Company registration in Nigeria is regulated by the Corporate Affairs Commission (CAC), established by the Companies and Allied Matters Act (CAMA) 2020. Registering a company legally enables the business to operate within the country, offering it a distinct legal identity. This process is vital for establishing a corporate entity that can enter into contracts, sue and be sued, and access certain business rights. Below is an in-depth overview of the requirements and processes for registering a company in Nigeria.

Choice of Business Structure

Before commencing the registration process, an individual or group must decide on the structure of the business. Nigeria provides several options, including:

• Sole Proprietorship: For individuals who want to run a business under a personal name.
• Partnership: A group of individuals coming together to run a business with shared responsibilities.
• Private Limited Company (Ltd): This is one of the most popular types in Nigeria, limiting shareholders’ liability to their share contributions.
• Public Limited Company (PLC): Suitable for large businesses with the intention to offer shares to the public.

For the purposes of this explanation, we will focus on registering a Private Limited Company (Ltd), which is one of the most common business forms in Nigeria.

Minimum Share Capital

The CAC, following requirements from various business sectors’ regulators mandates different levels of minimum share capital depending on the industry and type of company. For a Private Limited Company, the minimum share capital is N100,000, while for a Public Limited Company, it is N2,000,000. Certain sectors, like banking, insurance, and telecommunications, have much higher capital requirements.

Even if the actual capital to start the business is smaller, the company must have a share capital registered with the CAC as an official figure. Higher share capital is required for foreign investors, with the minimum being N100,000,000 in certain cases for businesses owned wholly or in part by foreign nationals.

Name Reservation

Choosing a company name is a critical step. The CAC allows prospective business owners to submit two preferred names for reservation, and the chosen name must be unique and compliant with the regulations of the Commission. The names are verified to ensure they do not conflict with already existing business names or trademarks. If approved, the name is reserved for 60 days, within which the registration process should be completed.

There are guidelines regarding the use of certain words in a business name. For instance, names containing terms like “Federal,” “National,” or “Government” might require special approval or rejection if they are misleading or inappropriate.

Appointment of Directors and Shareholders

A small Private Limited Company requires at least one director and one shareholder for registration. However, the director and shareholder can be the same person. Directors are responsible for the day-to-day management of the company, while shareholders are the owners of the company. For a wholly or partly foreign-owned company, the minimum number of directors is two because any company involving a foreigner is considered a large company.

All directors must be at least 18 years old and not be convicted felons or bankrupt. The shareholders’ details, including their names, addresses, and number of shares held, must be included in the registration documents. Directors and shareholders can be individuals or corporate bodies, and foreigners can also serve as directors and shareholders.

Registered Office Address

Every company in Nigeria must provide a valid registered office address, which serves as the official location for correspondence with government agencies, clients, and suppliers. The registered address can be different from the company’s operational address but must be a physical address in Nigeria, not a post office box.

Memorandum and Articles of Association (MEMART)

The Memorandum and Articles of Association (MEMART) outline the objectives, structure, and internal rules of the company. The Memorandum defines the relationship between the company and the external world, while the Articles lay down the internal management of the company, including rules on how meetings are conducted, how shares are issued, and the roles and responsibilities of directors.

The MEMART must conform to CAMA 2020 and include provisions for the authorized share capital and the company’s objectives. The CAC provides templates for these documents, but companies can customize them to fit specific needs and add any other custom rules or terms to them.

Payment of Registration Fees

The CAC charges a registration fee, which varies depending on the size of the company and the share capital. The fees include a reservation fee for the company name, filing fees for the registration forms, and stamp duty charges. Stamp duty is payable to the Federal Inland Revenue Service (FIRS), which places an official seal on the documents to legitimize them.

Documentation for Incorporation

Several forms and documents are required to complete the company registration:

• Application for Registration Form: The online application for registration form is made up of about ten pages, which an applicant or its agent needs to complete during the registration. The online form comprises listed pages such as Entity Details; Objects & Memorandum; Articles of Association; Directors; Secretary; Statement of Issued Share capital; Persons with Significant Control (PSC); Statement of Compliance; Document Upload and Preview.
• Identification of Directors and Shareholders: Copies of valid government-issued identification, such as international passports, national IDs, or driver’s licenses, are required for all directors and shareholders.
• Proof of Payment: Payments for registration fee and stamp duty tax are made online. The payments must be successful before the applications can be submitted for registration.
• Issuance of Certificate of Incorporation

Upon successful completion of the registration process, the CAC will issue a Certificate of Incorporation, which officially confirms the legal status of the company. Along with the certificate, the company’s MEMART and Application Status will be issued.

Tax Identification Number (TIN)

All registered companies in Nigeria must register and obtain a tax identification number (TIN) in Nigeria before the commencement of operation. The TIN is mandatory for opening a corporate bank account and filing tax returns.

Post-Registration Requirements

After registration, the company must comply with certain ongoing requirements:

• Annual Returns: Companies are required to file annual returns with the CAC, showing the company’s financial status.
• Tax Compliance: Every registered company is expected to file tax returns and comply with Nigerian tax laws, including paying corporate taxes, value-added taxes (VAT), and withholding taxes where applicable.
• Business Permit and Expatriate Quota (for Foreigners): Foreign-owned companies may need additional permits, such as a business permit or an expatriate quota, to employ foreigners.

In conclusion, registering a company in Nigeria is a straightforward but essential process for any business seeking to operate legally in the country. By adhering to the requirements set forth by the Corporate Affairs Commission, companies can enjoy the benefits of limited liability, legal recognition, and access to broader markets. Understanding the various steps and preparing the necessary documentation in advance can streamline the process and ensure successful incorporation.

For more information on company registration in Nigeria, kindly contact us at SOW Professional:

E-mail:         care@sowprofessional.com

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