I hate to say it, but I’m going to panyway.
Starting a business in Nigeria is hard.
In fact, as of 2020, 33% of startups in Nigeria failed. Back then, there was a fuel subsidy. Today, there’s none.
But that’s not the problem.
The problem is you need loans to finance operations in your startup. And if the start-up fails, you’re liable for those loans.
I mean, your creditors can seize your personal properties.
Thankfully, there’s a legal loophole to help you escape that trap: company registration. And you don’t need to follow strenuous bureaucratic processes to explore this loophole. You can do it online.
In this article, I’ll show you how to register your company in Nigeria online.
But first, let’s start with some explanations.
Types of Companies and the Best Fit for Your Business
A company is a legal entity (corporate personhood) that helps the government separate your assets from your business assets.
And you must understand the different types of company structures before registering yours.
In Nigeria, the government recognizes two types of companies:
- Private companies
- Public companies
Private companies
Private companies are companies that can’t sell their shares in stock markets. This type of company can have a minimum of two owners and a maximum of 50 owners.
There are three types of private companies:
- Private company limited by shares
- Private company limited by guarantee
- Private unlimited company
The difference between these sub-types is the extent of liability. In the event of liquidation, shareholders in a company limited by shares will only pay for the amount of unpaid shares they own.
In a company limited by guarantee, shareholders are only liable to pay for an amount they promised to pay in the case of liquidation.
But in an unlimited company, the liability of shareholders is not limited. They must pay for all the insufficiencies that sales of the company’s assets don’t cover.
Public Companies
Public companies are corporate entities that can sell their shares in stock markets. This type of company can have an unlimited number of shareholders but must have a minimum of 7 shareholders.
Like private companies, public companies have three subtypes:
- Public company limited by shares
- Public company limited by guarantee
- Public unlimited company
And these sub-types have the same function and limitations as their private counterparts. The differences are the transferability of shares and number of shareholders.
You can read about types of companies, stocks, and shares on Investopedia.
Most companies in Nigeria are either private or public limited companies. So, I’ll focus on how to register both private and public limited companies.
How to Register a Company in Nigeria Online
The body responsible for implementing company registration in Nigeria is the Corporate Affairs Commission (CAC). And the CAC’s online registration process comprises 4 stages:
- Name availability check
- CAC account creation
- Name reservation
- Company registration
Name Availability Stage
To check for the availability of your business name, visit CAC’s name-searching tool.
Conduct a business name search to verify there’s no business entity with the same name in Nigeria. If your proposed name is available, move to the next stage.
CAC Account Creation
You need an account on the CAC portal to be able to register your company. Here’s how to create one:
- Step 1: Visit the CAC registration portal
- Step 2: Click on the sign-up button
- Step 3: Fill out the bio data form on the next page
- Step 4: You’ll receive a confirmation email. Confirm the mail.
- Step 5: Write down your email and password.
Business Name Reservations
The CAC allows you to register a business name and reserve it for 60 days. You must reserve a business name before you can register your company.
Here’s how to register a business name:
- Step 1: Log in to your CAC account
- Step 2: Click on the “New Name Reservation” button
- Step 3: Type in your proposed company name and business type. This is where you’ll choose the type of company.
- Step 4: Click on the “save and continue” button
Check out CAC’s naming policy.
- Step 6: Select “New Incorporation” in the drop-down menu on the next page. And click on the save and continue button.
- Step 7: Preview your details to avoid errors. Proceed to the payment page
- The name reservation fee is 500 Naira. If the payment is successful, the portal will redirect you to the main dashboard.
Company Registration Stage
Here’s a step-by-step guide to registering your company in Nigeria online:
- Step 1: Click on the reserved tab on the CAC dashboard
- Step 2: Click on the “Start Registration” button
- Step 3: Fill out the required fields in the form
- Step 4: Click on the “Add Object” button on the “Object of Memorandum” page. Then, click on the “save and continue” button. You can add multiple objects
- Step 5: Type in your witness’s information on the “Articles of Association” page. You can either adopt default Articles of Association or input a custom article.
- Step 6: On the next page, fill out the company’s director bio-data and means of identification.
- Step 7: If your company has a secretary, you can input his/her data. Small companies can skip this stage.
- Step 8: Type in your company’s Statement of Issued Share Capital.
- Step 9: Add your company’s shareholders
- Step 10: Add Persons with Significant Control in your company. (People or companies with at least 5% shares)
- Step 11: Upload the relevant documents seen below.
- Preview your information. And click on the “Proceed to Payment” button. CAC company registration fee is 10, 0000 Naira.
If and when the registration is successful, you’ll see it on the “Registered” tab in the main dashboard.
Conclusion
Building a startup is a risky endeavor, especially in developing nations like Nigeria.
Apart from the obvious opportunity cost of time you will lose, there’s a chance you’ll personal asset. That’s if the business fails.
Although no one prays for failure, it’s better to reduce this risk. And the only way to decrease the risk is to register your company.
Thankfully, the Federal Government of Nigeria has removed the bureaucratic processes involved in company registration. You can now register your company online.
Hopefully, the step-by-step in this article is enough to help you register your company in Nigeria online.
