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| Photo Credit: Linkedin.com |
After making up your mind to register your business, it is not unusual or strange to have doubts on what suits you at the moment. A young man shared his story with me.
What was his story?
He was a graphic designer, running a large graphic design firm and decided to enlarge his purview. He also had a small farm where he engaged in fish farming and carried out poultry by the side.
His wife on the other hand was into fashion designing, she already owned two shops with about 20 staffs on her pay roll. He wanted all the businesses running same time and under the protection of the law. His advertising name used was "TOPE MEDIA REACH", his farm operated as TOPE FARMS while his wife operated her fashion store as TAYO STICHES. We looked at it together, weighed the pros and cons of a business name and a company, alongside the structure of his existing business then he decided to register his business as T & T LTD.
Why the scenario?
The Company and Allied Matters Act (CAMA) 2004 grants the right to two
or more persons to form and incorporate a company by complying with the
requirements of the Act in respect of registration of such company. See
Section 18 of the CAMA 2004. The requirements for registration are embedded in the classification of companies.
What is the difference between a company name and a business name?
A company is classified as follows:
1. PRIVATE OR PUBLIC
LIMITED LIABILITY COMPANY
A Private or
Public limited liability company ( “also referred to as a LTD or
PLC"), is a company having the liability of its members limited by the
memorandum to the amount, if any, unpaid on the shares respectively held by
them.
Features
of a private liability company include:
- The
memorandum states that it is a private company.
- The
articles restrict the transfer of shares to the public unless authorized by law.
- The
total number of members of a private company can be a minimum of two and a
maximum of 50.
- The
minimum authorized share capital for an LTD is
N10,000
Features of a public company include:
- Any
company other than a private company shall be a public company
- It
is stated in its memorandum that it is a public company.
- The
minimum authorized share capital in the case of a PLC is
N500,000. - At
least 25% of the authorized share capital must be issued.
Registration Requirements:
- Availability
and Reservation of Name
- Completion of statutory forms
- Strictly construed Memorandum and Articles of Association
- Payment
of appropriate Stamp Duty to Federal Board of Inland Revenue
- Submission
of Memorandum and Articles of Association together with statutory forms
for verification and assessment
- Payment of filing fees and Certified True Copies of Documents (if required) to the Corporate Affairs Commission
- Certificate of proficiency
2. UNLIMITED
LIABILITY COMPANY
An unlimited liability company also (“referred to as a
ULC"), is a company not having any limit on
the liability of its members in the memorandum.
Feature:
An unlimited liability company is one which is stated in its memorandum to be an unlimited liability company.
An unlimited liability company is one which is stated in its memorandum to be an unlimited liability company.
Registration Requirements:
- Availability and Reservation of Name
- Completion of statutory forms
- Strictly construed Memorandum and Articles of Association
- Payment of appropriate Stamp Duty to Federal Board of Inland Revenue
- Submission of Memorandum and Articles of Association together with statutory forms for verification and assessment
- Payment of filing fees and Certified True Copies of Documents (if required) to the Corporate Affairs Commission
- Certificate of proficiency
3. COMPANY LIMITED
BY GUARANTEE
A Company limited by guarantee
is a company having
the liability of its members limited by the memorandum to such amount as the
members may respectively thereby undertake to contribute to the assets of the
company in the event of its being wound up.
Feature:
Where a company is to be formed for
promoting commerce, art, science, religion, sports, culture, education,
research, charity or other similar objects, the income and property of the
company are to be applied solely towards the promotion of its objects the
company may be registered as a company limited guarantee.
Note: A company limited by guarantee shall not be incorporated with the object of carrying on business for the purpose of making profits for distribution to members.
Registration Requirements:
- Availability
and Reservation of Name
- Memorandum
and Articles of Association
- Completion
of Statutory Forms
- Payment
of Stamp Duty to Federal Board of Inland Revenue
- Payment
of filing fees
- The
consent of the Attorney-General of the Federation
Note: A foreign investor wishing to set up
business operation in Nigeria should take all steps necessary to obtain local
incorporation of the Nigerian branch or subsidiary office.
4. BUSINESS NAME
A business name is that distinct to an individual, firm
or corporation having a place of business in Nigeria and carrying out an
activity of choice be it in the rendering of services or sale of goods. The law
requires that it be registered.
Exceptions to registration:
- In the case of a firm or partnership, parties use their true surname of all partners or an addition of the true forenames of the individual partners or the initials of such forenames;
- In the case of an individual, the name consists of his true surname without any addition other than his true forenames or the initials thereof;
- In the case of a corporation, the name consists of its corporate name without any addition.
- Where the business is carried on in succession to a former owner of the business,that addition shall not of itself render registration necessary;
- Where two or more individual partners have the same surname, the addition of an "s" at the end of that surname requires no registration.
- Where the business is carried on by a receiver or manager appointed by any court, registration shall not be necessary.
Features:
- It operates as a sole proprietorship or a partnership venture
- The number of membership is restricted
- It is restricted to the object clause for which the business was formed
- It cannot let out shares to the public
Registration
requirements:
- Availability
and Reservation of Name
- Completion
of statutory forms
- Submission
of statutory forms for verification and assessment
- Payment
of filing fees to the Corporate Affairs Commission
- Certificate of proficiency where necessary