CORPORATE LAW

FORMING YOUR  OWN COMPANY IN NIGERIA 

By 

Adebayo Adekola 

LL.B, BL, ASM, ACIS.

Under the Nigeria Corporate Legal System, it takes two or more but not more than 50 legally qualified persons to come together to form and bring (incorporate) a private company into existence in anywhere in Nigeria while there is no limit for a public company with the aim or object or purpose of carrying on a legal business.-Section 27(1), Section 39(1) of CAMA. However, a company may Ultra vire its object. - Section 39(2)-(4) ofCAMA.  The law regulating the formation and running of a company in Nigeria; Companies and Allied Matters Act (CAMA) NO.1 1990 under it relevant section: Section 18 Companies and Allied Matters Act recognizes and stipulates the type of company that can be formed. To be legally qualified to form a company in Nigeria, you must have met the legal requirements stipulated in the Companies and Allied Matters Act, particularly Section 20 Companies and Allied Matters Act and any other enactment regulating your area of business, location and practice. i.e. under the Companies and Allied Matters Act, an infant cannot form a company except with two adults, some enterprises can be undertaken only by incorporated companies e.g. banking and insurance, you must be a pharmacist before you can own or ran a pharmaceutical store or factory, and you must have attended the Nigeria Law school and passed the required examinations and called to the Nigerian Bar before you can practice law, a non-Nigerian seeking to carrying on business in Nigeria vie a company –Section 20(4) must make applications under Nigerian Investment Promotion Commission Act Cap Nl17 LFN 2004; Investments and Securities Act Cap. I24 LFN 2004;. National Office for Technology Acquisition and Promotion Act Cap N 62 LFN 2004 (Transfer of Technology); and Immigration Act Cap Il LFN 2004. See also Lasisi V Registrar Of Companies (1976) 1 F.N.L.R. 101; (1976) 7 S.C. 73; Starcola (Nig.) Ltd. versus Adeniji [1972] I All, N.L.R. (Part 1) 49; Ezeonwu V Onyechi [1996] 3 N.W.L.R. (Pt. 438 499. Also see Foreign Exchange (Monitoring and Miscellaneous Provisions) Act Cap. F34 LFN 2004.

However, the front line law regulating the formation of company in Nigeria; Companies and Allied Matters Act established under its Section 7(1) a body a Regulatory Agency called Corporate Affairs Commission charged with the responsibility of giving effect to the provisions of the Act

When forming a company in Nigeria, usually your lawyer(s) who by virtue of the provision of Section 35(3) of the Companies and Allied Matters Act is the ONLY professional allowed for the formation of companies obtains from you information like your full names, addresses and occupations of all persons whose names must be entered in the Register of Members (section 79(1) and (section 79(2) interested in forming the company, two names for the company they want to form, office address-(section 35(1) and (2);  date for completion, obtain filling fees depending on whether you want express registration at a cost of N50.000 otherwise called “one day’’ registration, capital, signatory to the account, statutory books and content of memorandum of article of association(section 547).  Expatriate Employees, including directors, must be covered by expatriate quota (Immigration Act section 8), names of at least two persons who need not be members of the company to be appointed as Directors (sections 244(1), 246(1), 247, 251 and 255, 257). Only a public company can issue its shares or debentures to the public, usually by way of a prospectus (section 48 of Investments and Securities Act) but where no prospectus is issued a statement in lieu of prospectus is filed (section 61 of Investments and Securities Act). Filing the prospectus is not a prerequisite for the formation of a public company.(section 36(4)). Tax Relief: If any tax relief is to be claimed, particulars should be obtained t0 enable application to be made; e.g. under the Industrial Development (Income Tax Relief) Act Cap I 7 LFN 2004 . Tax Clearance Certificates: for the subscribers and first directors and provide him any other information that will aid him in filling and filing the necessary forms at the Corporate Affairs Commission.

Although, you can register a company using your personal names, a combination of the names of the promoter but invented or geographical and generic names which may create difficulties are not allowed. See the case of Lagos Commerce versus Registrar of Companies 14 W.A.C.A 197.

While names identical with a company in existence and already registered or so nearly resembles that name as to be calculated to deceive as contained in Section 30(1)a and supported in the case of  Niger Chemists Ltd versus Nigeria [1961] 1 All. N.L.R. 117 OR/AND contains the words "Chambers of Commerce" unless it is a company limited by guarantee (Section 30 (1) (b), is capable of misleading as to the true nature or extent of its activities or is undesirable, offensive, or otherwise contrary to public policy. (Section 30 (1) (c), or would violate any existing trade mark or business name unless the consent of the owner of the trade mark or business name has been obtained Section 30 (1) (d), are prohibited and restricted.

And the use of the following words like Federal, National, Regional, State, Government or any other word suggesting governmental patronage, Municipal, Chartered, Co-operative, Building Society, Group or Holding and recently words like "Banks" and "Insurance". as a name of your company is subject to the approval of the Commission: Section 30 (2). A name may be reserved by the Commission for a maximum period of 60 days pending incorporation.-Section 32

The types of company that can be formed recognized by the Act are "Company Limited by shares" i.e. having the liability of its members limited by the Memorandum of Association to the amount unpaid on shares respectively held by them, or "Company Limited by Guarantee" i.e. having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up; or "Unlimited Company" i.e. Not having any limit on the liability of its members.- Section 21. And the kind and the size of business will determine whether the company will be private or public- Section 21(2).