Whilst there are other forms of business organisations in Nigeria, this article is specifically concerned with steps in registering a limited liability company.
The body charged with responsibility to accept applications to register companies and to maintain a register of companies in Nigeria is the Corporate Affairs Commission The applicable law under which it carries out its functions is the Companies and Allied Matters Act, 1990
The following are the basic steps in registration a company:
Name Availability Search
The name intended for the Company would first be checked against existing names in the registry to ensure it is not already in use by another registered business. This is referred to as ‘name availability’ search.Upon a successful availability search, the desired name will be reserved for 60 days within which an application to register in that name should be submitted.
Often when a name is too closely related to an existing name, its reservation will be declined and an applicant will have to come up with a modified or different name For this reason, applicants are permitted to submit 2 names for one availability search.
Articles of Association
Having successfully reserved a name, an applicant can now produce articles of association, to contain the powers of the Company, the rules and regulations by which the company will be run, particularly the relationship between shareholders and directors.
Memorandum of Association
At the same time, is also produced a memorandum of association which confirm the agreement of promoters to form the company and to become members of the company known as subscribers to the memorandum of association. A minimum of 2 subscribers is required for a private limited company, while for a public liability company, the minimum is 50.
Foreign investors can own up to 100% shares in Nigerian companies upon obtaining a Business Permit. In the meantime, a foreign national can authorise a Nigerian (individual or corporate) by way of power of attorney to subscribe on his/her behalf pending grant of a business permit.
The memorandum shall state the name of the company, type of company, the registered office address, head office (if any) and the objects of the company stating the types of business the company will be engaged in. The memorandum shall also state the authorised share capital of the company of which at least one share will be allotted to each subscriber.
Both Articles and Memorandum of Association shall be duly stamped at the stamp duties office.
Prospectus
In the case of a public liability company, a prospectus is required to be submitted to the registrar of companies for approval. It is typical for a company to be formed first as a private company before seeking to float itself on the stock exchange as a public company.
The prospectus is therefore the document by which a company offers it shares to members of the public. It is usually printed in glossy paperback and distributed among the public. It includes background information abut the company and essentially pitches the public on to why buying shares in the company should be a good investment.
Business Permit
Where any of the Subscribers is a foreign national, copy of business permit obtained from the Nigerian Investment Promotion Commission.
Statutory Forms
A set of forms required to be completed are as follows
- Form CAC 2 – Statement of Share Capital and Return of Allotment duly stamped by the Commissioner for Stamp Duties;
- Form CAC 2.1 – Particular of Person Who is the Company Secretary of a Company or Any Changes Therein.
- Form CAC 3 – Notice of Situation or Change of Registered Address
- Form CAC 4 – Declaration of Compliance With the Requirements of CAMA (the Companies Act)
- Form CAC 7 – Particular of Persons Who are First Directors of the Company
(together with consent letter of each director, duly signed, to so act)
Other
A Statutory Declaration of Compliance by a Legal Practitioner.
