Understanding basic business entity formation lingo in Nigeria

Now that you know that you want to register a company in Nigeria with the corporate affairs commission, let’s take a look at some unfamiliar terminologies that will help you have it registered in quick time.

1.Shareholders

These are the owners of the company. They own shares in the company. They are also called members. To register a company in Nigeria, the law provides that a private company limited by shares must be owned by a minimum of 1 and a maximum of 50 people. Certain industries e.g Money lending are still required to have a 2 directors. A Person under 18 can only be a shareholder if there is another adult.

2. Directors

These are people who are in charge of the day to day running and management of the business. The law requires a minimum of 1 director in every company. Shareholders can double as Directors of the company. However, Directors do not necessarily have to be shareholders. This means you can involve that mentor of yours who can give you guidance on your board of directors. 

3. Authorized share capital

The authorized share capital is the sum of all shares which the company is allowed to issue to its shareholders. The minimum share capital for a private company limited by shares is 10,000 however, most private companies have 1,000,000 as share capital. The members of the company can agree to increase or reduce the authorized share capital, so you are not stuck at 1,000,000 shares for life.

It is important to note that there are certain regulated industries which have a required minimum share capital. Also, where there is foreign participation (A foreigner or foreign company is a shareholder) in a company, the minimum share capital required by law when registering a company in Nigeria  is 10,000,000.

4. Company Secretary

A company secretary would either be a lawyer, chartered secretary or an accountant. A Private company need not have these categories of professionals as company secretary however, it is good to have. The advice and guidance of your company secretary when starting out a business is priceless.

5. Memorandum and Articles of Association

These are the Holy Books of a company. Like the Quran to Islam, Bible to Christianity so is MEMART to a Company. These documents indicates Who? Where? What? of a company. It states the Name, Objects i.e. the business the company is into, Office address, Type, Liability and the Shareholders of the company.  This document is public and everyone has access to it from the CAC.

6. Proficiency Certificate

There are certain industries that are more regulated than the others. The CAC would usually like to be sure that companies that profess to carry out business in such industries are adequately qualified and equipped to carry out such services. This is a measure to protect members of the public from dealing with unqualified personnel. Hence, if registering a company in Nigeria under these sectors, be sure to have a director with certification in this industry or at least a provisional license from your regulator.

7. Declaration of Compliance

The CAC requires that a Legal Practitioner or Notary Public confirms that the promoters of a company have complied with the requirement of the law. This step can only be skipped if the person in charge of registering a company in Nigeria is a lawyer or Accredited by the CAC.

8. Availability check and reservation of name

The first step to register a company in Nigeria is to ensure that the priced name you love and cherish so much and intend to use to start your business is not already taken. Two companies cannot bear the same name.Have this in mind when registering a company in Nigeria. The process for checking of name has been digitized and can easily be done through a public search

The CAC requires 2 proposed names to be submitted to the CAC. If approved you are definitely on your way to being a Company owner. However, you only have 60days within which to get it registered and make it permanently yours. If your proposed name is disapproved, you have to repeat this step with new names.

It should be noted that certain names are expressly prohibited. Names that are identical or closely similar to names already registered or reserved, names capable of misleading, offensive names, names that violate any existing copyright or trademark except with owner’s consent. Names that include Chamber of Commerce, National, Federal, State, Government, Municipal, Chartered, Corporate Society, Building Society and a few others require consent by CAC.

9. Certificate of Incorporation

If CAC finds all prim and proper and there are no queries, a notice is sent to the email provided that your company has been duly registered. Download all the available documents and keep safely wishing 7days. This is because CAC now charges extra fees to re download documents.

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