SME's DIY: The step-by-step guide to incorporating your Company in NigeriaSMEStudio
To register a Limited Liability Company is not difficult, although this business entity (particularly at the post-incorporation stage) is strictly regulated by the Corporate Affairs Commission (CAC), the government body charged with the responsibility of incorporating, monitoring and regulating the affairs of corporate entities in Nigeria. The best approach to registering a company is to instruct a Lawyer in this regard. The reason for this is not farfetched, apart from the fact that one of the Forms required for incorporation (Form CAC 4) is to be filled and signed by a Lawyer, a Lawyer by training is generally skilled at wording the Memorandum and Articles of Association of the proposed Company to fully represent the objects of the Company and the intentions of the Promoters of the company.
Step by Step guide on Registration of a Limited Liability Company in Nigeria
Having pointed out that a Lawyer is better skilled and is required by law to register a company, the requisite steps taken in the registration process are as follows:
Give your Lawyer all the instructions necessary to carry out the Company registration that is:
i. Shareholders’ personal details (Full name, Address, email, Phone number etc)
ii. Name of Company (with Alternative names)
iii. Type of Company
iv. Date for completion of registration.
v. Sphere of operation of the Company
vi. Objects or business of the Company
vii. Capital of the Company
viii. Details of first Directors of the Company (every Company must have at least 2 Directors whom may also double as Shareholders)
ix. Control and management of the company
x. Details of expatriate employees (if any)
xi. Details of Subscribers to the Memorandum and Articles of Associations of the Company (this are usually the Shareholders).
xii. Proposed business address of the company.
Lawyer obtains incorporation forms
Lawyer conducts an Availability search and Reservation of name at the Corporate Affairs Commission (names are usually reserved for 60 days at first instance).
Lawyer prepares incorporation documents after it has been confirmed that the proposed company name is available.
Lawyer submits 2 copies of Memorandum and Articles of Association with 2 copies of the Statement of Share Capital for stamping at the Federal Board of Inland Revenue office.
Lawyer files the incorporation documents, which have been prepared and stamped, at the CAC.
Lawyer obtains the Certificate of incorporation at the CAC as a proof of incorporation. Also, the Certified True Copies of your incorporation documents are usually supplied to you by the lawyer.
Please understand that some of the documents to be prepared under Step 4 are as follows:
1. The Memorandum and Articles of association which is to be signed by the Subscribers (Shareholders/Members);
2. Statement of Share Capital and Return on Allotment of Shares (Form CAC 2);
3. Notice of Situation/Change of Registered Address (Form CAC 3);
4. Declaration of Compliance with the Requirement of CAMA (Form CAC 4); and
5. Particulars of Directors or Any Change Therein (Form CAC 7)
Apart from the points listed above, there are other factors that are to be taken into consideration by an entrepreneur or founder of a company (who may also be referred as promoter in law) in the process of registration of a Company. Some of these factors are:
1. At least a minimum of 2 persons and a maximum of 50 persons are required for the formation of a Company.
2. An individual cannot join in the formation of the Company if he is less than 18 years unless two other qualified persons that are of full age are also members.
3. The Authorized Capital of a Private Limited Liability Company must not be less that N10,000 and that of a Public Company must be at least N500,000. However, the nominal capital of a Company is generally higher that the Authorized minimum since the amount of capital the newly formed Company needs to hit the ground running is usually more than N10,000 (It is the practice in Nigeria to fix the Nominal Capital of Private companies at N1,000,000 for incorporation purpose).
Once a Certificate of incorporation is issued by the CAC, the Company becomes a legal person recognized by law and enjoying the benefits a natural person would ordinarily enjoy. But this is not all a company needs to do in its lifetime, the nature of a private company requires that regular business updates be given to the CAC on post-incorporation affairs.
This post is intended to provide general information on this topic. Specialist advice should be sought on your specific circumstance.
By Ayo Adeyemo