Types and Registration of Companies

A

TERM PAPER REPORT

ON

TYPES AND REGISTRATION OF COMPANIES

WRITTEN BY:

OLADEINDE KAYODE JOHNSON

ARC/06/9482

SBMITTED TO THE COURSE LECTURE

PROF. OLU-OLA OGUSOTE

OF

THE DEPARTMENT OF ARCHITECTURE

FEDERAL UNIVERSITY OF TECHNOLOGY, AKURE

ONDO STATE.

COURSE: PROFESSIONAL PRACTICE AND PROCEDURE 1 (ARC 807)

JUNE 2013.

TABLE OF CONTENT

1.0……….Introduction

2.0……….Company and Applied Matters Act (CAMA) Chapter 59 Laws of the Federal Republic of Nigeria 1990

3.0……….The Corporate Affairs Commission (CAC)

3.1……….Services offered by the Commission

3.2……….How to register your business name with Corporate Affairs Commission of Nigeria

4.0……….Types of Companies

4.1……….Private Company

4.2……….Public Company

4.3……….Capacity of individual to form a company

4.4……….Minimum Share Capital for companies

4.5……….Minimum Share Subscription

4.6……….Reservation of Name

4.7……….Prohibited Names

4.8……….Restricted Names

4.9……….Names requiring consent of the Commission

4.10……...Pre-incorporation services and requirements

4.10.1...... Consent to use the word Group

4.10.2...... Consent to use the word Holding

4.10.3…....Consent to use the word Consortium

4.10.4…....Foreign Nationals

4.10.5……Requirement of registration of company in Nigeria

4.10.6……Exemption of foreign companies

4.11……...Post-incorporation services and requirement

4.11.1……Search

4.11.2……CTC of filed documents

4.11.3……CTC of Certificate of Registration

5.0 ………Conclusion

References

1.0  INTRODUCTION

The types and registration of companies is a serious business according to the law of Federal Republic of Nigeria. The inefficiency and ineffectiveness of the erstwhile Company Registry, a department within the Federal Ministry of Commerce and Tourism which was responsible for the registration and administration of the repealed Company Act of 1968 gave birth to the Company and Applied Matters Act (CAMA) in January 1990.

The Corporate and Affairs Commission (CAC) under Company and Applied Matters Act now regulate the formation and management of companies in Nigeria.

2.0 COMPANY AND APPLIED MATTERS ACT (CAMA) CHAPTER 59 LAWS OF THE FEDERAL REPULBLIC OF NIGERIA 1990

On 2nd January 1990 there was the commencement of Company and Applied Matters act (CAMA) to establish the Corporate Affairs Commission. The establishment of the Corporate Affairs Commission as an autonomous body was as a result of the perceived inefficiency and ineffectiveness of the erstwhile Company Registry, a department within the Federal Ministry of Commerce and Tourism which was then responsible for the registration and administration of the repealed Company Act of 1968.

3.0 THE CORPORATE AFFAIRS COMMISSION (CAC)

The Corporate Affairs Commission (CAC) was established under the Company and Applied Matters Act (CAMA), which was promulgated in 1990 to regulate the formation and management of companies in Nigeria. The Act provides the commission for the incorporation of companies and incidental matters, registration of business names and incorporation of trustees of certain committees, bodies and association.

The commission is a corporate body with perpetual succession and a common seal; capable of being suing and being sued in its corporate name; and capable of acquiring, holding or disposing of any property, movable or immovable, for the purpose of carrying out its functions. The Mission of the Commission is to provide Excellent Service Delivery through the best Technology, driven by a Motivated Workforce. The Vision of the Corporate Affairs Commission is to be a World Class Company Registry.

The headquarters of the commission is situated at Area II, Garki, P.M.B, 198, Abuja, Federal Capital Territory. Email . Phone: 09-3142916 and there is an office of the Commission in each state of the federation.

The Commission is the Agency of Government charged with, amongst other responsibilities, the regulations and supervision of the formation, incorporation, registration and management of Companies, Business Names and Incorporated Trustees. The Commission also regulates and supervises the striking off and winding up of Companies, removal of Business Names from the register and dissolution of incorporated Trustees. It carries out its functions through accredited members of Association of National Accountants of Nigeria, Institute of Chartered Accountant of Nigeria, Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN) and the Nigerian Bar Association (NBA). They are called Agents of the corporation.

The commission is made up of 10 members headed by a Registrar-General, each member representing the respective stakeholders, like the accountancy profession, the legal profession and the business community.

3.1 SERVICES OFFERED BY THE COMMISSION

The services offered by the Commission include the following;

·  Regulations and supervision of the formation, incorporation, registration and management of companies, Business Names and Incorporated Trustees.

·  Registration of changes, amendments and alterations in particulars of companies, Business Names and Incorporated trustees.

·  Repository of for statutory records of companies, Business Names and Incorporated Trustees including annual reports of exempted foreign companies and annual return of companies, Business Names and Incorporated Trustees.

·  Searches

·  Issuance of Certified true copies of certificate and extract of filed documents.

·  Enforcement of compliance of companies, Business Names and Incorporated Trustees with the provisions of the CAMA

·  Conducting investigation into the affairs of companies, Business Names or Incorporated Trustees.

·  Registration of changes in share share capital, mortgages, debentures, charges, etc.

·  Registration of appointment/discharge of Receiver/Manager

·  Registration of appointment of Liquidator.

·  Registration and supervision of the striking off and winding up of companies, removal of Business Names from register and dissolution of Incorporated Trustees.

·  Express incorporation of Company.

·  Accreditation of Lawyers, Chattered Accountants and Chattered Secretariesas direct users of the services of the Commission.

3.2 HOW TO REGISTER YOUR BUSINESS NAME WITH CORPORATE AFFAIRS COMMISSION OF NIGERIA (CAC)

1)  Choose uncommon business name.

2)  Have an alternative business name in case your original name has been used.

3)  Know the business models you are registering. The N200 availability form contains the followings: Private Limited Company, Public Limited Company (PLC), Unlimited Company (ULTD), Change of Name, Company Limited by Guarantee (LTD/GTE), Business Name, Incorporated Trustees.

4)  Avoid using correcting fluid on availability form and file.

5)  Never use a business name that requires certificate back up. Business names that include words like Consult, Guru, Expert, Technician etc should be avoided.

6)  Always follow up on your business name form/application. Check after 2-3 weeks to avoid risk of business name being taken by someone who submitted after you but was following it up more closely.

Tips

Moreover, if you have a business idea and you go ahead to register the business name, even if you spend 2 years perfecting the plan and raising the capital for it, for those 2 years from when the business was registered can count for you as years of experience.

Secondly, you may have discovered that people includes you and I, feel more comfortable paying for services and product into a corporate account with the name of an organization than paying into individual accounts. If you register your company, you can use the documents to open a corporate account with less stress.

For one, when it comes to doing serious business, many agencies will never take you serious if your company is not registered.

4.0 TYPES OF COMPANIES

Basically, there are 3 types of companies;

A)  Companies limited by shares having the liability of its members limited by memorandum to the amount, if any, unpaid on the shares respectively held by them.

B)  Companies limited by guarantee having the liability of its members limited by the memorandum to such amount as the members limited may respectively thereby undertake to contribute to the assets of the company to the event if it’s being wound up.

C)  Unlimited liability companies not having any limit on the liability of its members.

Each of these types of companies could either be a private or public company classified as;

I.  Private Company limited by shares

II.  Private unlimited Company

III.  Public Company limited by shares

IV.  Public unlimited company

V.  Company limited by guarantee

At incorporation all the legal objects of the company must be contained in it Memorandum and Articles of Association. The legal objects are the major business objectives of the company and the framework which it intends to run its business within the acceptance of the law.

The operational requirement of companies are governed by Company and Applied Matters Act (CAMA) and several other laws such as the Nigerian Investment Promotion Act, the Company Income Tax Act, Investments and Securities Act 1999, Foreign Exchange Act of 1995 etc.

4.1 PRIVATE COMPANY

A private company is one which is stated in its memorandum to be a private company. Every private company shall by its articles restrict the transfer of its shares. The total number of members of a private company shall not exceed 50, not including persons who are bonafide in the employment of the company, or were while in that employment and have continued after the determination of that employment to be, members of the company. Where two or more persons hold one or more shares in a company jointly, they shall be treated as a single member.

A private company shall not, unless authorized by law, invite the public to subscribe for any shares or debentures of the company; or deposit money for fixed periods or payable at call, whether or not bearing interest.

Some examples of Private Companies in Nigeria are; MTN Nigeria, Airtel Nigeria, Globacom, Aba Textiles Mills Plc, Abuja Electricity Distribution Plc, Acorn Petroleum Plc, Afprint Ngeria Plc, Ecobank Plc, Fan Milk Plc, Hallmark Bank Plc, Industrial And General Insurance Plc, Mainstreet Bank Limited, etc.

4.2 PUBLIC COMPANY

Any company other than a private company shall be a public company and its memorandum shall state that it is a public company. A public company may;

I.  Have membership exceeding 50 members;

II.  Invite the public to subscribe for any shares or debentures of the company;

III.  Invite the public to deposit money for fixed periods or payable at calls, whether not bearing interest.

Some examples of Public Companies in Nigeria are; First Bank Nigeria Plc, A.G. Leventis and Co PLC, ABC Transport PLC, Access Bank Plc, Aiico Insurance PLC, Berger Paints Nigeria Plc, Cadbury Nigeria Plc, Conoil Plc, Dangote Cement Plc, Dangote Flour Mills Plc, Dangote Sugar Refinery, Diamond Bank PLC, Julius Berger Nigeria Plc, Zenith Bank, Wema Bank, etc.

4.3 CAPACITY OF INDIVIDUAL TO FORM A COMPANY

1. An individual shall not join in the formation of a company if;

a)  He is than 18years of age; or

b)  He is of unsound mind and has been so found by a court in Nigeria or elsewhere; or

c)  He is an undischarged bankrupt; or

d)  He is disqualified from being a director of a company

2. A corporate body in liquidation shall not join in the formation of a company.

3. Subject to the provisions of any enactment regulating the rights and capacity of aliens to undertake or participate in trade or business, an alien or a foreign company may join in forming a company.

4.4 MINIMUM SHARE CAPITAL FOR COMPANIES

Private Company - N10, 000:00

Public Company - N 500,000:00

Note:

Minimum share capital for certain businesses are as prescribed by the industry rtegulation from time to time.

4.5 MINIMUM SHARE SUBSCRIPTION

25% of authorized share capital

4.6 RESERVATION OF NAME

60  days reservation period

4.7 PROHIBITED NAMES

Any name the Commission considers;

·  Capable of misleading as to the nature and extent of its activities.

·  Undesirable, offensive or contrary to public policy

4.8 RESTRICTED NAMES

Any name that;

·  Is identical with or similar to the name of a registered company unless the registered company is in the course of dissolution and consents in writing.

·  Contains the words Chamber of Commerce unless it is a company limited by guarantee.

·  Would violate any existing trade mark or business name unless with the consent of the trade mark or business name owner.

·  Would violate any incorporated trustee unless with consent of the trustee.

4.9 NAMES REQUIRING CONSENT OF THE COMMISSION

Names that contain any of the following words;

·  Federal, National, Regional or State Government or suggest patronage of Federal or State Government, Ministry or department.

·  Municipal or Chattered or suggest connection with any municipality or other local authority.

·  Co-operative or Building society.

·  Group or Holding

·  Any words suggesting temporary business arrangement e.g. consortium.

4.10 PRE-INCORPORATION SERVICES AND REQUIREMENTS

4.10.1 CONSENT TO USE THE WORD GROUP

Formal application for consent accompanied by the followings;

·  Evidence of not less than 3 associate companies to form the Group company

·  Evidence of common membership of the associate companies.

·  Resolution of the associate companies consenting to the Group Relationship.

·  Statement by majority of the directors of the proposed Group Company that the share capital of the company shall not be less than the highest share capital amongst the associate companies.

·  Updated annual returns of associate companies.

·  Updated section 553, CAMA filing of associate companies where applicable.

4.10.2 CONSENT TO USE THE WORD HOLDING

Formal application for consent accompanied by the followings;

·  Evidence not less than 2 subsidiary companies

·  Statement by majority of the directors of the proposed Holding company that the company shall acquire more than half in the normal value of the share capital of each of the subsidiaries within 90 days of its incorporation.

·  Updated annual returns of subsidiary companies.

·  Updated section 553, CAMA filing of subsidiary companies where applicable.

4.10.3 CONSENT TO USE THE WORD CONSORTIUM

Formal application for consent accompanied by the following;

·  Evidence of not less than 3 companies to form the Consortium

·  Evidence of registration in home country in case of a foreign company.

·  Resolution of each company in the consortium consenting to the arrangement and stating the object of the consortium.

·  Statutory declaration to wind up the consortium in the memorandum of association of the consortium.

·  Inclusion of a clause to wind up the consortium in the articles of association of the consortium.

·  Inclusion of a clause to wind up the consortium in the articles of association of the consortium.

·  Updated annual returns filing by companies forming the consortium.