Business Law

How to Register a Limited Liability Company in Nigeria

The Corporate Affairs Commission (CAC) is the governmental body responsible

for registering business names and companies in Nigeria.

Requirements For Incorporating A Private Limited Liability Company

In Nigeria
1. The Proposed Company Names to be submitted at the CAC for approval.
Usually, it's advisable to present two name options (option 1 and 2). If your name
is chosen, you will have up to 60 days to complete the whole registration by filling
and filing the forms.
2. Full Names, Residential Address, Signature and Designation of Subscribers and
Directors of the company. Minimum of two subscribers and directors, the
maximum is 50. Any of the subscribers/directors must not be less than 18 years of
age.
Example: If the total share capacity of the company is 1,000,000 and the share
holders or directors are three in number, spread the shares as in example, in this
manner, while also indicating each of their full names, occupation, signatures
and contact addresses:

1. Name of Shareholder or Director Edet Asu.

Occupation Architect/Business Man/Farmer
Share Capacity 500,000
Specimen Signature .............
Contact Address Plot this/No./Number this, 5 Ekpo Abasi street,
Calabar Cross River State, Nigeria.
2. Name of Shareholder or Director Okon Etim
Occupation Engineer/Consultant/Business Man
 Share Capacity 250, 000
Specimen Signature …………
Contact Address No. 5, Hotoro Street, Kano, Kano State, Nigeria
3. Name of Shareholder/Director Akpan Ime
Occupation: Farmer/Business Man/Estate Manager
Share Capacity 250,000
Specimen Signature ……………
Contact Address: Number 1, Okigwe Road, Owerri,
Imo State, Nigeria.

3. Name, Address and Signature of the Company Secretary. An example is XYX

Global Ltd or XYZ Nigeria Ltd. Then a name search will be conducted by the CAC
and if one of your chosen names is found suitable and unregistered, it will be
assigned to you.
4. Address of the Proposed Company. (Note that if you do not have Office yet,
you can also use your Residential or Contact Address as your registered
office/COMPANY address.)
5. Core areas of the company's business activities (Nature of business). If you
engage in specialist services (Hospital, Consultancy, Schools, Media, etc), you will
need to provide a photocopy of your professional proficiency document. E.g.
Certificate of Proficiency of a professional body/trade association, Academic
Certificate, or both.
Note down at least four objectives/objects of your proposed company. These
are "what you are into" or what you would be doing with the company after
registration or what you have already been doing and you now want to
formalize it through registration.

For instance, if you are into Engineering, or Construction services, you write your
objects as these:
a) Building Engineering Services
b) Water Engineering Services
c) General Contracts, etc.
6. A photocopy of Nigerian Identification (e.g. National ID card, Data Page of your
National Passport, Voter's Card or Driver's License) for all the Nigerian
subscribers/directors in the formation document.
7. The amount of the company's capitalization and how it will be shared among
the subscribers. (E.g. N1,000,000 share capital). If there are two persons that
formed the company, they could share it 50% each.
Each Director is called a Shareholder of the Company. The overall share
capacities of the Company are shared/allotted by the shareholders and each is
given a number of shares.

Usually, if the overall share capacity is N1,000,000 (1 million) shares, then, the
key promoter/person (shareholder) who is forming it (that is to say, the
owner(s) would take the highest number of shares like, N600, 000. Other
N400,000 are shared by his or her partners, children, wife, husband, friends, etc
(other shareholders/directors).
8. All directors must sign the filled forms and memorandum of association before
filing for stamping and verification. The consultant handling the process usually
drafts the Memorandum of Understanding and Articles of Association.

If the proposed company is a joint-venture (that is, having both Nigerian and non-
Nigerian as shareholders), or strictly 100% foreign-owned, the following
conditions apply:
In addition to the following requirements above,
• The foreign national will provide a valid ID; preferably, the data page of his/her
national ID.
• If you are incorporating a company having both Nigerians and non-Nigerians as
the shareholders, you could have any amount of share capital on the documents
as long as the non-Nigerian will not participate in the day-to-day affairs of the
company directly here in Nigeria. For instance, you could do a 2 million naira
share capital registration. Having a non-Nigerian with a Nigerian on the
incorporation does not make any difference. However,
a. If either you plan a joint venture with a Nigerian or 100% ownership of foreign
shareholders and one or all of the foreign shareholders will need to migrate to
Nigeria to oversee (or work in) the company, then the law say the company must
incorporate a 10 million naira share capital company.
b. You are not expected to invest N10m into the company; however, it is assumed
that you are investing at least 25% of that whether in cash, capital, or equipment.
c. Incorporating a N10m capital company is a requirement for obtaining Business
Permits for a foreign-owned company and obtaining Expatriate Quota. Expatriate
Quota is the approval given to a company to employ non-Nigerians (including the
share holders).
9. After stamping and verification has been done by the CAC, you will be issued a
certificate of incorporation.

How Much Does it Cost to Register a Company in Nigeria?

To get the official registration fee for a company with CAC Nigeria, go to CAC
website and click on "summary of fees and forms" on the sidebar menu.
How much should my share capital be?
The Share of a company is the amount of capital it has to carry on its business.
Share capital can be in form of cash or kind. There is no general legal requirement
that the share capital of a company should be a specific amount. Rather, the law
only specifies a minimum share capital for all companies.
This means that the amount of share capital largely depends on the shareholders
or promoters of the company: they know how much they can afford to invest in the
business. But at times the law makes provisions requiring that a company engaged
in a particular industry must have a certain minimum shareholding/share capital.
For instance, a bank must have at least N25 billion Naira share capital and a life
insurance company must have at least N2 billion share capital while a general
insurance company must have at least N3 billion as share capital. You will need to
check with your adviser or the regulator (if any) of your industry to know if any
specific minimum share holding is prescribed.
Other factors to consider when deciding the share capital for your company
include whether you will need to apply for certain licences and permits. For
instance, Expatriate quota applications are treated more favourably if the company
has a large share capital.
Whatever the share capital of a company is, the general law requires that 25% of it
must be paid up. In other words while you are not required to pay up or invest the
full share capital at once, at least 25% must be paid or invested. So if your share
capital is N1 million (One Million Naira) you must pay up (either in cash or kind i.e.
equipment e.t.c) N250, 000.00.
Again, the case may be different for companies operating in particular industries.
Take the case of banks for instance, the N25 billion is also the minimum required
to be paid up or invested.
Guide in Choosing Proposed Limited Company Name in Nigeria

Some suffixes are not accepted by CAC, however, there are a few exceptions.
i. Corporate Affairs Commission does not accept names having such words &
suffixes like "Incorporation", ''incorporated'', "Project", "Certified", "Group",
"Consortium", "Holdings", "Authorized", "State", "Government", "Patent",
"Commerce", "Copyright" "Conglomerate".

However, except in some special cases and ability to fulfill requirements of some
other enabling Laws of the Federal Republic of Nigeria in Companies & Allied
Matters Act, (CAMA), 1990, such words and suffixes like "Group", "Consortium",
"Holdings" and ‘’Conglomerate’’ can be used to register companies.

Example: To register a company with names ending in HOLDINGS, GROUP,

CONSORTIUM, you must have registered two or three other companies, which
you now want to MERGE together into Groups (as in UBA Group) or Holdings (as
in Nuel Ojei Holdings) or Consortium (as in Dandata Consortium).

ii. Names which have Words and Suffixes like Consulting, Construction,
Engineering, Medical, Pharmacy, Management, Financial, Accounting, School
etc require that at least one Shareholder/Director/Partner provides a photocopy
of his/her Educational/Professional/Training/Degree Certificate obtained from
Universities, Polytechnic, Colleges of Education, Professional Memberships,
Vocational Traning (BSc, BA, MSc, MA, MBA, MBBS, PhD) or Professional Bodies
like (COREN, NIM, ICSA, MPA, NSE, ICAN, ANAN, ACA, CITN, etc.)

Companies in Nigeria do not end their naming with 'LLC, Incorporated, SA, GmBH,
AG, and other foreign connotations'. You will therefore, be dissipating energy
trying or thinking up an idea to replicate or model examples of such foreign
companies like (Microsoft Incorporation as in US or Saticom LLC as in US, or R &
D Holdings SA as in France or Vinton GmBH as in Germany or Accenture AG as in
Switzerland) here in Nigeria.
Names of Limited companies in Nigeria are registered with ending suffixes like
‘’Limited’’ or ‘’Ltd’’ or ‘’Plc.’’.

iii. However, there is a difference between ''Trading Name'' and ''Registered

Name''.

You can trade or conduct your activities with ''LLC'' or even mute up ''Ltd' or
''Limited'' by using only catchy names like in Dangote, Ibeto, Honeywell, MTN,
CoServi, Glo, Etisalat, Airtel, UBA, GTB, Paga, M-pesa, Microsoft, HP, KPMG,
Delloitte, Accenture, Emergent, Facebook, Twitter, Honda, Toyota, CNN,
Aljazeera, Gucci, Marks & Spencer, Ikea, Berkshire Hathaway, etc.

Again, you can also tailor your trading name according to what you do or the
objects of your company such as Phillips Consulting, Frog Design, Tliblisi Trading,
Sahad Freight Services, etc.

But note again, that this is different from the Registration/incorporation Name
when it is involving a LIMITED COMPANY, where in Nigeria you MUST insert such
suffixes like ''Limited'' or ''Ltd'' at the end of your choice Limited Company name
for registration/incorporation.

Examples.
Nuel Ojei Nigeria Limited
Emerald Investment Ltd.
There is an exception to this if it involves registering Business Names, which does
not have its NAMES with suffixes such as ‘’Limited’’ nor ‘’Ltd’’.
Types of Companies in Nigeria
The following guide examines the various structures and types of Nigerian
businesses, from sole trader to PLC.
Sole trader
This is the simplest form of enterprise, it as it does not require registration, though
the sole trader may wish to register the business name to exclude other businesses
from trading by the same name.
It is the type of business in which the owner of the enterprise is exposed to the
greatest personal risk, because the sole trader is personally responsible for all
aspects of the business and has unlimited liability to all debts and legal actions.
The sole trader may also find it difficult to attract outside investment or partners,
which can hinder the expansion of the business. The sole trader may also find it
difficult to attract business as the sole trader does not file accounts or records with
the Corporate Affairs Commission (CAC), giving a lack of business transparency, and
making it impossible for potential customers to verify the background of the
business via an official third party.
Private Limited Company (Ltd)
A private limited company is a legal entity in it own right, separate from those who
own it, the share holders. The limited liability and simplicity of running the private
limited company makes it the most common of registered business in Nigeria. As a
shareholder of a private limited company, the shareholders personal possessions
remain separate (unless they are secured against the business for borrowing), and
the shareholders risk is reduced to only the money they have invested in the
company and any shares the shareholder holds which has not be paid for.
Limited liability companies are also considered prestigious by other companies and
the general public due to its legitimate nature and the way important information
is recorded at the Corporate Affairs Commission. Anyone wishing to do businesses
with a limited liability company can verify who is connected to the company and
also the financial status of the company by paying the Corporate Affairs
Commission a small fee. The level of transparency is very beneficial in terms of build
public confidence in the company.
 The private limited liability company have very few restrictions which makes the
simple but yet flexible solution for many businesses.

The very minimum requirements are:

 The company must have a registered office in Nigeria
 The company name must not be exactly identical to any other company name
currently held in the registry of the Corporate Affairs Commission
 At least twenty five percent of the authorized shares must be allotted at
incorporation
 At least two people above the age of 18 must subscribe to the memorandum and
articles of association.
 The total number of members in a private limited company must not exceed 50,
not including those who are bona fide in the employment of the company
 The authorized share capital shall not be less than 10,000

Public Limited Company

A public limited company differs from the private version in that it is able to sell its
shares to the public and may be quoted in the stock exchange. A public company
must have at least 500,000 authorized share capital and the subscribers must take
up at least twenty five percent of the authorized share capital. The cost of running
a public limited company is reasonably higher than that of a private limited liability
company. It is therefore better suited for large organizations.
Guarantee Company (not for profit)
In simple terms, a guarantee company is not for profit and is the type mostly
formed by charitable organizations. A guarantee company does not have share
capital, and the members do not own the company, the do not receive any profits
and have no claim to the company’s assets. All income generated is used to cover
operating costs and to achieve the objectives of the company