FAQ


Q1: What is a busi­ness name and why is it so important?

A busi­ness name is the name which a busi­ness trades under for com­mer­cial pur­poses. A busi­ness does not actu­ally begin by for­mu­lat­ing a busi­ness plan or open­ing a bank account. It starts from choos­ing a name. There is more to busi­ness name than just iden­tity. A good busi­ness name is an adver­tis­ing tool. Many large com­pa­nies even hire expen­sive con­sul­tants to help them name their busi­nesses, prod­ucts and services.

 

Q2: I have this busi­ness name that I love so much, and I want to start a busi­ness under that name. Can I pro­ceed immediately?

No. I think the next thing after you must have done a fea­si­bil­ity study on the busi­ness itself is to get the busi­ness name reg­is­tered at the Cor­po­rate Affairs Com­mis­sion (CAC).
 

Q3: What do you mean by Cor­po­rate Affairs Commission?

Reg­is­tra­tion of busi­ness in Nige­ria is the exclu­sive respon­si­bil­ity of the Cor­po­rate Affairs Com­mis­sion, also known as CAC; which has its head office in Abuja, and branches in most states of the fed­er­a­tion. The CAC is the fed­eral gov­ern­ment agency respon­si­ble for reg­is­tra­tion of all companies.

 

Q4: But I was told that the cost of registering/​incorporating a com­pany is expen­sive. Can’t I go on with the busi­ness then reg­is­ter the name later?

My can­did advice is No! Hav­ing your busi­ness reg­is­tered def­i­nitely con­fers some cred­i­bil­ity on it, given that it then acquires an iden­tity. In many impor­tant busi­ness activ­i­ties or rela­tion­ships you may want to get involved in, details of your busi­ness reg­is­tra­tion will be required. You do not have to wait for such occa­sions before get­ting your busi­ness into the reg­is­ter of com­pa­nies — you may miss an impor­tant oppor­tu­nity just for that omission.

 

Q5: Is that all?

No. Using a busi­ness name sim­i­lar or iden­ti­cal to that of a reg­is­tered busi­ness name can land you into prob­lems, includ­ing legal issues. Besides, if you have suc­ceeded in doing busi­ness for sev­eral years under a name which has not been reg­is­tered, that does not con­fer own­er­ship of such busi­ness name on you. The CAC has to approve the avail­abil­ity of such a busi­ness name before you can pro­ceed to file an appli­ca­tion to get the name registered.

 

Q6: Does that mean I may for­feit a busi­ness name that I have been trad­ing under and has become so pop­u­lar in the mar­ket­place just because I didn’t reg­is­ter it at first?

Yes. Due to your neg­li­gence, some­one some­where might have reg­is­tered that name or a sim­i­lar one. This means you will lose all the good­will that name gar­nered over the years. Do you see that this sit­u­a­tion is more expensive?

 

Q7: I under­stand that the Cor­po­rate Affairs Com­mis­sion rejects reg­is­tra­tion of some busi­ness names. What are the likely rea­sons for such actions?

Good ques­tion! Offi­cials at the CAC use their dis­cre­tion in approv­ing a busi­ness name sub­mit­ted for search. Busi­ness names may be dis­ap­proved if such names existed or are sim­i­lar to the ones on their data­base. At times, busi­ness names are dis­ap­proved due to their vague nature. Con­sider some­one who sub­mit­ted LAW FIRM as a busi­ness name!? More so, objects such as INSTI­TU­TION, FOUN­DA­TION and MIN­ISTRY are not likely to be approved as a busi­ness name, except when such objects are used for reg­is­tra­tion of incor­po­rated companies/​trustees.

 

Q8: What dif­fer­ence exists between a busi­ness name and incor­po­ra­tion of com­pany or trustee?

To start a busi­ness, you need to decide on a busi­ness name. You also need to choose a busi­ness for­mat under which to oper­ate. You need to know the require­ments relat­ing to mem­ber­ship of the com­pany, own­er­ship, etc to enable you make deci­sions you will remain happy with. The rou­tine processes of reg­is­tra­tion can then be car­ried out on your behalf by an accred­ited pro­fes­sional.

 

Q9: Do you mean busi­ness names, com­pa­nies, and trustees are formats?

Yes. It may be called busi­ness struc­tures too. You will need to talk to an expert con­cern­ing this. How­ever, let me give you a lit­tle of what you should know.

Three major classes of reg­is­tra­tion are avail­able under the rel­e­vant law (the Com­pa­nies and Allied Mat­ters Act of 1990):

Reg­is­tra­tion of Busi­ness Names: This applies to sole pro­pri­etor­ships and part­ner­ships. It is the sim­plest form of busi­ness struc­ture. It is the one-​man busi­ness, owned by a sin­gle per­son and called ‘enter­prise’ in the local par­lance. The part­ner­ship applies to a busi­ness where two or more per­sons agree to jointly own and carry on the busi­ness. Given the fairly com­plex nature of part­ner­ships, it is best to seek the ser­vices of experts to assist with the details.

 

Q10: What about incor­po­ra­tion of com­pa­nies and trustees?

Incor­po­ra­tion of com­pa­nies is the sec­ond class of reg­is­tra­tion avail­able under this Act. Incor­po­ra­tion rec­og­nizes the busi­ness as a unique entity, sep­a­rate from the own­ers, with statu­tory pow­ers to own prop­erty and sue or be sued. There is thus the con­cept of lim­ited lia­bil­ity, imply­ing that the indi­vid­ual owner’s (shareholder’s) lia­bil­ity relat­ing to the busi­ness is lim­ited to the amount of his share subscription.

The third class under this Act is the Reg­is­tra­tion of Incor­po­rated Trustee. This applies to pub­lic insti­tu­tions and asso­ci­a­tions, oper­ated by a Board of Trustees. This cat­e­gory includes: NGOs, churches, clubs, trade asso­ci­a­tions, polit­i­cal and civil groups etc.

 

Q11: Can an ‘enter­prise’ (busi­ness name) be used to carry on all kinds of business?

A: No. The choice of which struc­ture to adopt will depend on the nature of the busi­ness, the own­er­ship and eval­u­a­tion of the ben­e­fits, and the pit­falls of each format.

 

Q12: Why do some peo­ple pre­fer to incor­po­rate a lim­ited lia­bil­ity company?

A: Lim­ited lia­bil­ity com­pa­nies have grown to become so pop­u­lar among busi­ness own­ers due to the fol­low­ing reasons:

(I) There is lim­ited lia­bil­ity for indi­vid­ual share­holder. This means that the per­sonal assets of the direc­tors and share­hold­ers are pro­tected in the event of the com­pany wind­ing up as long as the com­pany is oper­ated legally.

(II) The stand­ing of the busi­ness is enhanced before finan­cial insti­tu­tions and other par­ties it does busi­ness with. Lim­ited sta­tus also pro­vides a cer­tain level of con­fi­dence in the busi­ness from both sup­pli­ers and customers.

(III) It has a bet­ter access to credit and on even bet­ter terms.

(IV) The busi­ness is dis­tinct from indi­vid­ual own­ers; the death of a mem­ber does not dis­solve the company.

 

Q13: Can I han­dle the reg­is­tra­tion pro­ce­dures myself?

Yes. But the chal­lenge here is that you may receive many queries from the offi­cials at the CAC if you don’t com­ply with cer­tain rules. Though it is cheaper to do the reg­is­tra­tion your­self, hir­ing the ser­vices of accred­ited pro­fes­sion­als does pay in the long run. How­ever, before now, the CAC specif­i­cally requires that only accred­ited par­ties carry out the actual reg­is­tra­tion pro­cess­ing for incor­po­ra­tion of com­pa­nies and trustees. The recent com­pany reg­u­la­tion allows the first direc­tor in the doc­u­ment to file reg­is­tra­tion for his com­pany. But an accred­ited pro­fes­sional is a trained prac­ti­tioner who is famil­iar with the reg­is­tra­tion require­ments for each busi­ness for­mat and pro­cess­ing procedure.

 

Q14: Now, how long does it take to get my busi­ness reg­is­tered and receive a certificate?

The dura­tion depends on the busi­ness for­mat you are con­sid­er­ing. Appli­ca­tions for reg­is­tra­tion of busi­ness names are usu­ally processed at the zonal office where you sub­mit­ted an appli­ca­tion to be reg­is­tered. How­ever, appli­ca­tions for incor­po­ra­tion of companies/​trustees are usu­ally for­warded to Abuja for pro­cess­ing. This may take more time.

In either case, the dura­tion also depends on how soon the Name Avail­abil­ity result is released. Name search may take 35 days; and the issuance of busi­ness name cer­tifi­cates may take 721 days depend­ing on the busi­ness format.

 

Q15: How much does it cost to have my busi­ness name reg­is­tered with the Cor­po­rate Affairs Commission?

Please, click here for price details and duration

 

Q16: Do you mean hav­ing my busi­ness name or com­pany reg­is­tered with the CAC con­fers spe­cial rights or priv­i­leges or licenses to carry on my line of business?

No. Reg­is­tra­tion of any busi­ness name under the Com­pa­nies and Allied Mat­ters Act only con­fers on the pro­pri­etor or part­ners thereof of the right to carry on such busi­ness under a busi­ness name, that is, a name other than their own sur­name or sur­names with­out any addi­tion other than their fore­names or Names or the ini­tial of such fore­name or names. It does not con­fer any spe­cial right or priv­i­leges or any license to carry on the busi­ness itself.

 

Q17: Do you mean cer­tain busi­nesses require licenses, edu­ca­tional cer­tifi­cates or accred­i­ta­tion from an autho­rized body before ven­tur­ing into them?

Yes. Before you reg­is­ter a com­pany that requires a lot of tech­ni­cal and finan­cial input, the CAC has devised new means of screen­ing out touts and quacks from pro­claim­ing to be ‘pro­fes­sion­als’ in a field that requires extreme exper­tise. Hence, it is required that you pro­vide edu­ca­tional cer­tifi­cates, belong to a rel­e­vant pro­fes­sional body, and or must have gained sev­eral years of hands-​on experience.

Busi­nesses that fall into this cat­e­gory may include: Advertising/​Public Rela­tions, Alter­na­tive Med­ical Prac­tice, Architects/​Town Plan­ners, Char­tered Sec­re­taries, Gen­eral Tax Con­sul­tants, Hospital/​Clinics, Building/​Civil Engineers/​Contractors, Food Products/​Processing, Legal Prac­tice & Con­sul­tancy, Human Resource Man­age­ment, Schools etc.

 

Q18: How many direc­tors can form a Pri­vate Lim­ited Lia­bil­ity Company?

Unlike a busi­ness name (sole pro­pri­etor­ship) that can be formed by only 1 per­son, a pri­vate lim­ited lia­bil­ity com­pany can be incor­po­rated by 250 per­sons called direc­tors or shareholders.

 


Q19: What does an Autho­rized Share Cap­i­tal mean and why is it com­mon to reg­is­ter a 1 mil­lion share cap­i­tal?

The issue of Autho­rized Share Cap­i­tal raises the ques­tion of how strong the com­pany is and the worth of the com­pany in mon­e­tary terms. Shares mean the amount of rights you own in a com­pany. The min­i­mum share cap­i­tal we reg­is­ter is 1 mil­lion because if you reg­is­ter any less, you still pay the same cost of reg­is­tra­tion. Besides, a 1 mil­lion share cap­i­tal is only nom­i­nal, and you don’t need to have 1 mil­lion naira in the bank before you incor­po­rate a 1 mil­lion share cap­i­tal com­pany. If you own 500,000 worth of shares in a 1 mil­lion share cap­i­tal com­pany, it means you own 50% of the company.

There are some com­pa­nies that the CAC statu­to­rily spec­i­fies for a higher min­i­mum share cap­i­tal when reg­is­ter­ing them – Banks, Insur­ance Com­pa­nies, Travel Agen­cies, Broking firms, Secu­rity Agen­cies, Reg­is­trars, Bureau de’ Change, Forex Com­pa­nies, etc.

Autho­rized share cap­i­tal is also referred to, at times, as reg­is­tered cap­i­tal. It is the total of the share cap­i­tal which a lim­ited com­pany is allowed (autho­rized) to issue. It presents the upper bound­ary for the actu­ally issued share capital.

 

Q20. What are the statu­to­rily require­ments for form­ing a pri­vate lim­ited com­pany in Nigeria?

A pri­vate lim­ited lia­bil­ity com­pany can be formed by 250 mem­bers (known as direc­tors). They must not be peo­ple: of unsound mind, declared bank­rupt, less than 18 years of age, of fraud­u­lent characters.

 

Q21: Why is the C.T.C so impor­tant?

The advan­tages of this is that with the CTC, you can present it to any com­pany to inspect its objects for busi­ness, to help con­duct busi­nesses with banks, ten­der it for auc­tions, or gov­ern­ment con­tracts, etc, when these big cor­po­rate insti­tu­tions need them. If you don’t have a CTC, you will force the com­pany to do a search on your com­pany at the CAC. Which means you will be billed for that search by the cor­po­ra­tion. So, imag­ine how many times you will be shelling out money for com­pany searches?

 

Q22: Do I get a CTC for a busi­ness name (Sole Proprietorship/​Partnership)?

Yes. But it’s quite dif­fer­ent from that of incor­po­rated companies/​trustees.

 

Q23: I don’t have a per­ma­nent busi­ness address yet. I oper­ate my busi­ness from home. Can I use my res­i­den­tial address as my busi­ness address?

Yes, you can. Then you can request for a change of address when you move to new location.

 

Q24: I quite under­stand why it is so impor­tant to reg­is­ter a busi­ness name or incor­po­rate a company/​trustee. It’s in my best inter­est, isn’t it?

Cer­tainly! Imag­ine your orga­ni­za­tion being rec­og­nized, favoured and approved of by your tar­get market/​audience, gov­ern­ment agen­cies, inter­na­tional orga­ni­za­tions, finan­cial insti­tu­tions, or even your local com­mu­nity — just because you are duly reg­is­tered with the Cor­po­rate Affairs Com­mis­sion of the Fed­eral Repub­lic of Nige­ria! The impor­tance of your organization’s cer­ti­fi­ca­tion with the nation’s reg­is­trar of companies/​trustee can­not be over-​emphasized.

 

Q25: Is MyIn​cor​po​ra​tion​.com​.ng the same as the Cor­po­rate Affairs Com­mis­sion or CAC?

No! MyIn​cor​po​ra​tion​.com​.ng is not the same as Cor­po­rate Affairs Com­mis­sion or CAC; and does not in any way over­ride the respon­si­bil­i­ties of the Fed­eral Gov­ern­ment Agency. MyIn​cor​po​ra​tion​.com​.ng is a busi­ness entity that serves to pro­vide sup­port ser­vices to clients who may wish to incor­po­rate a com­pany at the Cor­po­rate Affairs Commission.

 

Q26: I am a Niger­ian who lives in Dias­pora. Do you offer incor­po­ra­tion sup­port to peo­ple abroad?

Yes, we offer to Nige­ri­ans and for­eign­ers no mat­ter your loca­tion. In such cir­cum­stances where face-​to-​face meet­ings are unre­al­is­tic, courier ser­vices are used. Please, talk with one of our client ser­vice rep­re­sen­ta­tives for more information.

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