The Companies and Allied Matters Act (CAMA) regulates the activities of businesses in Nigeria. The enactment of CAMA 2020 which was assented to by the President on 7th August 2020 repealed CAMA 1990 which has regulated business activities in Nigeria for over 30 years. This has ushered in a new regime for the activities of businesses in Nigeria with some laudable innovations. The implementation of the Act takes effect on January 1, 2021. The government agency in charge of incorporation in Nigeria is the Corporate Affairs Commission (CAC).

This write up will identify the types of incorporations possible under CAMA 2020 and the requirements for their registration or incorporation. The following are the forms of incorporation in Nigeria, as provided by the extant law and the Companies Regulations 2021:

  1. Company (Private Company Limited by Shares, Public Company Limited by Shares, Company Limited by Guarantee and Unlimited Company);
  2. Limited Liability Partnership;
  3. Limited Partnership;
  4. Business Name;
  5. Incorporated Trustee.

Company

Pursuant to the CAMA 2020, the Companies Regulations 2021 and the new CAC 1.1, the following are the types of companies that can be registered with the CAC:

  • Private Company Limited by Shares: this has the liability of its members limited to the amount unpaid (if any) on the number of shares held by them. Thus, where shares are fully paid up, members are free from liability. It creates a blanket such that the company bears whatever debts incurred in the event of its insolvency. The following are further attributes and requirements for registering a private company:
    1. By virtue of Section 18(2) CAMA 2020 only a private company can be registered by One (1) person. Therefore, a minimum of 1 (one) and maximum of 50 (fifty) can be shareholders to a private company.
    2. It must have a minimum issued share capital of N100, 000
    3. It must restrict the transfer of its shares and any member intending to sell his shares must first offer same to the existing members.
    4. Details of subscriber(s).
    5. Approved name of company, verifiable registered address, head office (if different from registered address). Company's email address and phone number.
    6. Description of business activity.
    7. Memorandum of Association.
    8. Articles of association which can be the model articles provided by the Regulations or the model articles in addition to amendments which should be prepared and uploaded.
    9. Details of proposed secretary (individual or corporate secretary). This is optional for small companies.
    10. Details of proposed Directors which must be at least one (1) but two (2) for two-member private companies.
    11. Details of Person with Significant Control (one who directly or indirectly has at least 5% of shares or voting rights in a company, can remove or appoint majority of directors and exercise any significant control over the affairs of the company).

  • Public Company Limited by Shares: like a private company limited by shares, the liability of its members is also limited to the amount if any on the number of shares unpaid by them. However, they differ in the powers that can be exercised by them and the requirements for registration:
    1. Two or more persons may incorporate this company.
    2. It must have a minimum issued share capital of N2, 000, 000
    3. It is not mandated to restrict the transfer of its shares.
    4. Details of subscriber(s).
    5. Approved name of company, verifiable registered address, head office (if different from registered address). Company's email address and phone number.
    6. Description of business activity.
    7. Memorandum of Association.
    8. Articles of association which can be the model articles provided by the Regulations or the model articles in addition to amendments which should be prepared and uploaded.
    9. Details of proposed secretary, which must be at least 1 (individual or corporate secretary).
    10. Details of proposed Directors which must be at least two
    11. Details of Person with Significant Control (one who directly or indirectly has at least 5% of shares or voting rights in a company, can remove or appoint majority of directors and exercise any significant control over the affairs of the company).

  • Company Limited by Guarantee: here, the liability of members is limited to the amount they have respectively undertaken to contribute to the assets of the company in the event of it being wound up. The following are required during registration:
    1. Two or more subscribers
    2. It has no share capital however each must undertake to pay a certain amount not exceeding N100, 000 in the event of its being wound up.
    3. It cannot carry on business for the purpose of distributing same to its members but rather must be applied towards the success of its objects which could be promotion of education, research, commerce, charity or other similar objectives.
    4. Details of subscriber(s).
    5. Approved name of company, verifiable registered address, head office (if different from registered address). Company's email address and phone number.
    6. Memorandum of Association.
    7. Articles of association which can be the model articles provided by the Regulations or the model articles in addition to amendments which should be prepared and uploaded.
    8. Details of proposed secretary, which must be at least 1 (individual or corporate secretary).
    9. Details of proposed Directors which must be at least 1
    10. Publication in 3 national dailies calling for objections to the incorporation of the company where the Attorney General does not grant consent within 30 days.
    11. Details of Person with Significant Control (one who directly or indirectly has at least 5% of voting rights in a company, can remove or appoint majority of directors and exercise any significant control over the affairs of the company)
  • Unlimited Company: as the name implies the liability of members who have subscribed to the memorandum of association (i.e. opted to be shareholders) has no limit in the event of the company being wound up. Thus, where the assets of the company are insufficient to settle the debts incurred, the members personal assets can be sold to liquidate/offset the remaining debt.

An unlimited company can either be private or public depending on the preference of the subscribers to the memorandum of association. Therefore, the requirements for private or public company stated above will apply.

Limited Liability Partnership

Part C, Sections 746-788 of CAMA 2020 introduces Limited Liability Partnership. For persons intending to engage in a partnership, the introduction of this type of incorporation presents the opportunity to do so and for the partnership to be regarded as a separate legal entity. Accordingly, upon registration it can sue and be sued in its name, acquire, own, hold, develop and dispose-off immovable or movable property, have common seal (optional) and perform any other acts a body corporate may engage in lawfully. In accordance with CAMA 2020, the Companies Regulations 2021 and CAC/LLP 01 (Application to Register a Limited Liability Partnership) the following are the requirements for its registration:

  1. Approved LLP name
  2. Must have at least 2 partners
  3. Must have at least 2 designated partners, one of whom must be resident in Nigeria.
  4. Description of business activity
  5. Details of verifiable registered address and address of head office (if different form registered address), company's email and phone number
  6. Details of members (individual or corporate)
  7. Details of Person with Significant Control (one who directly or indirectly has at least 5% of interest, voting rights in the partnership, can remove or appoint majority of partners and exercise any significant control over the affairs of the company.
  8. Contribution of each member to the partnership.

Section 788 CAMA 2020 further recognizes the operation of a foreign limited liability partnership, which must be registered if it intends to carry on business in Nigeria. However, the Minister has the power to grant an exemption. Regulation 22 of the Companies Regulations 2021 states that a foreign LLP may apply to the Minister for exemption if it is:

  1. An LLP invited to Nigeria by or with the approval of the Federal Government to execute any specified individual project.
  2. An LLP in Nigeria for the execution of specific individual loan projects on behalf of a donor country or international organization.
  3. LLP owned by a foreign government and engaged solely in export promotion activities.
  4. An engineering and technical expert engaged on any individual specialist project under contract with any of the governments in the Federation or any of their agencies or with any other body or person, where such contract has been approved by the Federal Government.

Limited Partnership

Part D, Section 795 of CAMA 2020 recognizes a limited partnership to be one consisting of one or more general partners who are liable for the debts and obligations of the firm and limited partners. Therefore, while the liability of the general partners is unlimited, that of the limited partners is limited to the amount they contributed or agreed to contribute. Pursuant to Section 798(2) CAMA 2020 and CAC/ LP 01(Application to Register Limited Partnership) the following are the requirements for its registration:

  1. Approved name
  2. General nature of the business
  3. Principal place of business
  4. Details (name, address, identification card) of each general partner and limited partner (individual or corporate). For foreigners, the data page of International Passport is acceptable. Also, Minors may register as partners provided there are 2 other partners who are disqualified from being Partners.
  5. Amount contributed or agreed to be contributed by each limited partner and whether paid, or to be paid in cash or in another specified form.
  6. Partnership Agreement stating the terms of the partnership.

Business Name

Registration under this form is easy. Any firm, individual or corporation required to be registered must register with the CAC within 28 days of commencing business. Part E of CAMA 2020 and CAC and CAC/ BN 01(Application to Register Business Name) set out the requirements as follows:

  1. Reserved business name
  2. Date of commencement of business
  3. General nature of the business
  4. Details of principal place of business and branches (if any)
  5. Details of proprietor(s) (individual or corporate)

Incorporated Trustee

Part F of CAMA 2020 recognizes the incorporation of an Incorporated Trustee. It is created when two or more trustees are appointed by a community of persons bound by nationality, religion, culture etc. to promote educational, religious, literary, sporting or any other charitable cause and thus are not business organizations. The Commission reserves the power to determine the classification of an association and decide to make an association as part of an already registered one or regard as one, one or two associations having the same trustees.

The following by virtue of Part F of CAMA 2020 and CAC/ IT 01 (Application to Register Incorporated Trustee) are the requirements for registration:

  1. Incorporated Trustee Name
  2. Association code or description of association's classification
  3. Registered office address
  4. Details of publications in at 2 daily newspapers, one of which must be national and the other circulating within the area where association is situate.
  5. Aims and objectives of the association
  6. Details of Trustees which must not be less than 2.
  7. Details of Secretary
  8. Impression of Common Seal (if any)
  9. 2 copies of the Association's Constitution
  10. Copy of the relevant minutes of the meeting where the trustees were appointed, and special clause rule adopted for incorporation into the constitution.
  11. Details of current or past affiliation with any existing organization/association.

In conclusion, all incorporations recognized and made possible under CAMA 2020 have been discussed along with the requirements for registration of each. It is advisable for a person or entity wishing to engage in any business or undertake an incorporation in Nigeria to engage the services of a CAC accredited agent or corporate lawyer for an advice on the most suitable form of incorporation in Nigeria.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.