For anybody interested in going into business in Nigeria, there are different ways to go about it. You may opt for any of the following means to carry on your business:
i. Sole proprietorship
ii. Partnership
iii. Company
iv. Joint venture.

i. Sole proprietorship – This is the quickest and fastest means by which a business can be carried on. Anybody who wants to use this medium can conceive the idea today and start his business tomorrow because starting this kind of business does not require any form of registration. The amount of capital required to start off your business depends on the nature or type of product involved.

However, this does not mean that the business cannot be registered at all, if you want. The sole proprietor may decide to do what is called business name registration. Even if the sole proprietor wants to do business name registration, this does not imply that he cannot do so while the business is already going on.

For a business name, you may have names like Kemoct Concept, Bolly Ventures, Soli Enterprises, Ade & Sons, etc. A business name does not really have any special status in law. This explains why a business name cannot be used to sue nor can it be sued. In court papers, it is described this way, “Mr. Jay Ollo (trading under the name and style of Kemoct Concept) v. Inter Bank Ltd.” So what this means is that, even though Mr. Jay Ollo registered his business as Kemoct Concept , there is no difference between him and his business unlike “Inter Bank Ltd.” The same fate applies to a partnership with a registered business name. Nevertheless, it is advisable for people operating one-man business (sole proprietorship) to have a business name so that they may be able to open a bank account in the name of that business or use the business name in securing some government contracts or contracts from corporate organisations.

ii. Partnership – To carry on a business through the medium of partnership, there must be at least two people but they cannot exceed twenty except the partnership is formed by a group of lawyers, accountants or the partnership is for co-operative business.
Just like sole proprietorship, a partnership business may be and may not be registered but it is much more advisable that it is registered because the business involves more than one person.

In addition to a business name registration that should be done for a partnership business, it is equally advisable that a partnership agreement is drawn up by the partners because this will help greatly in case a conflict arises among the partners.

Partnership business is regulated by the Partnership Law or Act and where a partnership agreement does not exist, it is the provisions of this Law (or Act as the case may be) that will determine the rights and duties of the partners which may not be favourable to them. For instance, this law states that profits must be shared equally, irrespective of individual capital contribution of partners. For a partner whose contribution is not much, the Law is favourable but for partners who have contributed more capital, the law will be unfair.

However, this can be avoided where a partnership agreement (otherwise known as Articles or Deed of Partnership) is made which will state in clear terms how profits are to be shared (i.e. the ratio), signatories to bank accounts, salaries of staff, duration of the partnership, nature of business, names of partners, expulsion of partners, effect of death of a partner on the lifespan of the partnership, sharing of the assets of the partnership on dissolution and so on.

It should be noted that the fact that a partnership is registered and has an agreement does not confer any special status on the business at law. For example, in case of a business misfortune, all the partners are equally and jointly liable for the losses of the business. In fact, their liability is unlimited. In Lagos, however, partners may decide to register their partnership business under a law which gives partners limited liability like in the case of a company.

iii. Company – Companies and Allied Matters Act, 2004 (shortened as CAMA) is the law that regulates formation, registration, management and dissolution of companies in Nigeria. Now, unlike the two businesses mentioned above, a company cannot operate unless it is registered. A company must have a minimum of 2 members and each of them must not be less than 18 years. The maximum number of members that a company can have depends on the type of company. A company may be a company limited by shares, a company limited by guarantee or an unlimited company. Any of these companies may take the form of a private or public company. A private company must not have more than 50 members, while a public company does not have any limit as to the number of its members.
One unique advantage of doing business through the medium of a company is that, in case of any financial crisis, a member cannot lose more than the amount already contributed or allotted. In other words, the loss of a member is limited to the shares taken up by him, unlike sole proprietorship and partnership where liability may extend to personal belongings.
However, the procedure for setting up a company is more cumbersome and more expensive. For more details on companies, see Part XVI where some terms relating to companies have been explained in clear language.

iv. Joint venture – This medium is used where a company enters into a business partnership with another company for the purpose of carrying out a particular project or any other business transactions.

9.7.1 How to register a business name

Are you a sole proprietor or a partner in a partnership firm? If you are any of the two, then a business name is meant for you and the under-listed requirements are what you need to register your business name.

Step 1: Decide on a name that you want your business to bear. Better still, you may submit two names so that if one is not accepted for registration, the other may sail through.

Step 2: Consult a lawyer or you proceed to the Corporate Affairs Commission’s office yourself. A branch office of the Commission is usually located in states’ capitals. At the Commission, a form, known as Availability/Reservation of Name Form CAC 1, will be given to you at a cost. Then, you fill two names of your choice.

At this stage, a search will be conducted in order to know if the name you wish to use is not already being used by another person. If it is available for use, then you proceed to step 3 but if it is not available, you have to obtain another form.

Step 3: You will have to obtain an application form known as Form CAC/BN/A1 which has to be duly filled and completed by you. You will be required to staple your passport photograph to the relevant column of the form and pay the prescribed registration fee.

Step 4: Some other documents may be required in certain situations e.g. a qualifying certificate where the nature of business calls for some expertise.

Step 5: Once you are able to meet all the requirements from step 3 to 4 above without any query, a business name certificate will be issued and you are therefore qualified to use it. However, you may have to wait for a couple of weeks before the certificate is available for collection.

9.7.2 How to incorporate a company

A company is different from a business name. A company is a legal entity while a business name is not. A non-lawyer may handle the registration of a business name without involving a lawyer; it is not allowed for a non-lawyer (even in the case of a lawyer- he has to be accredited) to undertake incorporation of his prospective company without the services of a lawyer. It costs more to incorporate a company than registering a business name.

Notwithstanding what has been said, the requirements for registering a company are not beyond what a non-lawyer can understand. The requirements are explained below.

Step 1: At this stage, there are a number of preliminary issues you have to first settle. These preliminary issues are: 1. What name do you wish to give to your proposed company? Remember that your proposed name must end with either “Ltd” or “Plc.” So, you can have a name like “Advanced Concept Ltd.” A company cannot, however, bear a name like “Thirty09 Ltd.” A company’s name must be wholly in words not figures or a mixture of words and figures. 2. Is it a private or public company that you want to form? 3. What is your office address? 4. How much is your authorised share capital? 5. What kind of business activities do you want to venture into? Having decided on all these, you can now proceed to the Corporate Affairs Commission’s office.

Step 2: Proceed to the Commission’s office in your area and obtain FORM CAC1 (Reservation and availability of Name) which will be filled and submitted at the office. After some days, you will be informed on whether the name suggested by you is available for use or not.

Step 3: If the name you want the company to bear is not available for use which means that a company in existence is already using the same name or a name very similar to it, you will have to obtain another Form CAC1. But if the name is available for use, then you have to prepare and submit the following documents to the Commission: 1, notice of the address of the registered office of the company (otherwise known as Form CAC 2.2);
2, two copies of the Memorandum and Articles of Association (usually bound together and stamped). Stamp duty fee has to be paid;
3, a statement of the list and particulars of First Directors of the company together with their consent to be Directors (also known as Form CAC 2.3 and CAC 7);
4, a statement of the authorised share capital signed by at least one director (otherwise known as CAC 2.4);
5, a statutory declaration which must be prepared by a legal practitioner stating that you have complied with all the requirements for registration (This is also known as Form C.0.1);
6, particulars of a person to be appointed as the company secretary;
7, means of identification of the directors, shareholders and the company secretary must be stated which may be driver’s license, national ID or international passport.

NOTE: Names and addresses of directors and the secretary must be supplied. You may also have to supply their phone numbers as well.

Step 4: After you must have prepared all the above documents and submitted them to the Commission, you have some payments to make and the amount of money in this respect is not fixed. There are factors which would determine how much you incur. Some of these factors include what your authorised share capital is which may be a minimum of N 10,000 for a private company or N500, 000.00 for a public company. Both do not have a maximum in terms of share capital. However, in practice, the share capital of a private company is not usually less than N500, 000.00. How much you incur to register your company will be determined by the individual professional e.g. a lawyer, a chartered accountant or chartered secretary who is doing the registration for you and other official fees that may have to be paid.

Step 5: Once you comply with steps 1 to 4, then wait and expect a certificate of incorporation to be issued to you, provided that incorporation fee has been paid.

After a certificate is issued, it is expected of you to display your certificate in your registered office address and also that you quote your company registration number on your company’s letter-head papers.

Extracted from pages 170-176 of Kehinde Adegbite's LEARNING THE LAW IN NIGERIA, a book written in everyday language in order to bring the Nigerian law to the doorstep of non-lawyers. For more information on the book and additional hints on everyday legal issues faced by non-lawyers, visit the author's blog www.kehindeadegbite.com.ng

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