Having great technical skillset is a good starting point for an entrepreneur, but it is just what it is: a starting point.
If you want to make far-reaching impact in the economy, you may want to consider building a company around your skill. This has innumerable advantages.
WHAT DOES REGISTERING/INCORPORATING A COMPANY MEAN?
To register a company means you are creating a corporate structure for your business. It has a legal identity different from the founders, managers or its promoters.
Your company’s assets and liabilities are separate from yours. This helps to shield you from personal financial disaster in the event your company fails.
Before you incorporate, you have to decide what kind of company you want to build. Will it be a private company? A public company?
This decision is important because the requirements for registration and mode of operation of these two types are different.
Since most Nigerian companies are private companies limited by shares, the article shall guide you on registering a private company.
WHY YOU SHOULD REGISTER YOUR COMPANY
Forming a company around your products or services separates you from your business. This is because a company has a corporate identity, which differentiates it from that of its founder.
Secondly, registering a company greatly increases your business’ credibility. This is priceless as it makes investors more willing to invest in your dream .
Investors’ confidence in your startup is easily stoked up because being registered with the Corporate Affairs Commission implies that that you must have done proper documentation. This improves potential partners ‘ impression of you as an astute businessman.
This helps you to raise adequate funds for running the startup.
Again, registering your company helps you benefit from business policies and incentives the government gives to new startups. This could be grants, soft loans or tax waivers which can help your young company survive.
WHERE SHOULD YOU REGISTER YOUR COMPANY
The legal responsibility of registering business names and companies is vested with the Corporate Affairs Commission (CAC).
This regulatory body implements the Company and Allied Matters Act (CAMA) of 1990, which is the law that governs the formation and operation of a company in Nigeria.
This law describes the various company structures you can create, determines your eligibility to run a company and stipulates the rules of operation.
GUIDE TO REGISTERING YOUR COMPANY
Follow these step-by-step guide sequentially to get your company registered.
STAGE 1 – CHECK NAME AVAILABILITY AND RESERVE THE NAME, IF AVAILABLE.
The first step to register a company in Nigeria is called the name availability search. This helps you determine if the name you want to register your company with is available for use in the first place.
If the name is already in use, you willl have to create a new one. If the name is available, proceed with the next steps.
You can search for the availability of the intended name in two ways
First, you can do a free public search on the CAC website. This answers the question of whether another business is already using it, its registration number and date of registration.
Secondly, you can check further on the CAC online registration portal. That is after you have confirmed that the intended name is available.
This second search however, is not free like the public search .
The search costs N500 (Five hundred naira) and if your name is available you can reserve it for 60 days.
While reserving a name, chose one that is unique enough to differentiate you from other companies. This means that you would want to avoid generic names or cliches.
Restrictions have been placed on the use of some names. You cannot choose a name that contain words that mimics government parastatals.
“Chamber of Commerce”, “Federal”, “National”, “Regional”, “State”, “Government”, “Municipal” or “Chartered”, “Co‐operative” or the words “Building Society”; or “Group” or “Holding”
Names that in the opinion of the Commission is capable of misleading as to the nature or extent of its activities or is undesirable, offensive or otherwise contrary to public policy;
Names that the Commission considers a violation of any existing trademark or business name registered in Nigeria unless the consent of the owner of the trademark or business name has been obtained.
STAGE 2 – UPLOAD THE DETAILS OF THE SHAREHOLDERS
Nigerian corporate law stipulates that a private company must have a minimum of 2 members, and can only have a maximum of 50 members.
The founding members of the company must be at least 18 years old (the only exception to having a member less than 18 is at least 2 other members are over the age of 18).
They must be of sound mind, not an undischarged bankrupt, or disqualified by CAMA from being a Director.
The information about the members which you must provide for the CAC include:
- a. the name of the shareholders
- b. the residential address
- c. their occupation
- d. email address and mobile phone number.
- e. a recognised identity document e.g.national identity card, international passport, drivers licence, etc.
STAGE 3 – PREPARE /DRAFT THE REQUIRED DOCUMENTS
The documents required for the registration of a company include:
a. Memorandum of Association : a legal document which defines the relationship between a company and its shareholders and regulates its external activities. Along with the Articles of Association, it forms the constitution of the company.
b. Articles of Association: this is the document that lays down the guide for internal management and defines the role of the directors.
c. The registered address of the business: this helps the CAC to easily locate your place of business.
d .List, particulars, and consent of the first Directors of the company: this helps authorities to verify the background and qualification of would-be directors.
e. Statement of compliance by a lawyer : this certifies that your company is compliant with the CAC guidelines. It provides information about the company and how it complies with the guidelines set by government authorities.
The new CAC guidelines which aims to ease the process of company registration makes it possible for founders to obtain all the required documentation from their portal.
However, for some documents only templates are provided. You will have to adapt it to the nature of the company you want to run.
Examples are the Articles of Association and Memorandum of Association. If the templates are not suitable for your line of business, you should hire a corporate lawyer to draft these documents for you because they have strong legal implications, with regards to the structure of the company.
STAGE 4 – PAYMENT OF FEES, SUBMISSION OF APPLICATION AND CERTIFICATION.
After completing stage 3, you can now proceed to make prescribed payments online.
The cost is commensurate to the share capital of the company .
After paying the recommended fees, you can now upload the prepared documents to their website.
If there is any hitch in your registration, the CAC will inform you for rectification.
If not, you can proceed to their office to collect your Certificate of Incorporation
And you are good to go.
NOW THAT YOU HAVE SUCCESSFULLY REGISTERED YOUR COMPANY, WHAT NEXT?
When you have Successfully incorporated, you will be issued with Certificate of Incorporation or Registration, which verifies your approval to run a company in Nigeria.
After incorporating your company, there are certain obligations you must fulfill. These measures ensure you run it transparently
and abide by the Companies and Allied Matters Act.
Failure to comply with these post-incorporation responsibilities attracts various penalties, ome of which can put you out of business.
They include the following:
a. Registration for Companies Income Tax and Value Added Tax with the Federal Inland Revenue Service (FIRS): this helps you fulfil your financial obligations to the government by prompt payment of taxes. Please comply with this as tax evasion is a serious offence.
b. Special Control Unit Against Money Laundering (SCUML) Registration (if applicable): the government uses this agency to check the creation of phoney companies for money laundering.
c. Annual General Meeting (AGM): your company is required to hold an AGM every year. It is an annual gathering of your share holders where your company’s executives provide them with a performance report and inform them of your strategy for coming years.
d.Filing of annual returns 42 days after AGM : this helps the Corporate Affairs Commission (CAC) to keep abreast of you company’s operations and activities .
Ask any questions you may have in the comment section and you will be replied promptly.