CAC: Frequently Asked Questions

Creative Arts Solution

FOUNDATION

a non-governmental foundation

FREQUENTLY ASKED QUESTIONS

Registering a company in Nigeria has now become easier due to the technological innovations deployed by the Corporate Affairs Commission (CAC). Over the years we have assisted hundreds of Entrepreneurs register their businesses and in the course of our interactions we have come across different questions and requests. In this article we try to provide answers to Frequently asked questions (FAQ) on Company Registration in Nigeria, we have also added a video which details our Company registration process.

Q: I want to register my business in Nigeria. How do I go about it?

A: There are two common options to be considered when starting a business. You can either register it as a Business Name or incorporate a Limited Liability Company with the Corporate Affairs Commission.

Q: What benefits do I enjoy for incorporating a company?

A: Ability to open a Corporate Accounts, Customers/Clients take you more serious if your Company is registered, Banks only grant business loans to registered businesses, Your Company becomes your brand, Investors are more comfortable with a registered business.

Q: What is the difference between a Business Name and a Limited Liability Company?

A: A Business Name is usually used for Sole Proprietorships (One Man Business) whilst a Limited Liability Company is owned by Shareholders and as the name implies their liability/ dividends are limited to the shares they own in the company. The image below shows some key differences between a Business Name and a Limited Liability.

Liability.

Q: Can I open a Corporate Bank Account with my Business Name?

A: Yes, you can open a Corporate Bank Account with your Business Name.

Q: Can I later convert my Business Name to a Limited Liability Company?

A: Yes, you can convert your Business Name to a Limited Liability Company. It is to be noted that the process of conversions cost more money and takes a longer time.

Q: What are the requirements for registering a Business Name?

A: CAC now allows individuals to register Business Names by themselves, however Kudi Konsult saves you the headache with our affordable and reliable Business Name  registration package. Still want to do it yourself? See process below

1. Check for availability of proposed company name 

• After name has been approved, use the availability code to start process of registration and fill all necessary forms on the Company Registration Portal
• Pay filing fees  

• Upload signed forms, valid IDs of all Proprietors and evidence of payment of filing fees.
• Submit the original copies of the documents uploaded at step 5 to the CAC office you selected for collection in exchange for your Certificate and the Certified True copies of the documents.

Q: What are the requirements for incorporating a Limited Liability Company?

A: CAC now allows individuals to register Business Names and Company by themselves, however Kudi Konsult saves you the headache with our affordable and reliable Company registration package. Still want to do it yourself? See process below

1. Check for availability of proposed company name 

• After name has been approved, use the availability code to start process of registration and fill all necessary forms on the Company Registration Portal
• Pay filing and Stamp duty fees  

• Upload signed forms, memorandum and articles, Valid IDs of all Directors/Shareholder/ Secretary and evidence of payment of filing fees.
• Submit the original copies of the documents uploaded at step 5 to the CAC office you selected for collection in exchange for your certificate and the Certified True copies of the documents.

Q: What are Shares?

A: Shares can be defined as units of ownership interest in a Limited Liability Company. While owning shares in a business does not mean that the shareholder has direct control over the business’s day-to-day operations, being a shareholder does entitle the possessor to participation in the profit (dividends) or losses (liabilities)

Q: What is the minimum number of shares I can have for my company?

A: You can have as low as 100,000 shares however it is advisable to have at least 1 million share capital in place because cost of filing fees and stamp duties is the same.

Q: How do I divide the shares of the company?

A: Shareholders may be family members, partners, friends or investors. Allocation of shares is usually dependent on what the person is bringing on board. However you must be careful in choosing your shareholders as they are entitled to vote in the proceedings of company meetings, receive dividend, attend meetings and contribute to the affairs of the company, inspect company’s statutory books, protect proprietary interest in the management of the company.

Q: Can I be the only Director of the Company?

A: No, the law requires that there must be a minimum of two (2) directors and a maximum of 50 before a Private limited liability Company can be formed.

Q: Why can’t my 10-year-old son be a Director of my company?

A: Minors (people under 18 years) can only be directors if there are two (2) other adults who are directors in the Company.

Q: Why are my preferred names rejected by CAC?

A:  CAC reserves the right to reject names that are:

• capable of misleading as to the nature and extent of its activities
• undesirable, offensive or contrary to public policy
• 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
• contain the phrase “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 trustees

Q: Is it true that there are certain businesses that cannot be formed with 1 million share capital?

A: Yes, there are some Companies that cannot be formed with 1 million share capital. They include: Banks, Private Security Company, Insurance Businesses, Lotteries, Air Transport, Aviation, Freight Forwarding, Bureau De Change, Finance Companies, Pension Fund Managers, Underwriters, Issuers, Dealers etc

Q: I have notification that my Company registration has been approved but they keep telling me certificate is not ready for collection?

A: The process of printing certificates is sometimes delayed and might take longer than the stipulated time.

Q: Since, I’m not available to sign the documents; can I send a scanned signature?

A: Yes, you may send scanned documents to conclude the registration process however note you need the original documents at the point of collection

Q: What documents do I get after the registration of my business?

A: For a business name, you get the certificate of registration and certified BN 01 Form. For a Limited Liability Company, you get the Certificate of Incorporation and certified copies of the Memorandum and Articles of Association and CAC 1.1.

Q: How about Tax Identification Number (TIN)?

A: TIN nos is free. Once we conclude registration  with CAC you can visit nearest FIRS office for the printout of your TIN

Q: Can a Foreigner Register a Business in Nigeria?

A: A foreigner can fully participate in the operation of any enterprise in Nigeria except enterprises in the negative list (which largely relates to the manufacturing of firearms and other military materials). The foreigner may operate alone or in Joint venture with Nigerians by means of a company, which has to be formed and registered with the Corporate Affairs Commission (CAC) and with the Nigerian Investment Promotion Commission (NIPC).

Reference 

https://hub.opera.com/home/content-library