Wednesday

How to Register a Company in Nigeria


Why should you register your business?

A country needs to ensure its business registration processes are as straightforward as possible and that the cost of such service is within the means of the average citizen or resident. Where this is not so informal (or ‘black’) markets will automatically develop, as people will trade without formal business registration and without remitting taxes to government. Institutional arrangements & transaction costs affect patterns of business operations. This is true of all markets whether in the United States, Europe or Africa. You can do a random sampling of the very many small shops operating in your neighbourhood to know how many have actually registered their business names - the result may be surprising.

I wanted to start my own company in Nigeria, so I set about trying to register a business name. This brought me to my first hurdle, which was whether to register as a Sole Proprietorship (SP) or a Limited Liability Company (LLC). 

Difference between a Sole Proprietorship and Limited Liability Company

Some of the differences between a Sole Proprietorship and a LLC can be found here and on other websites. However, I will mention those I believe to be the most important.
 
SP:   Lower start-up cost (suitable especially when there are limited finances)
LLC: Cost much more than SP

SP:   Owner is personally liable for all debts
LLC: Company has a life (incorporated), so the owner is liable to the value of his/her investment in the company

SP: Quicker to file taxes, as the owner’s income and the business income are considered to be the same
LLC: May file taxes as a sole proprietorship or a corporation (separate from the owner’s personal income tax)

Registering a Company in Lagos (similar to other states in Nigeria)

In Nigeria company registration & other business start-up procedures are governed by the 1990 Companies and Allied Matters Act and administered by the Corporate Affairs Commission (CAC). According to the World Bank, state offices of the Commission are fully operational in 29 states of the country. 

In Lagos, CAC has a Yaba office at Aje Street, close to Sabo bus stop in the Yaba area. This office handles business name registration, while incorporation (for Limited Liability Companies) is still done in Abuja. CAC lists two Lagos State Offices on its website. These are at:

        "Ikeja: Elephant Cement House, Assbifi Road, Alausa Ikeja
        Marina: 9th Floor, UBA House, No 57 Marina, Lagos Island
        Telephone: 01-7744799"

(I have not visited any of these offices nor called the listed number. Anyone with experience at any of these offices should please post a comment.)

Steps in Registering a Business Name in Nigeria

The steps to register a company (business name registration) in Nigeria are:
  1. Search for availability of name
  2. Submission of duly completed statutory forms with two passport sized photographs of each applicant attached to the form
  3. Payment of filing fee at the Corporate Affairs Commission
Cost of Registering a Business Name in Nigeria

As stated above, the cost of registering a business name (Sole Proprietorship or Ventures) differs from that of incorporating a business (Limited Liability Company). According to CAC, the ‘official’ cost of registering a business in Nigeria is broken down as follows:
Business Name Search (N500.00)
Business Name Registration Form (N250.00)
Registration of Business Name (N4,000.00)
Certified True Copy of a Business Name Certificate (N1,000.00)
                                     Total                                           N5,750.00

The cost of registering a business name, using a lawyer or staff of CAC (although not necessary) ranges between a low (quite rare) of N10,000 and average of N15,000. This could take as long as 14 working days, especially as the computer servers at CAC are often down. In such cases, additional 5-10 working days are not unusual.

Steps in Incorporating a Company (LLC) in Nigeria
  1. The steps to incorporate a Limited Liability Company in Nigeria are as follows:
  2. Search for availability of name
  3. Payment of appropriate stamp duty fee at the Federal Board of Internal Revenue
  4. Submission of Memorandum and Articles of Association together with statutory forms for verification and assessment
  5. Payment of statutory fees at the Corporate Affairs Commission

Cost of Incorporating a Company (LLC) in Nigeria

According to CAC, the ‘official’ cost of registering a business in Nigeria is broken down as follows:
1.      
  1. Availability of Name Form (N200.00)
  2. A set of Company Incorporation Forms (N500.00)
  3. Prepare the requisite incorporation documents and pay the stamp duty                              
  4. Declaration of Compliance (Form CAC 4) signed before a Commissioner                
    for Oaths or notary public
  5. Register the company with the Corporate Affairs Commission (N10,000.00)
  6. Certified True Copies of relevant documents (N7,000.00)
Other Cost Issues

I found it ‘difficult’ to get the official total sum required for incorporating a business in Nigeria from either the CAC website or the Doing Business in Nigeria website of the World Bank. In my search, I met with a lawyer from a reputable Lagos-based Law firm who gave me N27,000 as the official sum (not including professional fees) of incorporating a company with up to N1million share capital.

According to data from the Doing Business website on Nigeria, there is a legal requirement for company’s incorporators to hire a ‘CAC accredited professional’. This is usually a lawyer who will undertake the administrative incorporation procedures. This requirement is not peculiar to Nigeria alone as several countries have similar requirements. The World Bank data puts the average professional fees of a lawyer in Lagos at N60,000.  However, several persons ranging from lawyers to clerks in claw firms and several members of staff at CAC Zonal Offices are very quick to carry out these services. I have heard of prices between N180,000 and N60,000 for incorporating a company with N1 million share capital in Lagos, Nigeria.

Assuming my reliable source was correct about the N27,500 official fee, then what is the justification of the N60,000 (minimum) that CAC staff often collect to incorporate a business? Why does CAC not suggest minimum rates which are fair rather than allow ‘CAC accredited professionals’ increase rates by over a 100% (at least).

Business Startup Costs Comparison

How does Nigeria compare ?

Registering a business name:

Nigeria: N5,750
UK: Free

Incorporating a business (official costs):
Nigeria: N27,500
UK: £20

Issues

Is it possible to legislate on a minimum cost for professional services in registering a Limited Liability Company, seeing its importance in our economy, and also grant Nigerians direct access to CAC for incorporation? Let us remember that institutional inefficiencies, high costs are bottlenecks that help create illegal economies, which are unfavourable to the growth of our great country Nigeria.

45 comments:

  1. Good post! I was doing research online on company registration when I came across your blog.

    ReplyDelete
  2. Great one, lad. I really needed this info and you saved my the stress and expenses of moving around and facing annoying front desk officers. Keep it up!

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  3. Thanks a lot. This info is really very important to me right now. I am going to register my business as a sole proprietorship business. Do you know the tax rates for sole proprietorship businesses?

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  4. Lagos Guide thanks for a very useful information about how to incorporated a business in Nigeria. The fees you quoted are correct they are the official fees, I just want to point out that if you give the task to a lawyer (which is the most sensible thing to do) the all inclusive fee they charge starts from about N80,000 for a company that takes months to incorporate to about N100,000 if you want a fast track incorporation .

    ReplyDelete
  5. You post is of great help to me because I want to register a sole business company at Aba. I will go straight to Owerri state office of CAC to verify and let all know. I do not agree that the lawyer can do better than you going straight to CAC and handle it yourself. Lawyers will just collect money and the and the time frame remain thesame. Except you can not prepare articles of association then the lawyer will foul you to collect hugh money for a four page write up.

    ReplyDelete
  6. The information is helpful...thank you.

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  7. Well, some fact have been said but deep consideration with full business ethics shows that it pays to hire professionals who will not only register your business but also give you legal guild on how to continue with the business officially.

    Akahi Group International will register you within few weeks of your decision to legalize your company/business name.

    Akahi Group International will register you at the comfort of your home. But, you MUST pay.

    Call: 08038644328, 08025759022

    ReplyDelete
    Replies
    1. Well, some fact have been said but deep consideration with full business ethics shows that it pays to hire professionals who will not only register your business but also give you legal guild on how to continue with the business officially.

      Akahi Group International will register you within few weeks of your decision to legalize your company/business name.

      Akahi Group International will register you at the comfort of your home. But, you MUST pay.

      Call: 08038644328, 08025759022

      Delete
  8. This comment has been removed by the author.

    ReplyDelete
  9. Was searching information on registering a business in Nigeria when I stumbled on this. The information is succinctly put and easy to understand. I commend the writer of this article, and will be linking it in an upcoming business themed blog post I will be making on my blog hmnigeria.com. Good job

    ReplyDelete
  10. Thanks for the info.I was at CAC Office today to do a business name search.The form cost 200.There was no charge for the business name search.Type of business is Enterprise.The whole process takes not less than one month.
    I was asked to come back after 10 working days(2weeks) for the name search result.You dont need the services of a lawyer if your business type is enterprise.

    ReplyDelete
  11. Thank you all for this information, was very very useful.

    ReplyDelete
  12. Interesting Topic and good information provided.
    With experience Registering a Sole Proprietor/Enterprise business can be done by oneself but a Limited Liability company requires a Licenced Agent/Company (Lawyer, Chartered Accountant or chartered Secretary) for the registration.
    Our company, Rhegos Resources is a business start up and development company into helping entrepreneurs start up a business, through business plans, registration, documentation, up to effective running of the business.
    We also help companies register for Tax Identification Number with FIRS which is required for any business to open a corporate account with any Bank in Nigeria.

    We have registered countless businesses and we do it with Trust, Efective Service delivery and excellence relationship.

    You can check our page on www.rhegos.blogspot.com and www.rhegos.com for more information about our company.
    You can also call for more info: 08168779399.
    It is better, you give the troubles to us to bear for you while you use your time doing more important things.

    Regards,
    Sunday Obanubi
    For: Rhegos Resources
    08168779399

    ReplyDelete
  13. Nice post,this information stumbled upon in the cause of my search is of great relief to me as its quite educative.
    Just when am about doing my business registration(incorporation)am equally getting the straight policy,procedure and cost of doing it right.

    Thanks a lot.

    ReplyDelete
  14. Dear Lagos Guide,
    I must really commend you for this write-up! Kudos! It shows how much you are willing to help people find their way quickly and easily in Lagos.

    However, few issues here...
    First and foremost is that you don't necessarily need a Lawyer to register a company, especially if you opt for a LLC. The CAC recognises accredited Chartered Accountants and Chartered Secretaries as well to carry on incorporation services. Much power should not necessarily be given lawyers when it comes to this.

    It is needful also to state that the CAC has, effective from January 1, 2013, slightly increased the cost of some filing fees, and has placed stiffer penalties for companies who fails to file an annual returns in due time.

    On Doing It Yourself...
    It pays to regsiter your company yourself, especially for a Business Name (Sole Proprietorship), but from experience, the advisory support provided to you by an experienced accredited professional is of great value.
    However, registration of LLCs are limited to accredited parties only.

    There's more to be known about registering a business than just going to the CAC yourself and face some "non-smiling" CAC clerks who just tell you, "go and see a lawyer".

    I have compiled and answered some frequently asked questions that could be of help to person's or group considering to incorporate a company. You'll find them here: http:// myincorporation.com.ng/index.php/frequently-asked-questions

    Ayokunle Bankole is an Entrepreneur Advisor, Company Formation Specialist, Sales & Promotion Expert and Seminar Speaker.
    I have been involved in the registration of over 50 business names/companies since 2008.

    Like our fb page: http://facebook.com/MyIncorporationNG
    Mobile: 07063956911

    ReplyDelete
    Replies
    1. This comment has been removed by the author.

      Delete
    2. Oops! Sorry, the correct link to the frequently asked questions is http://myincorporation.com.ng/index.php/our-faq

      Delete
  15. Thank you for this guide, was indeed helpful. Cheers!!!

    ReplyDelete
  16. Your blog content in very educative, effective and high quality content.thanks for the nice info...
    Register a Company

    ReplyDelete
  17. The Corporate Affairs Commission (CAC) Ban "Touts"

    In a bid to sanitize operations and patronage at the Corporate Affairs Commission's offices nationwide, the nation's registrar of companies and allied matters has enforced strict compliance of the law that forbids unaccredited persons to engage in registration services on behalf of clients. This has long taken effect from March 1, 2013 as indicated on a notice conspiciously pasted at the agency's entrance.

    In line with the above, only accredited persons and firms; directors/subscribers of a proposed company, and proprietors of a proposed business name can file registration at the CAC.

    A visit to the Lagos office of the Federal Government agency to purchase 3 set of company registration forms for our clients today confirms the strict compliance of this policy as the ever-busy office saw only a number of persons engaging in business activities.

    ReplyDelete
  18. This information has been very helpful,I will be headed to their office at Alausa tomorrow Friday.When I get back,I will let you all know how much I spent to register a private company.Wish me luck peeps.

    ReplyDelete
  19. This topic clears my insight of the complex situation of registering a business name in Nigeria. Your subject properly enlightens my understanding of the steppes one needs to follow to have his/her business registered legally.

    ReplyDelete
  20. Very helpful...youre a good fella...cheers!

    ReplyDelete
  21. This was really helpful! The search guide paid off. Thanks much

    ReplyDelete
  22. Just got it and found palatable.. Thanks man

    ReplyDelete
  23. Hello

    Thank you so much for this peaceful and useful information. I am an International Nigerian Author. I want to register a pen name for all my book publication. This pen name will represents a company which deals with many publication like books, newspapers, magazine and other journals. I am wondering if this can work out here in Nigeria. I would be glad if you can write to my email. davidisoje@yahoo.com. I really want to have something to do with you!

    thanks a lot.

    ReplyDelete
    Replies
    1. You're an author and you write like a 5th grader? I hope you're not writing in English!

      Delete
  24. Lagos Guide,
    Good Information I have been looking this information on what is required to register a company in Nigeria.
    Victor Asemota - Global Health Inc.

    ReplyDelete
  25. Register your Company Name yourself without the service of Lawyer.
    Call: 08038644328

    ReplyDelete
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  27. Thanks so much for this info..it came to M̶̲̅ε̲̣̣̣̥ @ right time ..but I held federal government had splash d llc fee by 50% ...is this information true ?and if it is,how much is d official fee now? Thanks

    ReplyDelete
  28. THANKS A LOT FOR YOU INFO. CAN SOMEONE PLS TELL ME THE LIMITATIONS OF USING A BUSSINESS NAME ONLY. CAN YOU DO AN ENGINEERING SUPPORT CONTRACT WITH THAT?

    ReplyDelete
  29. THANKS FOR YOUR SUPPORT. I WANT TO KNOW IF ONE CAN APART FRO DOING BUSSINES, TAKE A CONTRACT TO DO A SMALL CONSTRUCTION WITH A BUSSINESS NAME. ALSO, WHAT ARE THE LEVIS PAID? DOES ONE NEED TO BE AN ENGINEER TO HAVE A COMPANY THAT CAN DO TECHNICAL WORKS? CAN AN INDUSTRIAL PHYSICIST OWN A STRUCTURE SUPPORT COMPANY? IF I HAVE A QUALIFIED PERSON IN MY BOARD, CAN I OWN A COMPANY THAT I MYSELF AM NOT PAPER QUALIFIED? I MEAN TO ASK IF I CAN OWN A COMPANY THAT DOES TECHNICAL SUPPORT AND CONSTRUCTION IF IM NOT AN ENGINEER BUT DID ENGINEERING RELATED COURSE AND HAVE EXPERIENCE TOO AND IN MY BOARD, I HAVE A QUALIFIED MECHANICA ENGR. AND A QUALIFIED CIVIL ENGR. ? my email is fergiedimedici@gmail.com and my number is 08033928172. please reply

    ReplyDelete
  30. Hi,The courts of the State of Qatar shall be competent to deal with disputes for Incorporation in Qatar arising between the Agent and the Principal with reference to the Agency contract, unless there is an agreement to the contrary.Thanks....

    ReplyDelete
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  33. Hi

    we are interested in incorporation a company in nigeria. kindly send me details on
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  34. Thnk u very much. Very detailed and helpful. But jz on a Lil questions, what's d difference between biz name registration and incorporation? No laff me ooo I d need clarity

    ReplyDelete
  35. Good post but can I have memorandum and articles of Association for a person intending to register a Company that deals in building materials. my mail add is ........ mecaasino84k@yaahoo.co.uk

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    Replies
    1. sorry the mail i published is wrong. the right one is mecasino84k@yahoo.co.uk. thanks.its not double "aa" but one "a"

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    2. mecasino84k@yahoo.co.uk , pls not the one provided above thanks

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