If you are reading this article, it means you are considering incorporating a company.
In this article, we will provide you with step by step information on how to get your company incorporated in Nigeria.
But before then, what is the difference between a business name and a company?
The most important thing we could probably tell you about a business name is that it does not assume a separate legal entity. It is one and the same with the owner(s).
With a business name, the business cannot sue or be sued, and you cannot purchase properties in the name of the business!
It does have its advantages. If you are interested in running a one-man business where everything revolves around you and you alone, then a business name might be the best bet. It is also more affordable to set up, with less regulatory requirements.
With a company (Private Limited Liability Company), the first attractive bit is that the company is a separate legal entity from the owners.
To break it down, the company is regarded as different from you. You can be personally broke while the company is rich and vice versa. The death of the founder does not necessarily have any effect on the company as the company has a life of its own.
It is worthy of note that a private limited liability company can have up to 50 shareholders!
Benefits of a Company Incorporation
Registering a company rather than a business name gives you a much more professional image and clout. It signals to investors that you are committed to professional corporate governance structures that have been created.
It emphasizes that the business has permanence and can be trusted. It also makes it easier to raise capital by issuing new shares to investors.
So ready to incorporate your company?
Step by Step Guide to Incorporating your Company
Name search and reservation
Well, this is like the base of your pyramid. Without a name, you basically have nothing to build on right? So the first step is to carry out a name availability search. Is the name you have in mind for your company available? Or has it been taken up by someone else?
Do not make the mistake of registering for a domain name before finding out if the name is available for your use. That could be a bummer and put a hitch in your plans.
You can perform the name search in two ways:
- You can carry out a free public search on the Corporate Affairs Commission website. However, that's all it's for. Finding out that no one has used the name you have selected on the free search does not mean that it has been automatically transferred to you. You can carry out your initial search here.
- Once you confirm your preferred name is available i.e. it hasn't been used by someone else, you then proceed to conduct a formal search using the CAC online portal. This is not free, it costs N500. Here's the good part, if your name is available you can reserve it with the CAC for the next 60 days. That gives you enough time to put things in place. (To note: When you want to use the CAC online portal, you will be required to submit two names.)
Tips on picking your names
- Try not to use generic names as chances are they've already been taken. "Supreme", "Delight", "Clothiers" are all generic names and the likelihood of them being taken up are high.
- You are restricted from using certain names reserved for government establishments such as "Federal", "Regional", "State", "Chartered", "Holding" etc
- Ensure that the names you pick are not in anyway misleading about the nature of your business and what it is that you do.
Who are your shareholders and directors
Now that you have a name registered, you need to identify who your shareholders and directors are.
For a private limited liability company, you are required by law to have a minimum of two shareholders and a maximum of 50. Any more and you would have to registered as a public company. You are also required to have a minimum of two directors.
Tips for screening/selecting your shareholders and directors
- Your shareholders and directors should be of sound mind and above the age of 18
- Your shareholder should not be an undischarged bankrupt
- If your shareholder is a registered company, the company should not be in liquidation i.e. the company should not be at the verge of closing its business operations.
Asides from following the law, putting these tips into consideration when setting up your company is ensuring good footing for a new business.
You would need the following information on your shareholders and directors::
- House address
- Email address/phone number
- Valid ID card such as international passport, driver's license, or national ID card
Get your documents ready
As the CAC requires that, company incorporation has to be done online you have to fill the under listed documents on the CAC registration portal: :
- Form CAC 1.1- Application for registration of Company
- Memorandum and Articles of Association (MEMART): The memorandum of association is the document that sets up your company. While the articles of association explain in clear terms how your company is to be run and governed. It also explains the responsibilities and powers of the directors.
Make your payments
You will be required to pay two sets of fees: filing fees and stamp duties. The share capital of your company determines the amount you will be required to pay. The good news is that all payments are to be done online so you don't have to go through the stress of the long queues at the bank.
Scan and Upload your documents
After making your payments, you are to download the filled Form CAC 1.1 and MEMART and ensure that they are signed manually and appropriately.
When you've done this, scan and upload the Form CAC 1.1, MEMART, valid ID card of the directors, subscribers and secretary of the company and evidence of payment to the CAC on the CAC portal for processing.
Wait for the CAC to reach out to you
In the event of any queries on your registration, you will be contacted by the CAC. If there are no queries, you will be informed once your registration is complete and an e-certificate of incorporation issued to you.
After being issued the e-certificate, take all your signed document to the CAC, submit to the CAC and you will be issued with your original certificate of incorporation.
Ready to incorporate your company? It's even be made easier, and you do not have to visit the CAC office. Just start here.