Nigeria is one of the up and coming hubs of business. With the increasing middle-class population and congenial macroeconomic framework, Nigeria is attracting entrepreneurs and businesspeople from all over the world. On witnessing the potential of the country, the government of the country is using several strategies to attract both tourist and investors and tourism is treated as the preferred sector.
The government is mainly looking for people to invest in the country and one of the best ways to do so is the formation of a company in Nigeria. There are various types of companies in Nigeria, one of them being Company Limited by Guarantee.
What is Company Limited by Guarantee?
A company limited by guarantee is also known as a Guarantee Company. In such a company there are no shareholders. Members called Guarantor instead owns the company. These guarantors are obliged to pay a certain sum of money in the case the company is being wound up. The liability of the members is limited by the memorandum of association and in the event of winding up of the company, they require being liable to take care of the amount contributed in the company.
Such business structure is generally viable for non-profit organisations, and in this business structure, any profits earned are reinvested into the company to enhance the workings of the entity. Such type of company has a separate legal entity and can carry out various activities in the name of the business such as borrowing credit, employing human resource, buying or selling of property, etc.
A company which is limited by guarantee should not be incorporated or should not carry out its business activities to make profits which could be then circulated among the various members.
Features of Guarantee Company in Nigeria
Any number of guarantor or directors is allowed to be a part of a company limited by guarantee. A minimum of one director and one guarantor are mandatory for the establishment of the company. It is also possible that the same person handles the mantle of both a guarantor and a director.
A Company Limited by Guarantee is typically set up for non-profit purposes. Any profit generated by the company is reinvested and used for promoting its non-profit activities.
A Company Limited by Guarantee is separate from its owner and is considered as a unique legal entity. The approach signifies that the company is deemed to be responsible for its debts it has amassed.
Since this business structure would hold the company responsible for any of the debt taken by the company, the personal assets of the owner/shareholder are protected. They need to pay the amount as mentioned in the guarantee and that too only in the event of the company’s insolvency.
A Company Limited by Guarantee must include the suffix ‘’limited’’ in its name to invoke a feeling of trust among the clients.
Requirements to Set Up a Guarantee Company in Nigeria
- Certificate from the CAC, Nigeria is stating that the chosen name is available for use and also a receipt stating that the name has been reserved.
- Memorandum of Association and Articles of Association
- All the completed Statutory Forms
- Receipt of Payment for the Stamp Duty to Federal Board of Inland Revenue
- Receipt of Payment for the filing fees
- The consent from the Attorney-General of the Federal Republic of Nigeria
Procedure to Register a Guarantee Company in Nigeria
- Check for availability of the chosen name in the online portal of Corporate Affairs Commission (CAC). Upon finding the availability, reserve the said name.
- Fill the CAC1.1 Form Online using the Company Registration Portal
- Pay the appropriate Stamp duty fee to Federal Board of Inland Revenue Service and also pay the required filing fee to the Corporate Affairs Commission (CAC)
- After filling up the CAC1.1 form, it is necessary to scan all the required documents such as:
- Memorandum of Association and Article of Association (MART for short)
- Any recognised form of identification for the directors and Secretary
- After scanning the above documents, they should be uploaded for processing.
- After all the documents have been scanned and uploaded, the Commission must obtain approval of the Attorney General of the Federation before the registering the Company Limited by Guarantee
The setting up of a guarantee company would require a lot of knowledge of the business environment of Nigeria and a deep understanding of the company registration procedure. A business setup consultant would handle all the methods of setting up the company and will leave you free to focus on the other important matters.
Business Setup Worldwide will help you to set up your business in Nigeria and will provide you with professional and competent advice which would help your business attain great success. Feel free to contact us today and avail these services.