How to Register a Company in Nigeria: A Step-by-Step Guide
If you are looking to start your own business in Nigeria, the first step is to register a company. A company is an entity that can offer limited liability protection for its members. It lets them separate their personal and business assets from each other, which means that if your business fails or has financial difficulties and goes bankrupt, the registered company will not affect your personal assets and liabilities. This article explores how to register a company in Nigeria. Creating a company sounds complicated, but it’s actually pretty straightforward once you get past all the legal jargon. If you’re reading this as an individual who wants to start their own business venture, rather than as an accountant or lawyer who wants to set up companies for other people, we assume you have little background knowledge on this topic already. That’s why we have broken down everything you need to know about registering a company so that it’s simple and easy to understand.
What is a Company and Why Should You Register One?
A company is an entity that can offer limited liability protection for its members. It lets them separate their personal and business assets from each other, which means that if your business fails or has financial difficulties and goes bankrupt, the registered company will not affect your personal assets and liabilities. A registered company also allows you to have a wider range of business activities and functions. It gives you more credibility as a business owner and opens up opportunities for you to access larger investments, grants, and loans. If you choose to register your company as an unlimited liability company (ULC), however, you will be personally liable for all the debts of your business. A ULC is not recommended unless you have a good personal savings or assets that you can use to pay your debts.
Which Type of Company Should You Register?
There are many different types of companies you can register. The most common types are: - Close Corporation (CC): A CC is a private company that has limited shareholders. It is registered in the name of one or a few people, and the number of shareholders is usually limited to no more than five people. - Public Limited Company (PLC): A PLC is a company whose shares can be traded on a stock exchange. It is usually larger in size and has thousands of shareholders. - Joint Venture Company (JVC): A JVC is a company formed by two or more people with the purpose of pursuing a joint business venture. - Company Limited by Guarantee (CLG): A CLG is a nonprofit company formed with shareholders who are responsible for its debts, but who do not receive any direct benefit from the company’s profits. - Close Limited Company (CLC): A CLC is similar to a CLG, except that it is a profit-generating company. - Cooperative Society: A cooperative is a nonprofit business that is controlled and managed by its members. It is registered as a cooperative society.
Step 3: Choosing your Company’s Registered Office Location
The registered office is the place where your company’s corporate affairs are administered from. This is an important decision that you need to make during the company registration process. The registered office location determines where all legal documents related to your company are filed, so you need to make sure it’s both valid and accessible. It’s also useful for calculating the tax obligations of your company. However, you don’t need to physically have an office at the registered address. You can have an agent who will accept legal documents on your behalf. There are many ways you can choose to handle the registered office of your company. You can choose a location that is easy to access and meets the legal requirements in terms of accessibility. Some options include: - Home Office: Many entrepreneurs decide to keep the registered office of their companies at their home address. This makes it easy and accessible to receive legal documents. - Public Buildings: You can also choose to use a public building, like your local government office. This is an option if you don’t have a fixed address. - Commercial Offices: You can also choose to use an office that is rented by the day. This is an easy way to legally register a company without having to commit to a long-term lease.
Step 4: Decide on the Duration of your Company
The duration of your company determines how long it will be active for. You can choose from one to ten years, depending on your business needs. The main factors that determine the duration of your company are: - Capital: The amount of money contributed to start the company. - Debts: The amount of debt owed by the company. - Profit: The amount of profit generated by the company.
Step 5: Meeting & Admitting Directors and Registered Office Bearer(s)
The first step towards setting up your company is to meet with a company secretary to discuss the formalities of setting up your company. The secretary will guide you through the process and help you select the best registered office bearers (ROBs) for your company. - Secretary: The secretary is a person who has the authority to administer the company. You can appoint an individual or a corporate secretary to act on behalf of your company. - Director: The director is the highest authority in your company. He/she is responsible for managing your company’s operations and financial performance. - Registered Office Bearer: The company secretary decides who the best registered office bearer(s) are for your company based on your company’s needs. They must be at least 18 years old, Nigerian citizens, and have no criminal record.
Step 6: Drafting the Company Constitution and Articles of Association
Once you have selected the registered office bearers and directors of your company and you’ve appointed the secretary, it’s time to start working on the draft of your company constitution and articles of association. The articles of association is the document that describes the fundamental rights and obligations of shareholders and directors. The company constitution is a document that outlines the general rules and regulations of your company. It describes your company’s purpose, goals, and structure. The articles of association and company constitution are important legal documents that help govern your company’s operations and activities. The articles of association are similar to the constitution, but they are published in the Federal or State Gazette, whereas the constitution is kept internal within the company.
Step 7: Publishing Your Prospectus and Final Documents
Once you have all your articles of association and company constitution drafted, you need to publish them. Your director or secretary can publish your final documents in the Federal or State Gazette for a small fee. The Gazette is a public journal where all public notices are published. This means that all your final documents will be published in a public journal that anyone can access. This is important because it makes your company more legitimate, transparent, and accountable. - Note: You will also need to submit a copy of the final documents to the Corporate Affairs Commission (CAC) in order to complete the company registration process.
Starting your own business can be one of the most rewarding experiences you can have. Creating a company is the first step towards making that dream a reality. By following the steps outlined in this article, you will learn how to register a company in Nigeria. Now that you know what a company is and what is needed to register one, you are ready to get started. Start putting together your business plan and choose a name for your new company. Once you have that figured out, you can follow these seven steps to successfully register a company in Nigeria.