets, the company may reach into its members' personal property to liquidate its debt. In other words, its members have a joint and non-limited obligation to contribute to the assets of the company to enable settlement of its financial liability, if any, in the event of the company's insolvency.
The above-stated types of companies may be registered as a private company or a public company. And upon its registration, it assumes a separate legal personality from those of its members, enjoys perpetual succession, and becomes endowed with the capacity to sue and be sued separately from its members.
A company is a private company where its Memorandum and Article of association state so and it restricts the transfer of its shares; limits the maximum number of its members to 50 (although where two or more persons hold one or more shares in a company jointly they will be treated as a single member); cannot invite the public to subscribe for any its share or debenture, unless authorized by law.
A public company is any company other than a private company. The minimum membership is two but there is no maximum as is the case with a private company. Public companies are also more regulated than private companies as they are subjected to different external laws outside the CAMA for them to operate. For instance, every public company must comply with the provisions of the Investment and Securities Act (ISA) and the Rules and Regulations of the Securities and Exchange Commission (SEC) in inviting the public to subscribe for any of their shares or debentures.
PROCEDURE FOR REGISTRATION OF PRIVATE LIMITED LIABILITY COMPANY
The first step to be taken by an individual who has decided to register a private company limited by shares is proposing a name for the company and an alternative name. So, where the proposed name is not available due to any reason the alternative will then be available. The individual or his lawyer or agent will then carry out a name search on the CAC website to ensure that the proposed name or the alternative is available and registrable. If the name is available, it is immediately reserved.
Upon the name reservation, the applicant will proceed to the registration stage. The following documents will be required for incorporation:
- Names, addresses, emails, and phone numbers of the first directors and shareholders of the company
- Statement of Compliance.
- Copies of the means of identification of the shareholders and directors, such as international passports.
- Certificate of Incorporation and Company Resolution authorizing the registration of the company, where any of the shareholders will be another company.
Upon furnishing the above requirements, the necessary incorporation forms and the Memorandum and Articles o Association for the company will be prepared and printed out for signing.
It should be noted that a business consultant or lawyer is the best person in a position to prepare the incorporation documents and completes the incorporation forms obtained from the CAC. If all the incorporation documents are well completed and executed, the commission will then incorporate the company and issue an incorporation number immediately online. Certificate of Incorporation and the Certified True Copies of the other documents will be issued by CAC and received by the consultant or lawyer, usually in less than 48 hours after the company is duly incorporated by CAC.
In sum, individuals or entities seeking to register corporate organizations in Nigeria may incorporate the same as either a private company limited by shares or a public company limited by shares. A private company limited by shares or a public company limited by shares is suitable when planning to incorporate a company to make profits but a private company limited by shares is, however, highly recommended for start-up companies for several factors which include the fact that a single person may form and incorporate it and its process for registration is not as strenuous as other forms of incorporations. Although individuals may seek to register their own companies directly through CAC, it is mostly advised that a CAC accredited agent should be engaged for a seamless registration process.
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.