The Companies and Allied Matters Act (CAMA) recognises 6 corporate structures in Nigeria:
1. The Business Name
2. The Private Company Limited by Shares.
3. The Public Limited Company
4. Unlimited Company
5. Company Limited by Guarantee; and
6. Incorporated Trustees.
But for the purpose of this blog post, however, let me just proceed to the business of the day.
REQUIREMENTS FOR INCORPORATING A PRIVATE COMPANY IN NIGERIA.
Irrespective of whatever you must have read elsewhere, the steps for incorporating a new company at the nation’s registry, The Corporate Affairs Commission, can be summarised in the following 10 steps:
1. Submission of the proposed Company Names to the CAC. This is the first step in the entire process. The promoters of the company must decide on a company name and submit for approval. The government officials reserve the right to approve or deny company names submitted for a number of justifiable reasons – availability, suitability, legality, similarity, etc. It takes an average of 5 business days to get availability results.
2. Details of Directors. Long story short, you will be required to provide the biodata of the Directors of the proposed company. These information include: Full Names, Residential Address, Nationality, Age, Valid Identification Document and Signature of the Directors. The minimum number of directors for a private company is 2 and maximum is 50. There is no maximum for public companies. There are statutory requirements for being a director, one of which is that the directors must not be less than 18 years old.
3. Shareholders/Subscribers. The legal minimum number of shareholders in a private company in Nigeria is 2 and a maximum of 50. The shareholders subscribe to the memorandum and articles of association and are alloted shares in the company.
PS – the shareholders can also double as the directors of the company.
4. Appoint a Company Secretary. Every Nigerian company must appoint a Nigerian Company Secretary, as it has become a legal requirement. The company secretary of a private limited company needs no formal qualifications. It is the directors responsibility to ensure he/she has the appropriate knowledge and experience to act as a Secretary of the company. The company secretary could be an in-house person or an outside consultant. Some of the roles of a company secretary include:
a. Maintaining the Statutory Registers;
b. Liaison between the company and the CAC and other relevant government agencies;
c. Providing members and auditors with notice of meetings.
5. Registered Address of the Proposed Company. The company must have a Nigerian business address. This requirement needs no much explanation and not debatable either.
6. Core Areas of the company’s business activities (Nature/Objects of company). Nigerians and Non-Nigerians are allowed to carry on all forms of business provided it’s legal and not in the “negative list”. If the company will engage in specialist services (Hospital, Consultancy, Schools, Media & Advertising, etc), the directors may need to provide an evidence of professional proficiency. E.g. Certificate of a professional body/trade association, Academic Certificate, or both.
7. Valid Identification. Although I have stated this requirement earlier. It is worthy of mention here again. A photocopy of Identification of all the directors is required. (e.g. National ID card, Data Page of your National Passport, Voter’s Card or Driver’s License).
8. The Company’s Share Capital and Allotment. In simple terms, the share capital of a company (usually in monetary terms), is the amount of capital the subscribers have to carry on the business. The minimum share capital of a private company must not be less than N10,000. However, for economic reasons, it is advisable that an average Nigerian company incorporate a N1,000,000 share capital company. A company’s share capital is also industy-dependent. For example, advertising agencies must have at least N10 million as share capital. The law also stipulates a minimum of N10 million share capital for a Nigerian company with foreign ownership. Your regulator or adviser should advice you appropriately. A minimum of 25% of the authorized sharecapital must be subscribed and paid for.
Once the issue of share capital have been decided on, then the subscribers must also decide on alloting the shares. If there are 2 persons that formed the company, they could share it 50% each.
9. Draft the Memorandum of Understanding and Articles of Association (MEMART). This is a legal document that spells out the business objectives and the framework on which the company intends to run its business within the acceptance of the law. This legal document also shows the particulars of the shareholders and their shares allotment.
10. Payment of Stamp Duty and Statutory Filling Fees. The total fees payable to the Stamp Duty office and the Corporate Affairs Commission is dependent on the company’s share capital.
These are the basic requirements for incorporating a private limited liability company in Nigeria. However, EXPATRIATES are subjected to additional requirements and laws – Nigerian Investments Promotion Act, Immigration Act, Investment and Security Act, and Foreign Exchange and Monitoring Act.
Duration of Incorporation at the Corporate Affairs Commission
As at the time of writing this blog post, the average turnaround time to receive a Certificate of Incorporation and Certified True Copies of your documents at the CAC is 3 weeks.
Although, Nigeria deserves a better business environment, Africa’s most populous nations is a thriving business destination for many investors.