SME’s is believed to be catalysts for economic growth and national development both in developing and developed countries.
Nigeria as a developing country has a host of opportunities to be tapped into and utilized by its citizens. Majority of these has seized such opportunities to startup businesses as a means of livelihood in order to ameliorate hardship in these volatile economic times and also as an alternative to joblessness which is common in the country; however, more often than not, people undermine the need and importance of giving a legal protection to their businesses. A lot call themselves business owners and entrepreneurs without giving their businesses the standard legal protection that it needs, this trend is wrong and at times catastrophic.
The first step to take to protect your business while starting up involves
- REGISTRATION OF YOUR BUSINESS WITH THE CORPORATE AFFAIRS COMMISSION (the commission)[1].
The commission is the authorized agency empowered by law to regulate and supervise the affairs of companies in Nigeria.
There are different types of companies which can be registered in Nigeria. There includes partnership[2], company limited by shares, company limited by guarantee and an unlimited company[3], the intending business owner can choose the type suitable for him/her, depending on nature of business the person is willing to undertake. It is also very important to note that certain legal considerations must be undertaken to form a company. The prospective business owner must be up to 18, be of sound mind, must not be bankrupt etc.[4]
The importance of registering your business cannot be over emphasized as it runs deep into the progress or failure of your business. Registering and starting up a company might seem like a big step however it is accompanied by several rosy benefits.
Benefits of Registering a Business
As stated earlier, the benefit(s) of registering a business is enormous. The benefits include:
- It gives you a unique identity to the exclusion of all others
- It validates your business: In this time an era where fraud rate is high, Investors and customers need vendors they can trust.
- It protects you from Liability: When you register a limited liability company, your risks are limited to the number of shares taken.
- It has perpetual succession: You can pass your business from generation to generation. Leave your footprint in the sand of time, the importance of continuity cannot be over stated. Your business can become another SHELL OR JULIUS BERGER
- It helps in establishing a corporate bank account. It is more professional to give your clients a business account for payment instead of your personal account which has your own full name.
- It is more convenient to obtain loan with a registered business: You are taken more seriously, Investors want to know that your business is structured, exists legally and is separate from your personal account.
- It gets you that desired contract. While bidding for a contract, a registered business always gives your company priority over others.
- It prompts funding when opportunities arise from government. There are lots of sustainable processes set up by the government capable of building the prospect of small and medium scale enterprises and consequently can be a path to national recovery of the Nigeria ailing economy. But you need to be seen as someone who is ready.
It may cost you some money, time and effort but it’s really a small price to pay to avoid costly damages and regret down the road. START SMALL, START SMART, REGISTER YOUR BUSINESS NOW.
LINDA NNAMANI
Corporate Law
TRIAX SOLICITORS
[1] The Company and Allied Matters Act, Cap 59, Laws of the Federation of Nigeria, (LFN), 2004, s.1 provides that the Company and Allied Matters Act shall establish the Corporate Affairs Commission, which shall provide for the incorporation of companies and incidental matters, registration of business names and the incorporation of trustees of certain communities, bodies and associations.
[2]Ibid, s. 656 (1) succinctly provides that Every individual, firm or corporation having a place of business in Nigeria and carrying on business under a business name shall be registered in the manner provided in this Part of this Decree if – (a) in the case of a firm, the name does not consist of the true surname of all partners without any addition other than the true forenames of the individual partners or the initials of such forenames; (b) in the case of an individual the name does not consist of his true surname without any addition other than his true forenames or the initials thereof; (c) in the case of a corporation whether or not registered under this Decree, the names does not consist of its corporate name without any addition.
[3] Ibid, s.21 provides that an incorporated company may be either a company-
(a) having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (in this Act referred to as “a company limited by shares”); or (b) having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up (in this Act referred to as “a company limited by guarantee”) or (c) not having any limit on the liability of its members (in this Act referred to as “an unlimited company”).
(2) A company of any of the foregoing types may either be a private company or a public company.
- path to national recovery of the Nigeria ailing economy. But you need to be seen as someone who is ready.
It may cost you some money, time and effort but it’s really a small price to pay to avoid costly damages and regret down the road. START SMALL, START SMART, REGISTER YOUR BUSINESS NOW.
LINDA NNAMANI
Corporate Law
TRIAX SOLICITORS
