Registering a Private Company Limited by Shares (LTD) in Nigeria involves meeting specific requirements set forth by the Corporate Affairs Commission (CAC). These requirements are designed to ensure that companies are formed and operated in compliance with Nigerian law.
Legal Requirements for Private Limited Company Registration
This article outlines the key requirements for registering an LTD in Nigeria, as per the Companies and Allied Matters Act (CAMA) 2020.
Understanding Private Company Limited by Shares (LTD)?
Under section 18 of the Companies and Allied Matters Act 2020 (“CAMA”), one or more shareholders can form a small company limited by shares. A company is small if, amongst others, the turnover is less than N25,000,000 and it has no foreigner or government corporation as a shareholder.
So, unless banks, mortgage institutions, bureau de change, etc., require approval in principle from the Central Bank of Nigeria (“CBN”) before they can be registered, any other company can be registered without any delay.
The CAMA 2020 requires a company to have at least two (2) directors though small companies may have one (1) director according to section 271 of CAMA 2020. Shareholders could be individuals, companies, or LLPs, but only individuals can become directors of a company.
A director need not be a shareholder of the company and shareholders need not necessarily be directors as well. Shareholders / Members are the persons holding shares in a company.
Directors of the company are responsible for the management of the company affairs and legal compliance under various laws. Directors are normally appointed by shareholders.
Basic Features of a Private Company Limited by Shares
This table reflects the regulatory requirements for Private Limited Companies in Nigeria under the Companies and Allied Matters Act (CAMA) 2020.
| Characteristics | Description |
|---|---|
| Shareholders | Minimum number of shareholder(s) – 1 Maximum number of shareholders – 50 |
| Board of Directors | Minimum number of director(s) – 1 |
| Authorized Share Capital | Minimum share capital of ₦100,000 (Private Limited Company) |
| Paid-Up Capital | Paid-up capital required at incorporation (must not be less than 25% of the authorized share capital) |
| Board Meetings | Minimum of 4 board meetings per year (quarterly) |
| Annual General Meetings | Must hold at least one AGM annually within 15 months of the previous AGM |
| Taxation | Subject to Companies Income Tax (CIT) at 30% on profits exceeding ₦100 million; CIT rate is reduced to 20% for companies with profits between ₦25-₦100 million. Companies below ₦25 million are exempt from CIT. |
| Naming Requirements | The company name must be unique, must include "Limited" or "Ltd," and cannot conflict with existing names. It must comply with CAC's guidelines on business names. |
| Forms Required For Registration | Form CAC1.1 (Application for Registration), Form CAC2.5 (Particulars of Directors), Form CAC2.3 (Particulars of Shareholders), and other incorporation forms as required by CAC. |
| Public Disclosure | Basic information on directors, shareholders, and the company’s address must be submitted to the Corporate Affairs Commission (CAC) and is publicly accessible. |
| Transfer of Shares | Shares are not freely transferable; the transfer is restricted and subject to approval by existing shareholders. |
| Financial Reporting | Must file annual financial statements with the CAC, even if the company is inactive. |
| Employment Obligations | Must register for the Pay-As-You-Earn (PAYE) system for income tax and comply with National Pension Commission (PENCOM) regulations if there are employees. |
Key Requirements for Registration
These are the essential requirements for registering a Private Company Limited by Shares (LTD) in Nigeria.
| Requirement | Description |
|---|---|
| Number of Directors | A private limited company can have a minimum of 1 director, who must be at least 18 years old and of sound mind. |
| Number of Shareholders | A private limited company can have a minimum of 1 shareholder and a maximum of 50 shareholders. |
| Director and Shareholder | The same person can be both the sole director and the sole shareholder of the company. |
| Registered Address | A valid Nigerian address must be provided as the company’s registered office address. |
| Share Capital | The minimum issued share capital for a private limited company is ₦100,000. |
| Memorandum and Articles of Association | The company must prepare and submit the Memorandum and Articles of Association, outlining the company’s objectives and governance structure. |
| Identification Documents | All directors and shareholders must provide valid means of identification, such as a national ID, international passport, or driver's license. |
| Consent for Use of Name | The proposed company name must be approved by the Corporate Affairs Commission (CAC), ensuring it is unique and not similar to existing registered entities. |
| Tax Identification Number (TIN) | The company must register for a Tax Identification Number (TIN) with the Federal Inland Revenue Service (FIRS). |
| Annual Filings | The company is required to file annual returns and financial statements with the Corporate Affairs Commission (CAC) to maintain compliance. |
| CAC Registration Forms | Forms such as CAC1.1 (Application for Registration) must be filled and submitted to the Corporate Affairs Commission (CAC) to complete the registration process. |
Private Company Limited by Shares (LTD) Incorporation Requirements
Every business type has its own set of requirements before it is incorporated. The very minimum requirements of private limited company in Nigeria are:
1. Company Name
The first step in registering your LTD is choosing a unique company name. Requirements include:
- The name must end with "Limited" or "Ltd."
- It must be unique and not already in use by another company
- The name should not be misleading or offensive
- Certain words (like "Federal," "National," or "Government") require special approval
Tip: Conduct a name search and reserve your chosen name with the Corporate Affairs Commission (CAC) before proceeding with registration.
2. Registered Office Address
Every company must have a registered office address in Nigeria. This address will be used for official communications and must be a physical location, not a P.O. Box.
3. Shareholders
An LTD must have at least ONE shareholder, with a maximum of 50.
- Shareholders can be individuals or corporate entities
- At least one shareholder must be 18 years or older
- Non-Nigerian citizens can be shareholders
4. Directors
CAMA 2020 requires at least one director for an LTD.
- Directors must be at least 18 years old
- At least one director must be ordinarily resident in Nigeria
- Details of directors (including name, address, occupation, and nationality) must be provided
5. Company Secretary
While CAMA 2020 made the appointment of a company secretary optional for small companies, it's still recommended. If appointed, the secretary must be qualified as per CAMA requirements.
6. Share Capital
The minimum authorized share capital for a Private Limited Company in Nigeria is ₦100,000. However, depending on the business type and industry requirements, higher share capital may be necessary. This share capital must be divided into shares and allotted to shareholders.
7. Memorandum and Articles of Association
The Memorandum of Association (MOA) outlines the company's objectives and scope of operations, while the Articles of Association (AOA) set out the internal rules and regulations for the company's management and governance.
These documents must be drafted and submitted to the CAC as part of the incorporation process.
8. Identification and Consent of Directors, Shareholders, and Secretary
Every director and shareholder must provide valid identification documents, such as International Passport, National Identity Card, Driver’s License, and Voter’s Card.
If a company secretary is being appointed, their details and consent must also be provided. However, under CAMA 2020, small companies may not be required to appoint a company secretary.
9. Appointment of Auditor
According to CAMA 2020, a Private Limited Company must appoint an auditor to review its financial records annually. However, small companies are exempt from this requirement unless the shareholders deem it necessary.
10. Registration Fees
Applicants are required to pay registration fees, which vary based on the company's size and type. This includes:
- Filing fees for registration
- Stamp duty on share capital
11. Tax Registration
After incorporation, the company must register for taxes, including:
- Tax Identification Number (TIN)
- Value Added Tax (VAT)
- Employee taxes (PAYE)
12. Filing of Annual Returns
Private companies are required to file annual returns with the CAC to ensure they remain compliant with Nigerian laws. This must be done every year within a specified period after the financial year ends.
Additional Requirements for Foreign Investors
Foreign investors looking to register a Private Limited Company in Nigeria must comply with additional requirements, which include:
- Business Permit: Foreign-owned companies must obtain a business permit from the Ministry of Interior.
- Expatriate Quota: If the company plans to employ expatriates, an expatriate quota must be approved, which permits foreign nationals to work in Nigeria.
- Local Partner(s): While 100% foreign ownership is allowed, partnering with local investors or stakeholders may be advantageous for navigating local business landscapes.
Required Documents and Particulars for Registering a Private Company in Nigeria
When registering a Private Company Limited by Shares (LTD) in Nigeria, certain documents and particulars must be provided to the Corporate Affairs Commission (CAC) to complete the registration process.
Below is a list of the key documents and particulars required:
- Application for Reservation of Name: The proposed name of the company must be reserved with the CAC. You need to submit the "Application for Reservation of Name" form, which should contain at least two alternative names and the purpose of the company.
- Memorandum and Articles of Association (MEMART): This document outlines the company's operations and structure. It must include the company name, registered office address, company objectives, share capital details, a liability statement, subscriber details, and the rules governing the company's internal management.
- CAC 1.1 Form (Application for Company Registration): The CAC 1.1 form contains key details of the proposed company, such as the proposed name, registered office address, email and phone number, business objectives, share capital details, and the list of directors.
- Particulars of Directors (CAC 7A Form): For each director of the company, the CAC 7A form must be submitted, providing full names, former names (if applicable), residential addresses, business occupations, nationality, and state of origin (if Nigerian), other directorships, and dates of birth.
- Statement of Share Capital and Return of Allotment (CAC 2A Form): The CAC 2A form is used to disclose the authorized share capital, issued share capital, and the details of share allotments made to subscribers.
- Particulars of Shareholders: Information on each shareholder must be provided, including their full name, residential or registered address, occupation or nature of business, and the number and class of shares taken.
- Identification Documents: For all directors and shareholders, copies of valid identification (such as an international passport, national ID, or driver’s license) must be submitted, along with a recent passport photograph.
- Particulars of Company Secretary (if appointed): If the company appoints a secretary, you need to submit their full name, residential or registered address, email, phone number, and occupation.
- Notice of Registered Address (CAC 3 Form): The company must provide its registered office address using the CAC 3 form.
- Declaration of Compliance (CAC 4 Form): A legal practitioner or a person named in the memorandum as a director or secretary must sign the CAC 4 form, declaring compliance with the CAC registration requirements.
- Evidence of Payment: Proof of payment for the name reservation and registration fees (based on the company’s share capital) must be submitted.
- Particulars of Persons with Significant Control (CAC 2.1 Form): The CAC 2.1 form is required to disclose the particulars of individuals or entities that have significant control over the company.
- Consent Forms: Each director must sign a consent form to act as a director, and if a company secretary is appointed, they must also provide consent to act as the secretary.
- Additional Requirements for Foreign Nationals: If any director or shareholder is a foreign national, a copy of the data page of their international passport, as well as their resident permit or business permit, must be submitted.
- Requirements for Corporate Shareholders/Directors: In cases where a corporate entity is a shareholder or director, the company must submit its certificate of incorporation, board resolution authorizing the investment or directorship, and the particulars of the corporate entity’s directors.
- Attestation Page: The attestation page must be signed by the applicant or their agent, confirming the accuracy and authenticity of the information provided.
These are the critical documents and particulars required for registering a Private Company Limited by Shares in Nigeria. Accurate and complete submission of these documents will facilitate smooth registration with the Corporate Affairs Commission (CAC).
Timeline for Completing the Incorporation of a Private Company Limited by Shares in Nigeria
The process of incorporating a Private Company Limited by Shares (LTD) in Nigeria with the Corporate Affairs Commission (CAC) typically follows these key steps and timelines:
- Name Reservation (24 – 48 hours):
The first step is reserving the company name with the CAC. The name must be unique and must not conflict with any existing company names. Once the name is approved, it is reserved for 60 days. - Filing of Incorporation Documents with CAC (24 – 48 hours):
Once all documents are prepared, they are submitted to the CAC for processing. This can be done either online or at a CAC office. The submission includes the application for company registration, details of directors, shareholders, share capital, and other statutory forms. - CAC Review and Approval (2 – 7 days):
The CAC will review the submitted documents to ensure compliance with the requirements for company registration. If there are any errors or missing information, the CAC may request corrections, which could add some time to the process. - Issuance of Certificate of Incorporation (1 – 2 days):
Once the CAC approves the application, the Certificate of Incorporation, along with the Certified True Copy of the Memorandum and Articles of Association, will be issued. This signifies the successful incorporation of the company.
Total Estimated Time: 3 – 10 working days
The entire incorporation process typically takes between 3 to 10 working days, depending on the speed of document preparation, the efficiency of CAC processing, and whether all documents are properly completed. In some cases, the process can take longer if additional information or corrections are required by the CAC.
Mandatory Regulatory Registration and Filings for a Registered Company in Nigeria
Registered companies in Nigeria are required to adhere to several mandatory regulatory registrations and filings, regardless of their sector or nature of business. Below are the key obligations:
- Corporate Affairs Commission (CAC): Companies must file annual returns within 60 days of their anniversary date, which include details about the company’s financial status and any changes in directors or shareholders.
Additionally, audited financial statements must be prepared annually in compliance with International Financial Reporting Standards (IFRS).
- Federal Inland Revenue Service (FIRS): Companies must register with FIRS to handle all federal taxes, including:
- Company Income Tax (CIT):
- 0% for small companies with a turnover of less than N25,000,000
- 20% for medium companies (N25,000,000 to N100,000,000)
- 30% for large companies (over N100,000,000)
- Returns due within 18 months of registration or 6 months after the end of the accounting period.
- Value Added Tax (VAT): Set at 7.5% for goods and services rendered.
- Education Tax: 2% of the company’s assessable profit.
- National Information Technology Development Levy: 1% of profit before tax for companies with turnover exceeding N25,000,000.
- Other applicable taxes may include Petroleum Profit Tax, Capital Gains Tax, and Stamp Duty.
- Company Income Tax (CIT):
- Special Control Unit for Money Laundering (SCUML): Companies must report suspicious transactions periodically.
- Industrial Trust Fund (ITF): Companies are required to contribute 1% of their annual payroll for industrial training development.
- National Social Insurance Trust Fund: A contribution of 1% of the employee's monthly payroll is mandatory.
- Local Government Council: Companies must pay Television and Radio License Fees, typically N250,000 annually for larger firms in urban areas.
- State Inland Revenue Service: Companies must remit personal income tax for employees.
- Pension Fund Administrator (PFA): Employers with five or more employees must register with a licensed PFA to manage mandatory monthly pension contributions. The employer contributes 10% and the employee contributes 8% of the monthly emolument. Non-compliance incurs a penalty of 2% of the unpaid amount.
- National Health Insurance Scheme (NHIS): Contributions include 10% by the employer and 5% by the employee of the monthly basic salary.
- National Housing Fund (NHF): Employers must register with NHF and deduct 2.5% of the employee’s monthly basic salary.
- Employee Compensation Insurance: Employers are mandated to register for insurance covering work-related injuries under the Employee Compensation Act.
- Company Secretary: Depending on the company structure, a secretary may be required to ensure compliance with legal obligations.
- Regulatory Filings: Companies in certain sectors may need to obtain additional licenses from regulatory bodies, such as the Central Bank of Nigeria or NAFDAC.
- Maintenance of Statutory Books: Companies must keep accurate records, including registers of members and directors, as well as minutes of meetings.
- Notice of Changes: Any structural changes, such as changes in directorship or registered office address, must be reported to the CAC.
Failure to comply with these requirements can result in penalties, fines, and potential legal repercussions. Regular compliance is crucial for maintaining good standing and credibility in Nigeria’s business environment.
Benefits of a Private Company Limited by Shares
Incorporating as a Private Limited Company offers several key advantages:
Conclusion
A Private Company Limited by Shares offers a balance of limited liability, professional credibility, and flexibility in ownership and management.
While it comes with increased regulatory responsibilities compared to simpler business structures, it provides a solid foundation for businesses looking to grow and attract investment while maintaining control over ownership.
Register your Private Company Limited by Shares (LTD) in Nigeria
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