The Companies and Allied Matters Act (CAMA) 2020 revolutionized Nigeria’s business landscape by introducing key reforms to enhance ease of doing business, promote transparency, and streamline business registration processes. One of the most notable areas impacted by this reform is the registration and regulation of Business Names.
Business Names Under the Companies and Allied Matters Act (CAMA) 2020
If you’re considering starting a business in Nigeria, understanding how CAMA 2020 affects business name registration is crucial. In this blog, we’ll explore the changes, requirements, and benefits of registering a business name under the new CAMA framework.
What is a Business Name?
The Business Name is the most common business structure in Nigeria due to its simplicity and affordability. It is primarily used to register two types of business entities: Sole Proprietorship and General Partnership.
A Business Name serves as the trading identity under which individuals, sole proprietors, or partnerships conduct their business operations. Unlike a company, it does not create a separate legal entity. Instead, the business and its owner(s) are considered the same in the eyes of the law.
In essence, a business name is how the business presents itself to the public and engages with customers. However, because it lacks a distinct legal personality, the owner(s) are personally responsible for all business obligations and liabilities, making it essential for them to manage risks carefully.
Sole proprietorship Business Name
A sole proprietorship is a business which is owned by one individual. This individual can be a natural person (Section 814(1)(c) of CAMA) or an artificial person (Section 814(1)(a) of CAMA).
This type of business is not different from its owner. In other words, the assets and liabilities of the business are also assets and liabilities of the owner. A sole proprietorship is employed by small and medium enterprises (such as petty traders, artisans, craftsmen, etc.) where the volume of investment and risks are minimal.
A core advantage of the business name is that it is easy to set up and decision-making is faster. A main disadvantage, however, is that it cannot be used for certain types of enterprises and the owner is personally liable for the debts and obligations of the business.
General Partnership Business Name
A General Partnership involves two or more individuals joining forces to run a business. Partnerships can be formed either orally or in writing, providing flexibility in structure. Just like a Sole Proprietorship, the partners share personal liability for the business’s debts.
In a partnership, each partner has unlimited liability. This means that all partners are equally responsible for business obligations, regardless of who incurred them. General Partnerships can include both natural and legal persons (corporations, etc.).
A partnership with more than 20 partners must be incorporated as a company, per Section 19(1) of CAMA. Foreigners can establish a General Partnership or Sole Proprietorship in Nigeria, provided they meet specific requirements.
General Partnership vs. Sole Proprietorship
Key Reforms to Business Name Registration Under CAMA 2020
CAMA 2020 introduced several reforms that impact the registration, operation, and regulation of business names in Nigeria. Below are some of the significant changes:
1. Introduction of Online Registration
The Corporate Affairs Commission (CAC) now offers an entirely digital registration process. Entrepreneurs can reserve, register, and manage their business names online through the CAC’s e-registration portal.
Benefit:
This shift eliminates the need for physical visits to CAC offices, making the process faster and more convenient.
2. Simplified Registration Process
The new Act simplifies the steps required to register a business name. Applicants now need fewer documents and can complete the process in a shorter time.
Key Requirements for Business Name Registration:
- Proposed business name.
- Nature of the business.
- Owner’s full name, address, email, and phone number.
- Means of identification (National ID, Voter's Card, Driver’s License, or International Passport).
- Passport-sized photograph of the owner.
3. Elimination of Duplicates
CAMA 2020 introduces stricter checks to prevent the registration of duplicate or misleading business names. Names that are identical or too similar to existing names, companies, or trademarks are automatically rejected.
Benefit:
This ensures uniqueness and reduces conflicts related to intellectual property or brand identity.
4. Exemptions from Business Name Registration
Certain entities are exempt from registering a business name under CAMA 2020. These include:
- Individuals using their full legal names for the business (e.g., “John Doe Enterprises”).
- Partnerships using the full names of all partners.
- Government agencies and statutory corporations.
5. Business Name Cancellation and Penalties
The CAC has the authority to cancel the registration of a business name if it violates CAMA 2020 provisions. This includes cases where the name is found to be fraudulent, deceptive, or conflicting with public interest.
Penalties:
Failure to register a business name or operating under an unregistered name can lead to fines, legal sanctions, or business closure.
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.
Benefits of Registering a Business Name in Nigeria
- Legal Recognition
A registered business name gives your business legal recognition, allowing you to operate officially and enter into contracts. - Access to Business Banking
Banks require proof of registration before opening a business account. With a registered name, you can access financial services for your business operations. - Enhanced Credibility
Customers and partners are more likely to trust a business that is officially registered with the CAC. It signals legitimacy and commitment to compliance. - Protection of Business Identity
Registration protects your business name from being used by others, securing your brand identity in the marketplace. - Participation in Government Contracts and Grants
Government agencies and large organizations often require businesses to be registered before awarding contracts or grants.
How to Register a Business Name in Nigeria
Here’s a step-by-step guide to registering a business name online:
Step 1: Name Reservation
Visit the CAC’s e-registration portal and search for your desired business name to ensure it is available. Once confirmed, reserve the name.
Step 2: Filling the Application
Complete the online application form with details such as the business name, nature of the business, and owner information.
Step 3: Upload Documents
Upload the required documents, including the owner’s means of identification and passport photograph.
Step 4: Payment
Pay the registration fee online through the portal.
Step 5: Approval
Upon submission, the CAC will review your application. If approved, you will receive a Certificate of Business Name Registration.
Maintaining Compliance for Business Names
After registration, business owners must comply with ongoing requirements to maintain their business name, including:
- Annual Returns: Filing annual returns with the CAC to update business information.
- Change of Business Details: Informing the CAC of changes in business address, nature of business, or ownership.
Conclusion
The Companies and Allied Matters Act (CAMA) 2020 has simplified and streamlined the process of registering a business name in Nigeria. Whether you are a small business owner or an entrepreneur starting out, registering a business name under the new CAMA framework is a critical step toward legal recognition, brand protection, and business growth.
By leveraging the reforms introduced under CAMA 2020, you can position your business for success in Nigeria’s evolving business environment. If you need assistance with business name registration, SplashDict offers seamless, professional services to help you navigate the process from start to finish.
Register Business Name in Nigeria
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