Doctoral Disertation

Incorporation of Non-profit Organisation in Nigeria Establishing an enterprise entails first a decision on what you want to do, and how. Then, you must decide on the form of the enterprise. Would it be a partnership, a sole proprietorship, a company limited by shares or a not-for-profit organization? Every enterprise in Nigeria is required by law to be registered with the Corporate Affairs Commission, and to comply with the relevant provisions of the Companies and Allied Matters Act, Chapter 59, Laws of the Federation of Nigeria 1990. 2.17.1.Forms of Enterprise in Nigeria An enterprise may take one of the following forms: • A Private company limited by shares • A Public limited company; • An Unlimited liability company; • A Company limited by Guarantee; • A Partnership/Firm; • A Sole Proprietorship; • An Incorporated Trustees; 2.17.2.Registration Requirements The Companies and Allied Matters Act, 1990 [CAMA] is the principal statute governing the registration of enterprises in Nigeria. The administration of CAMA is the responsibility of the Corporate Affairs Commission (CAC), with headquarters in Abuja, and zonal offices all over the country. 2.17.3.The functions of the CAC among other things include the following: - • The regulation and supervision of the formation, incorporation, registration, management and winding up of companies; • the establishment and upkeep of a suitable and well equipped Companies Registry; • the conduct of investigation into the affairs of any company where the interests of shareholders and the public so demand; etc. 2.17.4.Types of Companies and Enterprises Under the CAMA, the following types of companies exist: • Company limited by shares: This is a company having the liability of its members limited to the amount (if any), unpaid on the shares respectively held by them. • Company limited by guarantee: This is a company without a share capital. It is a not-for-profit company where the liability of its members is limited to such amount as the members respectively undertook to contribute to the assets of the company in the event of its being would up. Due to the tax exemption and other benefits granted this type of company, the Consent of the Attorney General of the Federation is required for the registration. • Unlimited Company: This is a company where the members’ liability is not limited to any particular amount. Each of these primary types of companies may be a private or a public company. A private company is one, which places restriction on transfer of shares by members, and limits its membership to 50 persons. It is also prohibited from inviting the public for subscription to its shares or debentures. On the other hand, a public company has no such restrictions as its shares can be freely traded on. It can be listed or unlisted. It is usually listed when it is quoted on the Stock Exchange. 2.17.5.Business Names - for Sole Proprietors, Partnerships & Firms • Business Names: This is the name or style under which any business is carried on, whether in partnership or otherwise. The expression firm is used when 2 or more persons have entered into a partnership with a view to carrying on business. Business names are to be registered under CAMA where the name consists of an addition to a person’s name. E.g. "John Smith" is not required to be registered, but "John Smith & Co" requires registration. • Sole Proprietorships: This is a one-owner business, and should be registered with the CAC as a Business Name under Part B of CAMA. • Partnership/Firms: This has the same format as a registered sole proprietor, except that there is more than one person involved. Please note that there is currently (as at June 2000) no provisions in CAMA for what is known as limited liability partnerships ("LLP") as is practice in some jurisdictions. However, the Partnership Laws of most states in the Federation provide for the registration of limited liability partnerships. Here there are two kinds of partners – the general partners who carry the risk and liability of the business, and the limited partner, whose level of liability is limited to a defined amount. This model makes for better access to finance by a partnership in the sense that a financier could provide capital not only in the form of debt, but also in the form of equity, and since the financier is not involved in the day to day running of the partnership, it becomes desirable to financier that his/ its liability is not open-ended. 2.17.6.Registration of Business Names The procedure for the registration of a Business Name for use by a "sole proprietor" or "partnership/firm" essentially involves the submission of a duly completed Application Form to the CAC signed by the appropriate persons. This form which must disclose certain particulars must be accompanied by a number of documents as follows: - • reservation of Name Form; • the proposed name • the general nature of the business or proposed activities; • the full address of the principal place of business and every other subsidiary place of business; • where the registration to be effected is that of a firm; the present forenames and surnames, nationality, age, sex, occupation and usual residential address of each of the individuals who are • the intending partners, and the corporate name and registered office of such corporation which is an intending partner as the case might be; • the proposed date of commencement of the business or activities; • Passport size photographs or the owners. • Certificates of professional qualification where the business is of a professional nature. • Where one of the partners is a non-Nigerian and intends to work in Nigeria, evidence of his immigration status.