What company means
A company is a person the law invented.
That sounds strange until you see what it does. Once the CAC issues the certificate, something new exists that was not there the day before. It has a name, an RC number, an address and a bank account. It can buy land, sign a lease, employ people, sue somebody and be sued. None of that is you, even though you own it.
That separation is the entire point. Your business debts belong to the company. Your business contracts belong to the company. When the company has a bad year, the loss lands on the company first, and the shareholders lose what they put in rather than the roof over their heads.
The word gets used loosely in everyday Nigerian speech. People call a two person shop a company. In law it means something narrower: an entity incorporated under the Companies and Allied Matters Act, carrying Ltd, PLC or Ltd/Gte after its name.
How it is used
You meet the word at the point where a business decides to grow up.
A client asks for your RC number before they will raise a purchase order. A bank wants a corporate account rather than your personal one. An investor asks what percentage they are buying, and there is nothing to buy unless shares exist. A landlord wants the lease in the company name. Each of those is a door that opens only for an incorporated business.
Registration happens at the Corporate Affairs Commission. You reserve a name, declare your share capital, state what the business will do, and name the directors and shareholders. The CAC issues a certificate of incorporation and a status report, and from that day the company exists.
After incorporation the obligations start. Annual returns are filed every year, the registers are kept current, changes of director or address are reported, and tax registration follows.
Key features
- A separate legal person, distinct from its owners and directors
- Owns its own assets and owes its own debts
- Perpetual succession, so it survives the death or exit of any owner
- Ownership is divided into shares, which is what makes investment possible
- Run by directors, owned by shareholders, and the two need not be the same people
- Identified by an RC number issued by the CAC on incorporation
How this works in Nigeria
CAMA 2020 recognises several kinds of company, and the differences matter more than most founders expect.
A private company limited by shares, the familiar Ltd, is what the overwhelming majority of Nigerian businesses register. Shares are not offered to the public and membership is capped at fifty. A public limited company, PLC, can offer shares to the public and carries much heavier compliance. A company limited by guarantee, Ltd/Gte, has no shares and is used for non profit work, and it needs the consent of the Attorney General. An unlimited company exists on paper and is almost never used, because the owners carry unlimited liability for the debts.
CAMA 2020 also removed the old requirement for two people. One person can now own and run a private company alone. Small companies no longer need a company secretary, and the minimum share capital for a private company is one hundred thousand naira.
What that adds up to is a system where a single founder can incorporate properly for a modest sum, which was not true a decade ago.
Company vs business name vs incorporated trustees
Three things get registered at the CAC, and they are not variations of the same idea.
A business name is a label. It registers the fact that Adaeze trades as Adaeze Fabrics. No new legal person appears, so Adaeze still owns the debts personally. It is cheap, quick, and fine for a small operation with little exposure.
A company is a new legal person. It costs more, carries annual filing duties, and in exchange it protects personal assets, continues after its founders, can take shareholders, and is taken seriously by banks and corporate clients.
Incorporated trustees is the structure for a foundation, church, association or NGO. There are no shareholders and no profit distribution, only trustees holding assets for the stated objects.
The question is not which is best. It is which one matches what you are actually doing and how much you would lose if it went wrong.
Limits and risks
Incorporation is not a magic wall.
Directors who trade fraudulently, misapply company money or ignore their statutory duties can be held personally liable, and CAMA 2020 spelled those duties out rather than leaving them to case law. Courts can also look behind the certificate where the company is being used as a front.
In practice the protection is signed away more often than it is litigated away. Nigerian banks lending to a young company almost always ask the directors for a personal guarantee, and that one document puts your personal assets back on the table for that debt.
There is also a running cost. Annual returns, tax filings and register upkeep are obligations, and companies that ignore them drift into default and eventually risk being struck off.
Worth knowing
Declare share capital that matches what you actually need. CAC filing fees and stamp duty are calculated on the figure you declare, so a founder who puts ten million naira on the form for the look of it pays for that decision immediately, and can raise it later anyway when there is a real reason.
Questions people ask
What is a company in Nigerian law?
It is a business incorporated under the Companies and Allied Matters Act, which the law treats as a separate legal person from its owners. It can own property, enter contracts, sue and be sued in its own name, and it continues to exist even when the shareholders change.
What is the difference between a company and a business name?
A company is a new legal person that owns its own assets and debts, so the shareholders are generally protected personally. A business name is only a trading label, and the owner stays personally liable for everything the business owes.
What types of company can I register in Nigeria?
A private company limited by shares (Ltd), a public limited company (PLC), a company limited by guarantee (Ltd/Gte) for non profit work, and an unlimited company. Almost every Nigerian business registers a private company limited by shares.
Can one person register a company in Nigeria?
Yes. Since CAMA 2020 a single person can incorporate a private company and act as both sole shareholder and sole director. The old requirement for two subscribers is gone.
How much does it cost to register a company in Nigeria?
Name reservation is six hundred naira, the CAC filing fee is assessed on your declared share capital, and stamp duty applies on top. LegalDoc handles the whole registration for fifty five thousand naira, and confirms the statutory charges with you before filing.
How long does company registration take?
Where the name is available and the details are complete, the CAC commonly issues the certificate within a few working days. Delays usually come from a rejected name or an identification document that does not match the details supplied.
What is an RC number?
It is the registration number the CAC issues to a company on incorporation. Corporate clients, banks and government agencies ask for it as proof that the business is a registered company rather than a trading name.
Do I still need to file anything after registration?
Yes. Annual returns are due to the CAC every year, changes of directors, shareholders or address must be filed, and separate registration with the tax authorities follows. A company that stops filing drifts into default and can eventually be struck off.