Private Limited Company in Nigeria

A Private Limited Company offers legal protection to its shareholders but may impose restrictions on ownership. A PLC is a separate legal entity distinct from its owners and shareholders. Due to the simplicity of this structure and its associated benefits, it is one of the most common forms of registered businesses in Nigeria.

In a Private Limited Company in Nigeria, the personal possessions of the shareholders are considered separate from the company, and the shareholders' risk is limited to the amount of money they have invested.

Restrictions on a Private Limited Company in Nigeria

The most common types of restrictions which a Private Limited Company in Nigeria faces are:

• The owner cannot sell, purchase, or transfer their shares without first offering them to the other owner(s).
• Shareholders are not allowed to offer their shares in the company to the general public over any stock exchange.
• The number of shareholders in the company should not be more than fifty.

Conditions to Incorporate a PLC in Nigeria

There are certain requirements that you need to follow to register a company in Nigeria:

• The name of your company should not be similar to an already existing organization in Nigeria. Note that the chosen name should not be offensive and hurt the sentiments of the local community. It should also aptly represent your business activities.
• The total number of members in a private limited company should not exceed fifty. The number of members does not include the company's legal employees.
• During the incorporation of the company, the founders should allocate at least 25% of the total shares.
• A minimum of two people who are above the age of eighteen must be a part of the Article of Association (AoA) and the Memorandum of Association (MoA).
• The company must have a registered office in Nigeria.
• The company should authorize a minimum of N10,000 as its share capital.

Procedure to Register a Private Limited Company in Nigeria

The following are the steps to register a Private Limited Company in Nigeria:

Step 1: The first step is to submit the chosen name for the company to the Corporate Affairs Commission (CAC). According to the availability, legality, and similarity of the name, government officials would make a decision.

Step 2: The company should provide the concerned authorities with information such as the directors' full name, residential address, age, nationality, and valid identification documents. There can be a maximum of fifty directors, and they should not be more than eighteen years of age.

Step 3: Prepare the memorandum of association and articles of association and allocate the shares to the shareholders. The shareholders of a company can also double as directors.

Step 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:

1. Maintaining the Statutory Registers
2. Acting as a bridge between the company and other relevant government agencies
3. Hold meetings with the members and auditors

Step 5: To set up a Private Limited Company, you must have a business address. In Nigeria, it is mandatory to have a physical office space.

Step 6: As long as your business is legal, you can conduct any form of operations. In case the company is engaged in specialized services (such as consultancy, healthcare, media, or advertising), the directors are required to provide a certificate from the relevant trade association, an academic certificate, or both.

Step 7: 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.

Step 8: You will now have to draft the Memorandum of Understanding and Articles of Association. 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 operations.

Step 9: Pay the fee for the Stamp Duty and the Corporate Affairs Commission. The fee depends on the capital of the company.

Documents Required for Registering a Private Limited Company in Nigeria

The Corporate Affairs Commission mandates the submission of certain documents for the formation of a company. These are:

1. Identification proof of the directors and shareholders. It can be:

• National ID
• Driver’s license
• Voters card
• International passport

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 foreign shareholders)

The formation of a Private Liability Company is a relatively easy task. Still, it can become a complex and perplexing procedure for an entrepreneur who is not familiar with the legalities of the region. The slightest mistakes can have grievous repercussions for the company.

We at Business Setup Worldwide understand this and are here to help you with the process. Our experienced advisors will provide you with professional and tailored advice that best suits your needs. They will also provide you with guidelines that will help your company thrive. For any query about the various services we provide, contact us today. We’d be happy to help.