Private Limited Company (LTD) Incorporation

In Nigeria, the majority of incorporated businesses are run through private companies limited by shares. A private company limited by shares is a type of company, which has a share capital divided into shares. The value, class, and rights attributable to each share will be set out in the Articles of Association of the Company. The owners of shares are known as shareholders.

Unlike a company limited by guarantee, whilst the company is a going concern, the shareholders usually contribute to the working capital of the company by paying a sum equivalent to the total nominal value of their shares (together with any share premium) to the company. In most private companies limited by shares, this is usually a relatively small sum.

Whilst shares in a private company limited by shares may not be issued at a discount, the Articles of Association of the company may provide that shares must be fully paid or that they may remain partly paid or unpaid prior to an insolvent winding up.

However, upon an insolvent winding up, the shareholders will only have to make a contribution to the liabilities of the company to the extent that the total nominal value of their shares has not been paid to the company.

The majority of the features of a company limited by shares are the same as those of a private company limited by guarantee. It has an independent legal capacity. Accordingly, it can enter into contracts in its own right, own property, and other assets, and employ individuals.

Limited liability simply means debts incurred by the business are the business's own liability and not its directors or shareholders. A limited company is a separate legal entity from its members; if a company incurs debt, it is liable to settle it.

Shareholders are obligated to pay the company the shares they have taken. Once a shareholder fully pays for the share, they need not pay more. So if two shareholders incorporate a company and one takes one share valued at N1 in the company, their sole responsibility as shareholders is to pay N1 each to the company for their shares.

The director will also not incur personal liability because they are considered company agents. However, in specific situations, such as wrongful or fraudulent trading, the court may impose liability on directors despite the general principle of limited liability.

The minimum share capital required for incorporation of a Private Limited Company in Nigeria is ₦100,000.

Minimum share capital is the minimum amount of assets a company must have. The purpose of this capital is to make sure that if a company goes bankrupt or has trouble with its finances, it has enough equity to pay its creditors.

Therefore, various industries have specific minimum share capital requirements that a company must have before incorporating a business or going public.

Below is a comprehensive list of the minimum share capital of some designated Companies:

Private Security Company-10 Million
Lottery- 5 Million
Sports Lottery — 30 Million
Agents of Foreign Airlines- 1 Million
Pension Fund Administrator- 5 Billion
Shipping Company/Agent- 25 Million
Issuing House-200 Million
Broker/Dealer-300 Million
Trustee-300 Million
Fund/Portfolio Manager-150 Million
Agricultural Seed, Productions, Processing, Marketing-10 Million
Stock Broker-200 Million
Stock Dealer-100 Million
Corporate Investment Adviser (Registrar)-150 Million
Corporate Investment Adviser-5 Million
Individual Investment Adviser-2 Million
Underwriter-200 Million
Venture Capital Manager-20 Million
Rating Agency-150 Million
Asset Management (Intangible Assets)-300 Million
Commercial Bank (With Regional Authorization)-10 Billion
Commercial Bank (With National Authorization)-25 Billion
Commercial Bank (With International Authorization)-50 Billion
Merchant Bank-15 Billion
Bureau De Change-35 Million
Payment Solution Services (PSS) (As permissible under Super Agent, PTS and PSSP (combined)- 250 Million
Super Agent (Agent Recruitment Management and other activities as specified in the Regulatory framework for licensing Super Agent in Nigeria)- 50 Million
Payment Service Provider (PSSP) (Payment Processing Gateway and Portal, Payment Solution/Application Development, Merchant Service Aggregation and Collection)- 100 Million
Mobile Money Operation (E-Money issuing, Wallet creation and management, Pool Account Management activities as permissible under Super Agent) — 2 Billion
Switching and Processing (Switching and Card Processing Transaction, Clearing and Settlement Agent Services, Non-bank Acquiring Services activities as permissible under Super Agent, PTSP and PSSP)- 2 Billion
Finance Company- 20 Million
Payment Service Bank-5 Billion
Health Management Organization (HMO) (National)- 400 Million (Paid Up)
Health Management Organization (HMO) (Regional)- 200 Million (Paid Up)
Health Management Organization (HMO) (State)- 100 Million (Paid Up)

Yes, foreigners can own shares in a Nigerian Private Limited Company, but they must comply with the regulations set by the Nigerian Investment Promotion Commission (NIPC) and other relevant bodies.

The registration process timeline varies depending on CAC and processing efficiency. This is the timeline:

Name Search and reservation: 6 - 24 hours from submission.
Grant of Certificate of Registration: 24 -96 Hours from filing.
Total time: Approximately 2 - 7 days.

Yes, a Private Limited Company can be converted into a Public Limited Company by following the legal procedures and meeting the requirements set by the regulatory authorities.