The Companies and Allied Matters Act (CAMA) 2020 transformed Nigeria’s business landscape by introducing reforms to boost transparency, simplify processes, and enhance the ease of doing business. A key area impacted is the registration and regulation of business names—a popular choice for sole proprietors and partnerships.
Overview of Business Names in Nigeria Under CAMA 2020
In this article, we’ll break down what a business name is, how CAMA 2020 governs it, the registration process, and its benefits, equipping you with everything you need to get started.
What Is a Business Name?
A business name is the simplest and most affordable business structure in Nigeria, used primarily by sole proprietorships (one owner) and general partnerships (multiple owners). It’s the trading identity under which you operate, but unlike a company, it doesn’t have a separate legal personality. This means the owner(s) and the business are legally one entity, with personal liability for all debts and obligations.
Under CAMA 2020, business names remain a go-to option for small and medium enterprises (SMEs)—think petty traders, artisans, or startups—due to their low setup costs and minimal regulatory demands.
Business Names Under CAMA 2020
CAMA 2020, enacted on August 7, 2020, modernized the framework originally set by CAMA 1990. Here’s how it defines and regulates business names:
Sole Proprietorship
- Ownership: One individual—natural (Section 814(1)(c)) or artificial (Section 814(1)(a)).
- Liability: The owner bears unlimited personal liability for business debts.
- Advantages: Easy setup, full control, and fast decision-making.
- Drawbacks: Not suited for high-risk industries; personal assets are at risk.
General Partnership
- Ownership: Two or more individuals (natural or legal persons) sharing responsibilities.
- Liability: All partners have unlimited liability, jointly responsible for debts.
- Key Rule: Partnerships exceeding 20 members must incorporate as a company (Section 19(1)).
- Flexibility: Can be formed orally or in writing, with profits split per agreement.
General Partnership vs. Sole Proprietorship
| Feature | General Partnership | Sole Proprietorship |
|---|---|---|
| Ownership | Two or more people | One individual |
| Liability | Shared unlimited liability | Full personal liability |
| Decision-Making | Joint decisions | Owner-driven |
| Profit Sharing | Based on agreement | Owner keeps all profits |
| Continuity | Can dissolve with partner exit | Ends with owner |
| Registration | Required with CAC | Required with CAC |
| Management | Shared responsibilities | Owner manages |
| Taxation | Partners taxed individually | Owner taxed personally |
Key Reforms Under CAMA 2020 for Business Names
1. Online Registration
The CAC now offers a fully digital process through its e-registration portal. From name reservation to certificate issuance, everything is done online.
Benefit: Faster processing and no need for physical visits.
2. Simplified Documentation
Under the new Act, registering a business name requires fewer documents. You’ll need:
Proposed business name
Nature of the business
Full name and contact details of owner(s)
Valid ID (NIN, Voter’s Card, Driver’s License, Passport)
Passport photograph
3. Prevention of Duplicate Names
Names that resemble or replicate existing business names, companies, or trademarks are automatically rejected by the CAC’s system.
Benefit: Protects your brand identity and avoids legal disputes.
4. Exemptions from Registration
You may not need to register a business name if you operate:
Under your full legal name (e.g., "John Doe Enterprises")
In a partnership where all partners use their full names
As a government agency or statutory body
5. Cancellation & Penalties
CAC can cancel a registered business name if it’s found to be deceptive, misleading, or in violation of CAMA’s provisions.
Penalties: Operating without a registered name may lead to fines, business closure, or legal sanctions.
Features of a Business Name Under CAMA 2020
A business name has the same features or characteristics as a sole proprietorship or a partnership. Some of these features include:
- Simple and Fast Registration
Registering a business name is straightforward and quick (Section 815 of CAMA). No need to draft documents like the Memorandum and Articles of Association or pay stamp duties. Only Form CAC/BN 1 is required, and approval can typically take less than a month, depending on the application. - Certificate of Registration
Once approved, the business name is entered into the Register of Business Names (Section 816 of CAMA) and a Certificate of Registration is issued, bearing a unique identification number (e.g., BN111222). This certificate must be displayed at the business's principal place, with penalties for non-compliance. - No Corporate Personality
A business name does not have a separate legal identity from its owners (proprietors). Assets and liabilities are tied to the owners, who are personally liable. Unlike incorporated entities, a business name cannot own property or enter legal contracts in its own name. - Fewer Regulations
Business name proprietors face fewer regulatory requirements compared to other business entities. There is no need for a board of directors or a company secretary, and no corporate governance rules like those for companies. - Filing Returns
Business names must file annual returns (Form CAC/BN 6) to keep their details current with the CAC (Section 822 of CAMA). Failure to file on time results in penalties. The return must include the business's financial statement for the previous year. - Limitation of Rights for Failure to File Returns
If returns are not filed, the proprietor cannot enforce contracts made during the default period. However, a High Court can restore these rights if the default was accidental or justified (Section 821 of CAMA). - Tax Obligations
All businesses, including registered and unregistered, must pay taxes, including VAT, personal income tax, and other relevant levies. - Limited Usage
Certain industries (e.g., oil and gas, banking, food and drugs) require incorporation as a company, not just a business name. The CAC may query such applications if the business falls within these restricted sectors. - Official Document Requirements
Proprietors must include their names and the business registration number on official documents. Non-compliance leads to penalties. - Easy to Unregister
If a business name ceases operations, the proprietor must notify the CAC, after which the name is removed from the Register. Failure to notify may result in penalties (Section 819(5) of CAMA). - Business Name vs. Trademark
A business name is not the same as a trademark. While a business name can be part of a brand, it doesn’t automatically protect intellectual property like a trademark does. Violations of business name usage may lead to a claim for passing off, but trademark infringement is easier to prove.
Why CAMA 2020 Matters
CAMA 2020 reflects Nigeria’s commitment to enhancing the ease of doing business. By modernizing the registration process and reducing bureaucratic hurdles, the Act not only protects consumers from fraud but also promotes entrepreneurship.
A registered business name provides legal backing, facilitates smoother transactions, and creates opportunities for growth—making it a strategic asset for any entrepreneur.
Conclusion
Understanding Business Names under CAMA 2020 is crucial for anyone looking to start or formalize a business in Nigeria. While the process is straightforward and cost‑effective, it comes with important legal implications that protect both the business owner and the public. Whether you operate as a sole proprietor or in a partnership, registering your business name provides credibility, legal protection, and a competitive edge.
For professional assistance and seamless registration, consider partnering with SplashDict. Our CAC‑accredited experts ensure your documentation is accurate, your application is processed swiftly, and you stay compliant with all regulatory requirements.
Register Your Business Name in Nigeria with Ease
Here’s how SplashDict’s CAC-accredited experts assist you:
