Legal Forms of Business in Nigeria

Legal Forms of Business in Nigeria

Below is a brief description of the types of commercial and non-commercial organizations in Nigeria. ii. Do you want to earn income by paying dividends or salaries, or do you want to get a return on your investment through the eventual sale of your business? In summary, all the start-ups recognized and facilitated within the framework of CAMA 2020 as well as the requirements for the registration of each individual were discussed. It is advisable that a natural or legal person wishing to do business or incorporate in Nigeria should use the services of a CAC accredited agent or corporate lawyer to obtain advice on the most appropriate form of incorporation in Nigeria. A corporation separates the corporation`s business assets from the personal assets of its owners. In Nigeria, there are two main forms that a business can take. The company may take the form of a registered corporate name or a corporation. This form of business unit would be the most common form of business observed in the business ecosystem in Nigeria. A private company is a separate legal entity established by at least 2 partner members and authorized to operate in Nigeria on the basis of the agreement of specific regulations. Such a company has its own outstanding characteristics such as – The required insurance coverage is an important part of starting a business in Nigeria.

Below, we will highlight a number of mandatory insurance policies that companies need to purchase to operate legally in Nigeria. Under Nigerian law, there are different legal forms of companies that can be registered. This article walks you through the list of business structures you can access if you meet regulatory requirements. Thus, a corporation may sue and be sued on its behalf, may own land, may own shares in another corporation, and may perform other acts on its behalf that are permitted by law. While a company name cannot have more than 20 members at a time, a private company can have 50 members, while a public company can accommodate as many people. There are three different types of companies recognized by Nigerian law, and they are: This article claims to cover all the details about the different business entities that can be legally incorporated in Nigeria, but what it does not cover is the amount of struggle that aspiring companies have to go through for administrative processes such as business formation and business registration. Let us help you through the start-up phase of your business lifecycle with our diverse portfolio of business start-up and post-installation services. Contact us to learn more about how to start a business in Nigeria. III. Limited Liability Company: In Lagos State, Nigeria, partnerships may be registered as limited liability companies under the Partnerships (Amendment) Act of Lagos State (2009). It also creates a separate legal personality for the partnership of its partners. Although this form of partnership is not recognized under the existing CAMA, a bill is currently in the National Assembly proposing its recognition to CAMA.

Section 788 CAMA 2020 further recognizes the operation of a foreign limited liability company, which must be registered if it intends to do business in Nigeria. However, the minister has the power to grant an exception. Rule 22 of the Companies Regulations 2021 states that a foreign LLP may apply to the Minister for an exemption if: The main law for businesses and businesses in Nigeria is the Companies and Related Matters Act (CAMA). It deals with the different types of business structures, authorization, registration process and operating rules. When choosing the right business structure, it is first and foremost necessary to consider and answer the following questions: A limited liability company is a corporate structure formed by two or more for-profit individuals or companies. The different business structures allowed in Nigeria are: registered company name, limited liability company by shares, limited liability company by guarantee, unlimited company (all companies can be private or public) and registered trustees. Depending on the type of business, the following licenses are required to operate in certain sectors of the Nigerian economy: The Nigerian legal system provides for protection of intellectual property rights in the following categories – copyright, trademark and patents. To learn a little more about registering a company in Nigeria, you can read the articles below. The public company is a more transparent business entity that operates in the market and is required to publish its performance statement and financial statements annually in accordance with its corporate governance regulations. This type of business structure is best suited to larger companies with more ambitious plans.

These are the specifications of joint-stock companies that plan to set up a business in Nigeria: it is important to open a bank account to run a business. It also helps with tax filing. To open a business bank account in Nigeria for a company, the following are required: By updating its website, the Corporate Affairs Commission has introduced an easy way to obtain the Tax Identification Number (TIN), which is mandatory for any business in Nigeria. Therefore, if properly registered with the CAC, the certificate issued contains the TIN of the registered company. Some of the taxes levied by companies in Nigeria include: As mentioned earlier, depending on the preferences of the potential owners of the company and the purpose of setting up the company, a decision must be made on one of the above forms provided for by law. For example, people who intend to enter into a partnership can register a company name, limited partnership or limited liability company, a person who intends to be a sole proprietor can register a company name or limited liability company on shares (a recent innovation of CAMA 2020) There are different forms that a business organization can take, according to the preferences of the person(s) who intend to found the same thing. Whatever the differences, there are certain requirements that permeate everyone. The requirements that must be obtained before such a corporation can be established under the law. This article provides brief guidance on the requirements for starting a business, including those that must be acquired if the business is properly registered. ii.

Partnership: An association of two or more persons operating as a partnership under a single name. As with the structure of the sole proprietorship, the partners are jointly and severally liable for the debts of the company. Therefore, it is important to determine with whom you are entering into a partnership, as all partners are equally responsible for the actions of other partners. A partnership should have a partnership agreement defining how the partnership should work. However, the maximum number of people who can form a partnership is 20 (twenty). Business units that are limited by a guarantee are often administrative terminologies used to designate non-profit or not-for-profit organizations. The share capital of these companies may be unlimited, but the liability of their shareholders is minimal. The company does not intend to make any additional profits and therefore does not trade on public exchanges, and the income generated is only for the purposes of the company and not for additional reasons. This is a tax payable by all natural and registered companies and partnerships, except those registered under Part A of the Companies and Related Matters (Public Limited Companies) Act 1990. The State Tax Administration administers the tax.

CAMA requires any foreign company intending to do business in Nigeria to register a separate entity in Nigeria for that purpose. Notwithstanding this requirement, the law has created cases where a foreign company may be exempted from the registration requirement. A sole proprietorship is generally registered as a business name with the Corporate Affairs Commission. And Nigerian residents can only register it. Finally, the above is a summary of the requirements for starting a business. There are several other laws that apply to doing business in Nigeria. However, registering a business name with the CAC is the first step in starting a business in Nigeria. Note, however, that a person under the age of 18 may participate in the creation of a business or business, provided there are at least two adult members of the business. A limited liability partnership, like a registered company, has its own legal personality. Therefore, she can sue and be sued on her behalf or acquire and own real estate in her name.

A company is a business organization with shareholders, directors and a secretary. A corporation is a legal entity and has a personality distinct from its owners. Choosing the right business structure for your business is key to growth, profitability and sustainability. Therefore, due diligence should be exercised with appropriate legal advice when determining the structure of your business. A private company with unlimited liability is very similar to its limited double business unit. The legal liability of members is unlimited and this form of company can legally operate with or without minimum or maximum limit on their share capital.

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