Understanding the various types of business registration done in Nigeria is essential. As an entrepreneur that wants to start his or her entrepreneurial journey, there are many benefits of properly registering your business with the Corporate Affairs Commission in Nigeria. From building credibility and attracting investors, to avoiding tax and legal complications.
Now you might be wondering, what type of business registration to do and how to go about it. We will explore the types of business registration in Nigeria, their various requirements..
The Companies and Allied Matters Act (CAMA) 2020 stipulates 5 business that are registrable in Nigeria. Such registrations can be done in Corporate Affairs Commission which is the body saddled with the responsibility of company registration in Nigeria. These 5 entities are as follows:
- Business Name.
- Sole Proprietor
- Partnership
- Limited Liability Company
- Private Company Limited by shares
- Private Unlimited Company
- Public Company Limited by shares
- Public Unlimited Company
- Private Company Limited by Guarantee
- Public Company Limited by Guarantee
- Incorporated Trustee
- Limited Partnership
- Limited Liability Partnership
We are going to explain briefly the 5 different Entities that are registrable in Nigeria.
- Business Name (also known as Enterprise)
Business Name also known as Enterprise is one of the oldest forms of business operation in Nigeria. Under it we have Sole Proprietorship and Partnership. It is a type of business in which a person or more owns and operates a business. It’s operation registration and requirements are provided for in Part E of CAMA 2020.
Read:CAC Business Name Registration 2024
- Limited Liability Company
A limited liability company as the name implies is a company that have the liabilities of the owners limited by shares. A Limited Company is a business structure that operates as a ‘juristic person’, i.e., it can sue and be sued under its registered name. Under the Limited Liability Company, we have Private and Public Limited Liability company. The private limited liability company must not exceed 50 persons as shareholders and cannot issue shares to the public whereas Public limited liability company can.
We also have Private Unlimited Company and Public Unlimited, as the name implies the liabilities of members are not limited.
We also Private and Public Company Limited by Guarantee. This is a company solely set up for the promotion of Arts and Culture, Education, commerce, charity and not for the purpose of making profits. They do not have shares, they are purely non-profit company
The registration, requirements, operations etc of Limited Liability Company is provided for in Part B of CAMA 2020.
Read also:Company Registration (Limited Liability Company) 2024
- Limited Liability Partnership
A Limited Liability Partnership (LLP) is a business structure consisting of two or more persons or corporations to make a profit. A distinguishing aspect of an LLP is that it is a legal entity separate from its owners who are liable for only the amount they invest in the business including personal guarantees.
Furthermore, an LLP can be seen as a combination of a corporation and a partnership and must have at least two partners (individuals, corporate partners’ nominees). The LLP does not have Shares like Limited Liability Company. It is also important to note that one of the partners must reside in Nigeria in the case of Foreign Limited Liability Partnership. The registration and operations of Limited Liability Partnership is set out in Part C of CAMA 2020.
Read:How to Register a Limited Liability Partnership in Nigeria
- Limited Partnership
A Limited Partnership is a business that comprises at least one general partner, one limited partner, and not more than 20 partners. The general partners have unlimited personal liability, they are responsible for making business decisions and managing the business as a whole.
On the other hand, the limited partners are those whose liabilities are limited to their investment in the business. There are silent partners, they are responsible for investing in the business rather than running the day-to-day operations.
Some examples of businesses that run this structure are real estate businesses, investment companies, etc. The operations, registration and other requirements of Limited Partnership are set out in Part D of the CAMA 2020.
- Incorporated Trustees
This entity is not a business organization but a non-governmental organization that consists of one or more trustees appointed by a group of people bound by religion, custom, etc.
There are no share capital or shareholders but it is run by a board of trustees. The bodies that fall under Incorporated, Trustees are; Church, Mosque, Charity organization, Associations, Unions etc. The requirements, and operations of Incorporated Trustees are set out in Part F of CAMA 2020.
Read also:How to Register an Incorporated Trustee with CAC in Nigeria
In conclusion, the benefits and the importance of registering your business with CAC in Nigeria cannot be over emphasized it ranges from tax compliances to unique business bank account for your business and avoidance of legal liabilities. As an aspiring entrepreneur your business or company registration is a significant step to thriving in the Nigerian business community.
The Requirements and the steps to register any of the above entities discussed can be gotten from our previous post.
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