What incorporated trustees means
Incorporated trustees is how a not for profit becomes a legal person in Nigeria.
Before registration, a church, association or foundation is just a group of people. It cannot own property in its own name, cannot open a bank account as itself, and cannot sue or be sued. Everything has to be held personally by individuals, which becomes a serious problem when those individuals fall out or die.
Registration solves that. The trustees are incorporated as a body, the organisation acquires legal personality, and it can hold assets and enter contracts in its own name.
How it is used
It is the format used for NGOs, foundations, churches, mosques, associations, professional bodies and community groups. Grant makers and donors typically require it before releasing funds, and banks require it before opening an account in the organisation's name.
The structure has trustees rather than shareholders, and a constitution rather than articles of association. There are no shares and no owners, because nobody owns a not for profit. The trustees hold the assets for the organisation's objects.
Key features
- Registered with the CAC under the incorporated trustees framework
- Gives the organisation legal personality separate from its founders
- Governed by a constitution setting out objects, membership and trustee powers
- Requires mandatory newspaper publication before registration completes
- Files annual returns like any other registered entity
- Trustees hold assets for the objects, never for themselves
How this works in Nigeria
The registration process is more involved than a company. Name reservation is scrutinised closely, particularly where names include words like foundation, trust or international. Trustee documentation is prepared, the constitution is filed, and a public notice is published in newspapers so anyone with an objection can raise it.
Costs break into three parts. CAC statutory fees, the newspaper publication, and professional fees for preparing the constitution and trustee papers. LegalDoc handles the whole process for one hundred and twenty thousand naira, with statutory charges confirmed before filing.
Incorporated trustees vs limited liability company
A company has shareholders who own it and can take profits out as dividends. An incorporated trustee has no owners, and its income has to be applied to its objects rather than distributed to trustees.
A company files articles of association. An incorporated trustee files a constitution. A company registers directors, an incorporated trustee registers trustees, and changing them follows a different and more public process.
If your intention is to build something that generates profit for its founders, the company is the correct vehicle. If the purpose is charitable, religious, educational or communal, incorporated trustees is the format that fits, and trying to run a business through it creates problems later.
Limits and risks
Trustees cannot benefit personally from the organisation's assets, and treating a foundation's account as a personal one is a breach of trust rather than a grey area.
Changing trustees is also more cumbersome than changing company directors, involving its own CAC process and, depending on circumstances, publication. Organisations that let trustee records fall out of date find that ordinary banking becomes difficult.
Worth knowing
Keep the CAC record of trustees current. A great many Nigerian NGOs discover during a grant application that the trustees on file died or left years ago, and fixing it takes months they do not have.
Questions people ask
What are incorporated trustees?
It is the CAC registration format for not for profit organisations in Nigeria, including NGOs, churches, foundations and associations. Registering gives the organisation legal personality separate from its founders, so it can own property and open accounts in its own name.
How much does it cost to register an NGO in Nigeria?
Three components make up the cost: CAC statutory fees, the mandatory newspaper publication, and professional fees for the constitution and trustee documents. LegalDoc handles the whole process for one hundred and twenty thousand naira, with statutory charges confirmed before filing.
Why is newspaper publication required?
Because registration of trustees requires public notice, so that anyone with an objection to the proposed trustees or the name can raise it before registration completes. It is a mandatory step, not an optional advertisement.
Can trustees be paid?
Trustees hold assets for the organisation's objects, not for themselves. Reasonable payment for actual services rendered may be permissible where the constitution allows it and proper process is followed, but distributing organisational funds to trustees as a benefit is a breach of trust.
Can an NGO make money?
It can generate income, and many do through programmes, services and grants. The difference from a company is what happens to that income. It has to be applied to the organisation's objects rather than distributed to the people who run it.
How do I change trustees?
Through the process in your constitution followed by the appropriate filing at the CAC. It is more involved than changing company directors, and leaving it undone causes real problems with banks and grant makers.
Documents that use this
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