Every individual, firm or corporate that has a place of business in Nigeria can carry on a business under a business name registered at the Corporate Affairs Commission (CAC). When considering starting a business in Nigeria, there are two options to be considered, the option of incorporating a company (Limited Liability or Public Liability Company) or operating as a Registered Business Name. A business name upon registration does not contain the words “limited”, “group”, “PLC” etc. After registration, the individual or corporation will be issued a certificate of registration containing the business name.
Conversion of Business Name to a Limited Liability Company
There are a plethora of reasons why an individual would consider converting a business name to a limited liability mostly because there are limitations to the advantages and benefits enjoyed by a registered business name, and the most prominent reason would be for the purpose of expansion of business objects or upgrade of the business name, or for projecting a more professional image. A limited liability company has a lot of advantages accrued to it than a registered business name.
The requirements for the conversion of a business name to a limited liability at the Corporate Affairs Commission are as follows:
- The applicant will make a formal application of conversion to the Registrar General of the Corporate Affairs Commission. The applicant will also attach the Original Business Name Certificate to the application.
- Where the application is made on behalf of the proprietor of the business name, an authorization letter from the proprietor will be attached alongside the formal application to the commission.
- The applicant for the conversion of a business name to a limited liability will submit evidence of up to date payment of annual returns for the business name. Payment of Annual Return for each year is N1, 000.00 (One thousand Naira) while penalty to pay for failure to pay each year is N2, 500.00 (Two Thousand Five Hundred Naira). The procedure for proper guidance on how to pay annual returns for a business name is as follows:
- Business name annual return is due for payment from 1st January to 30th June each year except the year it was registered.
- Download and print in colour the Business Name A/R Form from the CAC website
- Fill the Business name A/R Form and append signature on it.
- Submit the completed forms for assessment at CAC
- Generate the remita code for the assessed amount from remita.net and make payment online or at the designated bank from the remita website.
- The applicant will hand over the documents with three copies of the evidence of payment to the commission
- Finally, the applicant should keep the teller and signed remita receipt as evidence of payment.
- The applicant should make a payment of N5, 000.00 (Five Thousand Naira) to be paid via remita to the Corporate Affairs Commission.
- When all this is satisfied and submitted, they would be transferred to the office of the Registrar General in Abuja, who would grant consent for approval when satisfied with the application, but where it is queried, approval will not be given.
- Finally, where approval is given, the applicant can commence the registration of the previous name as a limited liability company.
A registered business name can be converted to a limited where the Proprietor of a business name intends to expand the business objects.
With all the aforesaid, a proprietor of a business name looking to convert to a limited liability company must ensure that the Annual Returns are up to date. An applicant should follow the steps enunciated above for that purpose or contact any CAC accredited agents or lawyers for assistance with the conversion.
By RESOLUTION LAW FIRM