These are 2020 CAMA Company Registration Requirements and how CAMA 2020 applies – What documents and procedures are now required for company registration? What are the implications of the 2020 CAMA on Nigerian companies and their formation? These and many more are the main thrust of this content.
Therefore, are you one of those asking; how do I register as a private limited company? What is a small company under CAMA 2020? What are the types of company and their registration requirements in Nigeria? I sincerely urge you to read on
CAMA 2020 is now Law:
Table of Contents
The Companies and Allied Matters Act 2020 (“CAMA 2020”, “the New CAMA”, or “the Act”) became effective from 7th August, 2020 when it was assented to by President Muhammadu Buhari. In fact, the new CAMA repealed and replaced the CAMA of 1990. The new CAMA which offers a number of legal innovations promotes ease of doing business in Nigeria. Therefore, CAMA 2020 has introduced some changes to the requirements for registration of companies in Nigeria. As a matter of fact, this content provides a guide on registration of private company limited by shares in Nigeria in light of CAMA 2020.
What is the nature of your company?
As it is, for you to register a company in Nigeria, you must first determine the nature of the company you wish to set up. That is, is it going to be a private company limited by shares or a private company limited by guarantee? Do you want it to be a public company, or an incorporated trustee? However, our focus here is on the most common form of companies in Nigeria – the private company limited by shares. So, this post is for those registering private companies limited by share
Search for the Name Availability:
The next practical step is to conduct a public search with the Corporate Affairs Commission (CAC). CAC is the statutory body responsible for the administration and enforcement of the CAMA in Nigeria; so, it has a data bank of names of registered companies in Nigeria. If your company name seems to be free through the public search, you can now apply for the name to be reserved for you by paying the statutory fee for it.
In fact, this’s commonly called ‘name availability search’; the process typically takes less than 24 hours. Where the name is available for you, CAC will issue an approval note. This means that the approved name would be exclusively reserved in your favour for a period of 60 days. In fact, within this time, any other company proposing to use the name will be barred from doing so on the ground that it is similar or confusing with the already reserved name. On the other hand, when the name applied for is disapproved, a disapproval note would also be issued CAC.
Furthermore, names re disapproved if that are seen as being capable of misleading as to its nature or extent of its activities; identical with or similar to the name of a registered company; with a trademark or trade name which may likely confuse unsuspecting members of the public; names that re restricted or prohibited in Nigeria.
Get the objects of the company ready.
As a matter of fact, the object of a company defines the nature and activities of the business of the company. These re listed in the company’s Memorandum of Association (MoA). The memorandum of a company, therefore, is a document that explains the fundamental conditions upon which a company’s formed and to operate in a given jurisdiction, like Nigeria.
In fact, to register a company in Nigeria, section 36 of 2020 CAMA provides that the MoA shall be delivered to the Commission together with an application for registration of a company, documents required by the Act and a statement of compliance.
The application for registration must state the following:
(a) The company’s CAC approved name;
(b) The registered office address and head office address as the case may be.
(c) Furthermore, whether the liability of the members of the company is to be limited by shares or by guarantee; and
(d) Whether the company shall be a private or public company.
In fact, it’s important that when registering your private company limited by shares, you ensure that the object clauses comprehensively capture the scope of your proposed company’s business; and that they comply with the requirements of CAMA.
Document Requirement – 2020 CAMA Company Registration Requirements: How CAMA 2020 Applies
Furthermore, the documents required by the Act for incorporation re stated below. So, ensure the registration process is completed online via the CAC portal with the following documents;
A. Form CAC 1.1-Application for Registration of Company
In this Form, you re required to complete it with the following information among others:
I. Statement of Capital & Initial Shareholdings
In this regard, on private companies limited by shares, section 37 of CAMA requires that the statement of capital and initial shareholdings must be stated as well as the total shares taken by subscribers on formation of the company. In addition, it must also state the number, class, and the aggregate nominal value of the shares as well as the aggregate amount (if any) to be left unpaid on the subscribers’ shares.
II. Statement of Proposed Directors
For the company registration purpose, the names and details of the directors of the proposed company must be submitted to CAC. Section 39 of CAMA 2020 provides that the statement of the company’s proposed directors shall contain the particulars of the proposed director(s) and secretary or joint secretaries of the company. In addition, the statement shall also contain consent by each of the persons named as a director, as secretary or joint secretaries, to act in the relevant capacity.
III. Statement of Compliance
Furthermore, section 40 of the Act requires that a Statement of Compliance be delivered to CAC. A Statement of Compliance is a statement by your or an agent that the requirements of the Act have been complied with. The CAC may accept the compliance as sufficient evidence of compliance. This is a new development under CAMA 2020. It effectively displaces the need for a statutory declaration of compliance which required that only a legal practitioner could attest that the statutory requirements for incorporation have been complied with.
Therefore, in the new Act, you or your agent may deliver the Statement of Compliance to the CAC. In fact, dispensing with the need for the declaration by a legal practitioner merely demonstrates that the framers of the Act no longer reckons with the relevance of a legal practitioner who ordinarily has the legal background and training to attest to statutory compliance of this nature. As a matter of fact, the idea of dispensing with a legal practitioner’s declaration has ben welcomed by some but not by many legal practitioners.
To these effect, CAC Form 1.1, shall be submitted to the CAC with the Memorandum of Association & Articles of Association of the Company after completion.
B. Memorandum of Association & Articles of Association of the Company (‘MemArt’)
As a matter of fact, the Memorandum of Association and Articles of Association (MemArt) are legal documents that form the constitution of the company. They regulate the external and internal affairs of the company respectively.
In fact, the Memorandum of Association, sets out, among other things, the objects of the company (the reason for company formation); situation clause (the jurisdiction or country the company has its registered address); and the liability clause (the extent of liability of members of the company) etc.
The Articles of Association,
On the other hand, the Articles of Association, regulates the company’s internal workings, powers and rights, duties and management, etc. You re advised to comprehensively review the Articles of Association. Always avoid company-registration agents who simply adopt the template Articles of Association. From our experience at Complete Full Marks Consultants Ltd, it is always in your best interest to prepare or review the Articles of Association in accordance with the specific, unique, or peculiar needs of your proposed company. This is because, what is good for the goose may not always be good for the gander. With the wrong Articles of Association, you may be buying for yourself a company that is either dead on arrival or a time bomb. Get professional help from us here.
2020 CAMA Company Registration Requirements: How CAMA 2020 Applies
As a matter of fact, by a combined reading of sections 20(2) and 41(1) of the CAMA 2020, the MemArt must be subscribed to by at least two (2) persons nd who may not necessarily be Nigerians. I must mention however, that a one-person company may now be registered under CAMA 2020 in which case only he/she subscribes.
Determine the share capital of your company?
In fact, how much share capital do you want? This is because section 27(2) of the Act places a minimum issued share capital of not less than N100 thousand for private companies and N2 million in the case of a public company. But under CAMA 1990, section 27 (2) (a), it used to be a minimum of 10,000 for private companies. Take notice also of the change from ‘Authorized Share Capital’ to ‘Minimum Share Capital’. This’s deliberate as promoter(s) of a business re no longer required to pay for or allocate shares that re not needed at the specific time of incorporation.
The Definition of Company Size per Share Capital?
I know this will interest you. Please, note that for tax-assessment purposes, Nigeria now defines in classes. These are small, medium, and large companies- define by the size of their gross turnovers. Respectively, these three sizes of company have the following thresholds:
- A gross turnover of not more than N25 million per annum for a small company;
- A gross turnover of more than N25 million but not more than N100 million per annum for a medium-sized company; and
- A large company means any company which is not a small or medium-sized company. So, we can, by implication, peg the threshold of large companies with a gross turnover of above N100 million per annum.
In fact, this categorization is by virtue of the new Finance Act 2019. This is because the category of a private company has tax implications under Nigeria’s various tax laws. It’s, therefore, important for companies to always seek proper advice and guidance in this respect in order to avoid or minimize business and regulatory issues.
2020 CAMA Company Registration Requirements: How CAMA 2020 Applies
The Presidential Enabling Business Environment Council (PEBEC) has been promoting the ease of doing business in Nigeria; the signing of CAMA 2020 into law is part of it. As a matter of fact, this content contains guides showing the steps involved in registering a private company limited by shares in Nigeria. In fact, we have taken time to highlight some of the changes introduced by CAMA 2020 in relation to private companies limited by shares.
In summary, this content is intended to provide a general guide to the subject matter; 2020 CAMA Company Registration Requirements: How CAMA 2020 Applies. We suggest that specialist advice be sought about your specific circumstances. You can contact us if you wish.
Our Corporate Services 2020 CAMA Company Registration Requirements: How CAMA 2020 Applies:
Finally, this article on 2020 CAMA Company Registration Requirements: How CAMA 2020 Applies; was put together by ur team of corporate professionals @ Complete Full Marks Consultants Ltd. It’s in fact part of our efforts to educate and guide members of the public on changes brought about by the introduction of 2020 CAMA. In fact, these changes has led to procedural changes also at CAC Nigeria. The changes affect how you go about your pre-incorporation and post incorporation needs; such as change of names, alteration of the MEMART, rendering annual returns etc. for the following business forms; Private company limited by shares, private company limited by guarantee; public company, and incorporated trustee (NGOs).
We wish to state that our corporate services cover all of these business forms; and our services take care of your pre-incorporation and post incorporation needs.
Our other entrepreneurship development and support services:
Furthermore, we render other business development and support services in a very extensive manner. In fact, as a firm of Chartered Accountants, there are a lot we can do for you in addition to what we have narrated above. We take care of your business start-up processes including generation of business ideas, business planning and feasibility analysis and entrepreneurship trainings. Recently, we’re involved in the CBN/NIRSAL MFB/BOI loan scheme trainings. In fact, by this we have been able to help several businesses find fund for their business take-off or expansion. We also have in place this website which you can freely access to study, reference in your writings, copy and bookmark for further references.
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Founder/Managing Partner of Complete Full Marks Consultants Ltd. An Economist turned Chattered Accountant and Tax Practitioner with over 37 years of industrial experience.