Checklist for Registering a Limited Liability Company
'Funmi Adesina-Bablogbon is a Law Lecturer at one of the…
Setting up a micro, small or medium enterprise may seem effortless on the surface. However, beyond determining what the business entails, or worrying about how to build up a client base, it is legally appropriate to register the business with the relevant government agency. The Corporate Affairs Commission ‘CAC’ is charged with registration of corporate organizations such as business names, limited liability companies and non-governmental organizations.
Apart from identifying and securing all necessary documents, it is pertinent to have an idea of what the registration of your business as a limited liability company encompasses. The trend especially here in Nigeria is to commence the operation before registering the company. However, the disadvantage of this is that, after your brand as a name and culture becomes established, the possibility of successfully registering the business with the same name might be slim as someone might register it ahead of you.
Notably, company registration has other advantages that the owner can benefit from. For instance, accessing a loan from Banks is easier; it accords the toga of credibility to the business, while also delineating the ownership of the company from the corporate entity of the company. This way, the owner is not personally held liable for some decisions or liabilities incurred by the company.
Here is a checklist for registering a limited liability company:
- Proposed Company Name/Address
It is advised that at least 3 (three) names should be penned down in case any of the options is rejected by the CAC.
One question you settle is what type of company you want incorporated. It could be a private limited liability company (where shares are privately owned) or a public limited liability company (where the company’s shares are offered to the public and are usually traded on the Nigerian Stock Exchange Market).
One detail you will be asked to provide is the office address of the company. Usually the address should be situate in Nigeria.
2. The Company’s Share Capital/Ownership Structure
The minimum required capital that the members of a company can have is a share capital of N1,000,000. A minimum of 25% of the share capital must be alloted at the time of incorporation.
3. Shareholders and their Details
According to the Corporate and Allied Matters Act of 2004, The minimum required number of shareholders per company is 2 with a maximum of 50.
A company can hold shares in another company through its human representatives and their details must be forwarded to the CAC.
The addresses provided by the shareholders must be verifiable and existing addresses, preferably in Nigeria.
They are required to submit Identification cards such as driver’s license, international passport, National ID, etc.
4. Objects of the Proposed Company
This might not be too difficult to address. Before starting the business you already have a fair idea of what your business will be all about. Business objects can vary and may be quite extensive. Regardless of what you list as your business objects in the MEMORANDUM OF ASSOCIATION, you must be sure that whatever type of business you are in reality doing must be covered by the memorandum. A business that is being set up for the sale of procurements could list as part of its business objects as 1) importation of electronics, home appliances, gadgets; 2) servicing of home appliances and repairs, etc.
In setting up a company, it is paramount to consider the persons who would be the directors of the company. Their names and their addresses would be required by the CAC. Also, a means of identification must be submitted. A director can serve the dual role of being a shareholder in the company.
6. Company Secretary
This is also a necessary requirement in incorporating a company, whether it is a public limited liability company or a private one.
7. Stamp Duty
This has to be remitted to the Federal Inland Revenue Service (FIRS). It is paramount to get the Memorandum and Articles of Association stamped by the FIRS.
The CAC presently has an online platform for registering businesses online, thereby facilitating a quicker, less expensive, and less stressful way of registering. Names can be reserved on the portal and upon reservation, no other person can use such name or any that bears similarity to it as a company or business name. The name is reserved until the company is duly registered. Once all the requisite forms are printed, filled and uploaded, it is only a matter of time before the incorporation certificate is issued by the CAC. Stamping of the CAC forms, and the Articles and Memorandum of Association can now be done electronically without having to take the documents physically to CAC office. Only legal practitioners, chartered secretaries and chartered accountants that are accredited however can facilitate the registration on CAC’s website; www.cac.gov.ng.’
Sometimes entrepreneurs do not consider business incorporation, it is however a legal requirement and an inevitably prudent step to take.