THE 12 FACTS YOU MUST KNOW BEFORE REGISTERING A COMPANY IN NIGERIA
Registering a company is the first step towards doing business in Nigeria. There are important facts every person intending to register a company in Nigeria must be aware of. Below are 12 key facts about company registration in Nigeria
- The sole government agency responsible for company registration in Nigeria is the Corporate Affairs Commission (CAC) and all applications for company registration must be channelled to the CAC. The CAC derives its powers and authority from the Companies and Allied Matters Act, 2020 (CAMA). Unlike a country like the United States where it is possible to register a company in various states, company registration in Nigeria is under the control of the Federal Government in Nigeria and the only Federal Government in charge of incorporation is the CAC.
- The most suitable form of business structure in Nigeria is a private company limited by shares. We have other business structures such as public companies limited by shares, business name, etc. however, the most common and suitable structure for business ventures in Nigeria is a private company limited by shares.
- A company can have only 1(one) shareholder and only one(1) company director. The same person can stand as both shareholder and company director in a company. However, a person who is below the age of 18 is not eligible to be a company director in Nigeria.
- A company secretary is no longer a mandatory requirement for all companies in Nigeria. however, where a company has a company secretary, such a company secretary must be resident in Nigeria.
- Registering a company in Nigeria does not automatically qualify one to engage in any business. Some industries are subject to special regulatory control and licenses must be obtained from the industries’ regulator before one can engage in a business in such industries. For instance, the Department of Petroleum Resources (DPT) Permit is required to engage in the Nigerian oil & gas industry.
- All companies must have a registered office address in Nigeria at the point of incorporation.
- Although Nigerian companies do not expire once registered and are not subject to renewal but all companies registered in Nigeria are required to file annual returns with the CAC. This can be filed by a solicitor on behalf of the company. The documents required for filing annual returns with the CAC are:
- The requisite CAC Annual Returns Form
- An audited account of the company
- Evidence of payment of all required fees and dues
- All registered companies now come with a Tax Identification Number(TIN), which is required for opening a corporate bank account.
- All company incorporation documents are now issued electronically, which include the Memorandum and Articles of Association(MEMART), Certificate of Incorporation and Application for Registration of Company (formerly CAC Form 2 and Form 7) after the registration of the company has been completed.
- The minimum share capital threshold applies to some categories of business in Nigeria. What this implies is that before someone can register a company to engage in business in some industries, the company must have a certain share capital amount. For instance, any company wishing to engage in maritime must have a minimum of Twenty Five Million Naira Share Capital.
- Where a foreigner is a director and/or shareholder of a company in Nigeria, the company is required to have a minimum share capital of 10(ten) million Naira. The CAC or the government does not require evidence of payment of share capital during company registration.
- Registration of a company in Nigeria does not automatically qualify a foreigner to be a signatory to a corporate bank account in Nigeria. When considering opening a bank account, there are other applicable laws. Pursuant to the Central Bank of Nigeria (Anti-Money Laundering and Combating the Financing of Terrorism in Banks and Other Financial Institutions in Nigeria) Regulations, 2013, most commercial banks mandate all foreigners to obtain a Nigerian Work Permit before they can be eligible to be a signatory to a bank account in Nigeria.
In summary, the opening of a company in Nigeria can be entirely done online, however, it is important to strictly comply with the above tips for a seamless registration.