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.

Here are the requirements for Incorporating a Private Limited Company in Nigeria:

Proposed Company Names: At least two (2) options (1st choice and alternative).
Business Objectives: Description of the company's nature and objectives.
MEMART: Memorandum and Articles of Association outlining company structure and regulations (We can provide this for free).
Share Subscribers: Details of shareholders - Minimum of 1 and a maximum of 50.
Directors: Personal data of proposed director(s).
Secretary: Personal data of secretary (Optional).
Share Capital: Minimum authorized share capital of ₦100,000.
Identification: Valid ID for directors and shareholders.
Registered Office Address: Proposed company office location.

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

Name Search and reservation: 6 - 24 hours from submission.
Grant of Certificate of Incorporation: 24 -96 Hours from filing.
Total time: Approximately 2 - 10 working days.

Limited liability protection
Separate legal entity
Flexibility in ownership structure
Access to funding
Ease of ownership transfer
Brand protection
Perpetual existence
Tax exemptions (for eligible businesses)

You need at least one shareholder and one director to start a Private Limited Company. The same person can be both the sole shareholder and director.

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.

Minimum Share Capital is the least capital base of a company as required by the Law. The Share Capital of a company is the capital base of such company, it does not mean that the company must have such fund (share Capital) in their account it simply means that the liability of such company is limited to that share capital.

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)

Any individual above the age of 18 can be a director, provided they are not disqualified under Nigerian law. At least one director must be a natural person.

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.

While a Private Limited Company doesn't need to appoint a company secretary, it is recommended for managing statutory obligations.

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.

Apart from resonating with your brand, your business name must comply with the CAC’s naming guidelines, which are in place to make sure business names are special, fitting, and don’t infringe on someone else’s trademark.

Here are some of CAC’s naming guidelines:

• Your business name has to stand out and be different from other business names or trademarks.
• Your business name should be related to what your business does; It shouldn’t mislead or confuse folks. For example, your business name should not imply you own a makeup studio if you are running a fashion store.
• Your business name must not be offensive, rude, discriminatory, or go against what’s considered good behavior in society.
• Your business name must follow all the laws and regulations in Nigeria. Don’t pick a name that suggests anything illegal or unethical. Also, don’t choose names that could trick or fool the public.
• Certain words are off-limits unless you get special permission. For example, words like “Federal,” “National,” and “Government” are reserved and need clearance from the right authorities before you can use them in your business name