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The Corporate Affairs Commission (CAC) is the regulatory body responsible for the formation, registration, control and overall monitoring of the affairs of companies in Nigeria, as enshrine in Section 1 (CAMA 2004).
With regards to corporate matters, only accredited legal practitioners, chartered accountants and chartered secretaries who are duly registered with CAC are the professionals allowed to transact business with the Commission and Gomez Corporate Consult LTD is an accredited firm with the Commission.
According to Section 22 of CAMA, it categorically states the nature of a private company. It is formed by a minimum of two to a maximum of fifty people, who make financial contributions to the business and have limited liability. They are limited by the monetary value of the shares they hold. The private limited company does not offer its shares to the general public. This means that such shares cannot be traded on a public stock exchange such as the Nigerian Stock Exchange. Also, it does not make its accounts public nor publish audited reports in the dailies, but sends the reports to the registrar of companies as required by the law. This is important as sending it to the registrar confirms that it is not selling its shares to the public. The private limited company has more sources of capital compared to the sole proprietorship and partnership forms of business organizations. This is because it has a higher limit of fifty people who can co-own the business and make financial contributions, compared to the limit of twenty people in the partnership and one person in the sole proprietorship. These are the major features of the private limited company that mark it different from the Public Limited Company.
Section 24 (CAMA, 2004), states that 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 limited company (PLC) is the legal designation of a limited liability company (LLC) that has offered shares to the general public and has limited liability. A PLC’s stock is offered to the general public and can be acquired by anyone, either privately, during an initial public offering or through trades on the stock market.
The mandatory use of the PLC abbreviation after the name of the company serves to instantly inform investors, or anyone dealing with the company, that the company is public and probably fairly large.
PLCs can be listed or unlisted on a stock exchange. Like any other major entity, they are strictly regulated and are required to publish their true financial health so shareholders (and future stakeholders) can size up the true worth of their stock. The life span of a PLC is not determined by the death of shareholder.
Being a public company allows a business to sell shares to investors in order to raise capital. Only PLCs may be listed on the Nigerian Stock Exchange and have the suffix PLC on their ticker symbol. Several other requirements must be met to obtain and maintain the listing: the PLC must be registered as a public company, it must have at least N500,000 authorized share capital (Section 27 (2a) CAMA) , and it must meet ongoing disclosure and filing requirements of the Nigerian stock exchange.
The biggest advantage of forming a PLC obviously, is the ability to raise capital by issuing public shares. Selling shares to the public means anyone can invest in the company, meaning more capital can be amassed than a private limited company. Being listed on an exchange can also attract interest and investment from hedge funds, mutual funds and other traders. Being a PLC also means that the risk is spread out. By allowing the people the ability to buy shares means they’re also buying into the risk. it also means that there’s big potential for growth and expansion, so PLCs can pursue new projects, buy more products, pay off debt and fund R&D.
Examples includes: A.G. LEVENTIS NIGERIA PLC, ABBEY MORTGAGE BANK PLC, HONEYWELL FLOUR MILL PLC, MEYER PLC.
In Section 25 (CAMA 2004), it states the nature of an unlimited company. The name of an unlimited company shall end with the word “Unlimited” (Section 29(4) CAMA). An unlimited company – or private unlimited company, since an unlimited company must be set up as a private company – is a type of business available both in the Nigeria and elsewhere.
You don’t come across unlimited companies very often – although they may not always be obvious because they don’t have to use “unlimited” in their name. The number of unlimited companies in Nigeria is quite small. Although this low number might in part relate to people not appreciating the benefits of an unlimited company, it’s largely due to their very serious drawbacks.
In normal trading circumstances, even the finances of the company operate in pretty much the same way as a limited company, with the shareholders having no direct liability to the business’s creditors. It’s only when a formal insolvency event occurs that the key differences arise.
If there is a formal liquidation, with the company lacking resources to pay off its debts, creditors have access to the personal assets of the unlimited company’s shareholders or members. In this event, all the shareholders bear joint, several and unlimited liability for the company’s liabilities. That means that regardless of your level of shareholding, if other shareholders are unable to pay you could have to contribute more and more. You could lose everything.
The unlimited company therefore shares important characteristics with a sole trader and general partnership, in that those behind the business accept complete liability for the company’s debts. While it’s still subject to most of the requirements of incorporated companies, because of the nature of the members’ liability, an unlimited company isn’t usually required to submit annual returns to the Commission, though there are some exceptions (Section 377, CAMA).
Examples of Unlimited Companies: DÉCOR UNLIMITED, UNLIMITED OIL & GAS COMPANY LTD, UNLIMITED GROWTH COMPANY, UNLIMITED PROPERTIES COMPANY LTD.
According to Section 26 (CAMA 2004), it states the nature & properties of a company limited by guarantee. This is a company formed for promoting commerce, art, science, religion, sports, culture, education, research, charity or other similar objects, and the income and property of the company are to be applied solely towards the promotion of its objects and no portion thereof is to be paid or transferred directly or indirectly to the members of the company.
It shall not be registered with a share capital, it shall not be incorporated with the object of carrying on business for the purpose of making profits for distribution to members and it shall not be registered without the authority of the Attorney General of the Federation.
The name of a company limited by guarantee shall end with the words “Limited by Guarantee” in bracket.
Example of Company Limited by Guarantee: Nigerian institute of freight forwarders limited by guarantee, Medicure clinic limited by guarantee, Sophia foundation limited by guarantee, League for human rights limited by guarantee.
This part categorically states the nature, procedure and application for the registration of a business name. According to Section 657, every firm, individual or corporation is required to be registered & shall within 28 days after the firm, individual or corporation commences the business in respect of which registration is required furnish to the Registrar at the registered office for the State in which the principal place of business of the firm, company or individual is situated, a statement in writing in the prescribed form, signed as required by this section & containing the following particulars:-
Business Name can be classified as a Sole Proprietorship or Partnership. It is a form of registration use by individuals and partners who want to carry on businesses other than the use of their own names. It affords them some measures of protection of their business name and also protects the public from the misleading and fraudulent use of such names.
It is the cheapest and the simplest form of corporate registration. In this class of registration ‘Proprietor or Partner’ is used and not shareholders because it does not involve shares, it is not a limited liability company because the partners or the sole owner are liable for profit and loss of the business. Succession is limited only to partnership. It is suitable for artisans, accountants, lawyers etc. Enterprises, concept, Ventures, are mostly used for its suffixes. Proprietor membership ranges from 1-20.
Examples: Fenera Education Services, Isdrab Clothings, Royal Springs, TFM Intellectual Solutions, Phigors Stitches etc.
According to Part C (CAMA 2004), it states the nature and procedure for the registration of incorporated trustees.
It is also called Non Governmental Organization (NGO), organization such as Club, Initiative, Foundation, Church, Mosque, Association, Movement etc are registered in these class.
It is a community of persons bound together by customs, religion, kinship or nationality, or a body or association of persons established for religious, educational, literary, social, development, cultural, sporting or charitable purpose may appoint one or more trustees for the community, body or association.
This is because it does not have any direct dealings with the government; instead exist for the purpose of its objectives. The trustees are agents and it’s not meant for profit but remuneration will be paid to the trustees as a form of salary, any money made is to improve the aims of the organization. This form of corporate registration is for community of persons bound together by customs, religion, kinship or nationality, or a body or association of persons established for any religious, educational, literary, scientific, social, development, cultural, sporting or charitable purpose may appoint one or more trustees for the community, body, association, club, foundation and organization.
NB: There is a mandatory 28 days for public notice or to raise objections as regards the proposed incorporated trustees. (Section 677 CAMA).
Examples: INITIATIVE FOR INNOVATIVE DEVELOPMENT IN EDUCATION AND AWARENESS, FREDRICK NWANKWO NWEKE FOUNDATION, THE INITIATIVE FOR NOT TOO YOUNG AWARENESS etc.