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FREQUENTLY ASKED QUESTIONS ABOUT COMPANY REGISTRATION IN NIGERIA
Company Registration In Nigeria has now become easier due to the technological innovations deployed by the Corporate Affairs Commission (CAC) and the ground breaking provisions contained in the Companies and Allied Matters Act (2020). Over the years we have assisted hundreds of Entrepreneurs register their businesses and in the course of our interactions we have come across different questions and requests about Company Registration In Nigeria.
In this article we try to provide answers to Frequently asked questions (FAQ) on Company Registration in Nigeria.
Q: I need Company Registration In Nigeria. How do I go about it?
A: There are two common options to be considered for Company Registration In Nigeria. You can either register it as a Business Name or incorporate a Limited Liability Company with the Corporate Affairs Commission. Religious Organizations, Charities, Assciations, Clubs can also register as Incorporated Trustee. Also note that, the Commission has recently introduced two new forms of business registration and they are the Limited Partnership (LP) and the Limited Liability Partnership (LLP)
Q: What benefits do I enjoy for incorporating a company?
A: Ability to open a Corporate Accounts, Customers/Clients take you more serious if your Company is registered, Banks only grant business loans to registered businesses, Your Company becomes your brand, Investors are more comfortable with a registered business.
Q: What is the difference between a Business Name and a Limited Liability Company?
A: A Business Name is usually used for Sole Proprietorships (One Man Business) whilst a Limited Liability Company is owned by Shareholders and as the name implies their liability/ dividends are limited to the shares they own in the company. The image below shows some key differences between a Business Name and a Limited Liability.
Q: Can I open a Corporate Bank Account with my Business Name?
A: Yes, you can open a Corporate Bank Account with your Business Name.
Q: Can I later convert my Business Name to a Limited Liability Company?
A: Yes, you can convert your Business Name to a Limited Liability Company. It is to be noted that the process of conversions cost more money and takes a longer time.
Q: What are the requirements for registering a Business Name?
A: CAC now allows individuals to register Business Names by themselves, however Kudi Konsult saves you the headache with our affordable and reliable Business Name registration package. Still want to do it yourself? See process below
- Check for availability of proposed company name
- After name has been approved, use the availability code to start process of registration and fill all necessary forms on the Company Registration Portal
- Complete pre-registration form – CAC-BN01 and upload relevant registration documents and information online using Company Registration Portal
- Pay filing fees
- Upon completion of the registration of any entity on the portal, your registration is approved by the Commission and an E- Certificate and Certified Extract of Registration information is automatically generated to your dashboard where you can download at your convenience.
Q: What are the requirements for incorporating a Limited Liability Company?
A: CAC now allows individuals to register Business Names and Company by themselves, however Kudi Konsult saves you the headache with our affordable and reliable Company registration package. Still want to do it yourself? See process below
- Check for availability of proposed company name
- After name has been approved, use the availability code to start process of registration and fill all necessary forms on the Company Registration Portal
- Complete pre-registration form and upload relevant documents and information online using Company Registration Portal.
- Pay filing and Stamp duty fees
- Upon completion of the registration of any entity on the portal, your registration is approved by the Commission and an E- Certificate and Certified Extract of Registration information is automatically generated to your dashboard where you can download at your convenience.
Q: What are Shares?
A: Shares can be defined as units of ownership interest in a Limited Liability Company. While owning shares in a business does not mean that the shareholder has direct control over the business’s day-to-day operations, being a shareholder does entitle the possessor to participation in the profit (dividends) or losses (liabilities)
Q: What is the minimum number of shares I can have for my company?
A: You can have as low as 100,000 shares however it is advisable to have at least 1 million share capital in place because cost of filing fees and stamp duties is the same.
Q: How do I divide the shares of the company?
A: The amended CAMA 2020 makes provision for an individual to own 100% shares in a Company. You can however decide to allocate shares to partners, family members, partners, friends or investors. Allocation of shares is usually dependent on what the person is bringing on board. However you must be careful in choosing your shareholders as they are entitled to vote in the proceedings of company meetings, receive dividend, attend meetings and contribute to the affairs of the company, inspect company’s statutory books, protect proprietary interest in the management of the company.
Q: Can I be the only Director of the Company?
A: The amended CAMA 2020 allows sole directorship and a maximum of 50
Q: Why can’t my 10-year-old son be a Director of my company?
A: Minors (people under 18 years) cannot be a director but can however hold shares in the Company.
Q: Why are my preferred names rejected by CAC?
A: CAC reserves the right to reject names that are:
- capable of misleading as to the nature and extent of its activities
- undesirable, offensive or contrary to public policy
- identical with or similar to the name of a registered company unless the registered company is in the course of dissolution and consents in writing
- contain the phrase “Chamber of Commerce” unless it is a company limited by guarantee
- would violate any existing trade mark or business name unless with the consent of the trade mark or business name owner
- would violate any incorporated trustee unless with consent of the trustees
Q: Is it true that there are certain businesses that cannot be formed with 1 million share capital?
A: Yes, there are some Companies that cannot be formed with 1 million share capital. They include: Banks, Private Security Company, Insurance Businesses, Lotteries, Air Transport, Aviation, Freight Forwarding, Bureau De Change, Finance Companies, Pension Fund Managers, Underwriters, Issuers, Dealers etc
Q: Since, I’m not available to sign the documents; can I send a scanned signature?
A: The CAMA 2020 provides for the electronic submission/filing of incorporation and other documents as well as the use of electronic signature.
Q: What documents do I get after Company Registration In Nigeria?
A: A major and remarkable feature of the new system is the introduction of E-certificate. The commission has introduced and adopted issuance of E-certificate as against the former manual system where customers have to walk into the Commission to pick up the certificate of registrations and incorporation of all entities. Upon completion of the registration of any entity on the portal, your registration is approved by the Commission seamlessly, the certificate is automatically generated to your dashboard where you can download at your convenience.
The commission has also introduced a document format called E-status report to replace the CAC forms issued upon new registration/incorporation of all entities. The E-status report will now replace the Form CAC 1.1 for company registration, BN 1 for Business name registration, IT form 1 for Incorporated Trustees
Q: How about Tax Identification Number (TIN)?
A: TIN nos is free. It now comes printed on Certficate of Incorporation of Limited Liability Companies. For Business Names you can visit nearest FIRS office for the printout of your TIN
Q: Can a Foreigner Register a Business in Nigeria?
A: A foreigner can fully participate in the operation of any enterprise in Nigeria except enterprises in the negative list (which largely relates to the manufacturing of firearms and other military materials). The foreigner may operate alone or in Joint venture with Nigerians by means of a company, which has to be formed and registered with the Corporate Affairs Commission (CAC) and with the Nigerian Investment Promotion Commission (NIPC).
Q: Are there any requirement before a Foreigner can do business in Nigeria?
A: in addition to registering your business with the Corporate Affairs Commission, a foreigner that intends to do business in Nigeria must also register with the Nigerian Investment Promotion Commission (NIPC) and where he/she wants to live in Nigeria would require a business permit from the Ministry of Interior. Kudi Konsult has a full registration package for foreigners package that includes all the necessary permits, registered address, bank account opening etc
Q: Are there certain Foreign companies that are exempted from Company Registration In Nigeria?
A: Yes, the following companies will be exempted after application for exemption:
- Foreign companies invited to Nigeria by or with the approval of the Federal Government to execute any specified individual project;
- Foreign companies which are in Nigeria for the execution of specific individual loan projects on behalf of a donor country or international organization;
- Foreign government-owned companies engaged solely in export promotion activities; and
- Engineering consultants and technical experts engaged on any individual specialist project under contract with any of the governments in the Federation or any of their agencies or with any other body or person, where such contract has been approved by the Federal Government.
Q: What is a Limited Partnership (LP)and Limited Liability Partnership (LLP)? What are the differences in the two?
A: LP is a partnership arrangement with at least one general partner and at least one limited partner. The liabilities of a general partner are unlimited, while the liabilities of a limited partner are limited, unless he partakes in the management of the partnership. An LP should consist of not more than 20 persons and the name of an LP should end with the word “Limited Partnership” or the abbreviation “LP”.
The LLP is a partnership arrangement with a legal personality, separate from the partners. The liabilities of the partners of an LLP are limited to the amount agreed to be contributed or outstanding in the event of winding up. An LLP shall have at least two “designated partners” who would be responsible for compliance with the requirements of the Act by the LLP. The designated partners should be individuals, at least one of whom must be resident in Nigeria.
Q: What are the requirements for Incorporation of Limited Liability Partnership (LLP) and Limited Partnership (LP)
A: The information required are as follows:
- The name of the limited liability partnership
- The proposed business of the limited liability partnership
- The address of the registered office of the limited liability partnership
- The name and address of each of the persons who are partners of the limited liability partnership on incorporation;
- The name and address of the persons who are to be designated partners of the limited liability partnership on incorporation
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