A Private Limited Company offers legal protection for its shareholders but can be a bit restrictive in the ownership. It is a separate legal entity in its own right and is considered separate from its owners and shareholders. Due to the simplicity of this structure and the benefits of the company, it is one of the most common forms of registered business in Nigeria. In this type of business structure, the personal possessions of the shareholder are considered as separate from the company and the risk of the shareholders is minimized to the point of the amount of money invested by them.
The most common types of restrictions which are faced by a private limited company are:
- The sale, purchase or transfer of shares cannot be done by the owner of the said shares before offering the other owner to buy the shares.
- Shareholders are not allowed to offer their part of the company’s shares to the general public over any stock exchange
- The number of shareholders of a company must not go above a certain figure which is fixed previously. This number is usually 50.
Conditions to Incorporate PLC in Nigeria
To register a company in Nigeria, there are certain requirements which are to be followed are:
- The name of your company should not be exactly identical to the name of any other company currently being held in the registry of the Corporate Affairs Commission, Nigeria
- The total members in a private limited company should not be more than 50. This does not include the legal employees of the company.
- During the incorporation of the company, a minimum of 25% of the total shares should be allocated.
- A minimum of two people who are above the age of 18 must be a part of the article of association and the memorandum of associations.
- The company should keep an office in Nigeria which should be registered beforehand.
- A minimum of N10,000 should be authorised as the share capital of the company
Documents Required for Setting up a PLC in Nigeria
According to The Corporate Affair Commission, which is the regulating authority with respect to the formation of the companies in Nigeria, has mandated certain documents to be kept ready for a quick and easy formation of a company such as:
1. Any form of Identification such as
- National ID
- Driver’s License
- Voters Card
- International Passport of the Directors and Shareholders
2. Proficiency Certificate (if the business is a consultancy or hospital)
3. Note of name Reservation from CAC, Nigeria
4. Receipt of payment from CAC
5. Stamp Duty Certificate from FIRS
6. Residence Permit (for Foreigner shareholders)
Procedure to Register a Private Limited Company in Nigeria
1. The first step is to submit a name which has been decided for the company to the CAC. According to the availability, legality and similarity to any other company name, the government officials would take decisions to approve or deny the said name.
2. The complete information regarding the directors of the company must be provided such as Full name, Residential Address, Age, Nationality, Valid identifications documents, etc. There can be a maximum of 50 private directors and should not be more than 18 years of age.
3. The shareholders of the company become a part of the memorandum of association and articles of association and are allocated shares in the company. The shareholder of a company can also double as the directors of the company.
4. Appointing a Company Secretary is now a legal mandate for every Nigerian company. No formal qualification is required to be a company secretary. The Secretary of the company must be able to perform certain duties such as:
- Maintaining the Statutory Registers
- Acting as a bridge between the company and other relevant government agencies
- Making the members and auditors of meetings to be held
5. To setup a Private Limited Company, they must have a Nigerian business address. It is a very important requirement for a company and cannot be ignored.
6. As long as a business is legal, any form of business can be carried out in Nigeria. In case the company is engaged in specialist services (Consultancy, Hospitals, Media and Advertising, etc.), the directors of the company are required to provide a Certificate of a Trade Association, an Academic Certificate or both.
7. A photocopy of Identification of all the directors is required which comprises of the National ID card, Data Page of your National Passport, Voter’s Card or Driver’s License.
8. The minimum limit of the share capital of a company is N 10,000. A company with foreign ownership must have a share capital of at least N10 million and a minimum of 25% of the authorized share capital must be subscribed and paid for.
9. The Memorandum of Understanding and Articles of Association is drafted. IT is a legal document containing all the particulars of the shareholders along with the shares allotted to them. It states the business objectives of the company and also the framework on which the company intends to run its business.
10. Finally, the total fees of the Stamp Duty and the fees payable to the Corporate Affairs Commission are paid. These are dependent on the complete capital of the business.
The formation of a Private Liability Company may look easy but may turn into a complex and perplexing procedure for an entrepreneur trying to set up his business in Nigeria for the first time. If there is even a small mistake, there may be grievous repercussions for the company.
We at Business Setup Worldwide can help you with the process of formation of a company in Nigeria and would provide assistance at every step of the way. Our experienced advisors will provide you with professional and realistic advice and will also provide a guideline for the future of the company. For any query about the various services we provide do contact us today – we’d be happy to help.