Properly understanding the various types of business name registration done in Nigeria is essential. Meet Ademola, a brilliant ‘go-getter’ and entrepreneur who is excited to get his business running after finalizing market research. 

He’s got the solution, team members, and the resources to get started, however, there’s one last detail. Ademola has to register his business correctly to be legally functional. 

Whether it's you or Ade trying to kick start your 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, there are various pros of registering your business. 

Now you might be wondering, what type of business registration to do and how to go about it. We’ll explore the types of business registration in Nigeria, their various requirements, and more.

The Companies and Allied Matters Act (CAMA) and Corporate Affairs Commission (CAC)

The Companies and Allied Matters Act (CAMA) is the basic legal structure in Nigeria that forms the requirements for establishing, organizing, and managing businesses and companies. 

The Corporate Affairs Commission (CAC), on the other hand, is the legal body authorised with the obligation to regulate the management and formation of companies and businesses in Nigeria. 

The CAC ensures that business owners comply with the CAMA ultimately ensuring the straightforward process of business registration.

8 Types of Business Registration in Nigeria

1. Sole Proprietorship

Sole Proprietorship is one of the oldest forms of business operation in Nigeria. It is a type of business in which a person (known as a sole proprietor) owns and operates a business. 

Also known as an enterprise or a ‘one-man business’, in a sole proprietorship business structure, the owner is legally the same as the business and bears the risks and liabilities incurred by the business. 

However, a good fact about this business structure is that it gives the owner total control over decisions and access to the full profit. Additionally, it gives the owner the ability to operate a corporate business account like Moniepoint MFB under its name. 

For instance, Florence who owns a thrift store can register her business with the CAC as a sole proprietorship where she makes the decisions, has access to the profit, and is responsible for the liabilities the business may incur. 

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2. 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, i.e., they are responsible for making business decisions and managing the business as a whole. Ademola, for instance, can register his business successfully with the CAC as a Limited Partnership and get his Certificate of Registration.

On the other hand, the limited partners are those whose liabilities are limited to their investment in the business. Also known as 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, and this type of business registration can be done under a business name with the CAC. 

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3. 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). Also, one of the partners must reside in Nigeria and ensure that the partnership complies with the regulations of the CAMA.

4. Private Limited Company

A Private Limited Company is a business structure that operates as a ‘juristic person’, i.e., it can sue and be sued under its registered name. In an Ltd., it is required there must be at least 50 members with a minimum issued share capital of N100,000. 

Additionally, the owners of a PLC are not liable for any act by the company and their liability is limited to their contribution to the memorandum and articles of association. 

This means that their liability is limited to only the number of shares they own. A distinguishing aspect of a PLC is that it operates under a memorandum of association and its shares are private and cannot be traded on the public stock exchange market.

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5. Public Limited Company

A Public Limited Company (PLC) is among the types of company that can be registered with the CAC in Nigeria. This business entity is suitable for large companies like banks and its shares are traded publicly on the stock market. 

Additionally, the law requires a PLC to annually publish their financial records for the sake of accountability and transparency. 

This type of corporation must be registered by a minimum of two adults and have an operating share capital of N2,000,000.

6. Company Limited by Guarantee

This type of company can be referred to as a “non-profit organization” and they are registered not for the aim of earning profits but to promote art, commerce, religion, etc. 

It doesn’t have a share capital and the guarantors don’t claim any profit, thereby having no claim to the company’s assets. 

The liability of the members is limited to the amount they undertake in contribution to the company’s assets. Ultimately, all income the company generates is utilized in covering operational costs and achieving its objectives.

7. Private Unlimited Company

This type of company is a rare type of business registration done in Nigeria in which the shareholders have unlimited personal liability for the obligations and debt of the company. Overall, what this means is that the members have a non-limited and joint responsibility to clear the company’s liabilities.

8. 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. Furthermore, Trustees can be a Church, Mosque, Charity organization, etc, and usually have a chairman and secretary managing their affairs.

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Requirements for the Types of Business Registration in Nigeria

We’ve seen the various types of business registrations you can do for your entities with the CAC in Nigeria. Let’s see the various requirements for registering each one of them;

1. Business Name: To register a business name with the CAC in Nigeria, the requirements include;

• 2 Preferred business names

• Your Business Address

• Your Residential Address

• The Nature of your business company,

• Identification Card, i.e., National Identity Card (NIN), voter's card, or driver's license.

• Your Passport Photograph

• Your Phone Number

• Your email address

2. Company: When registering various types of companies in Nigeria, you must provide the following requirements;

• Two preferred names for your company

• Company Address

• Nature of Business

• Residential Address

• Articles of Association

• Share Allotment

• Email

• Phone Number

• ID Card of Directors

• Signature of Directors

3. Trustees: The following requirements must be provided when you want to register your Trustee with the CAC in Nigeria;

• Two preferred names for your Organisation

• Organisation Address

• Residential Address

• Aim and Objectives

• Phone Number

• Email

• 2 Passport photographs for each Trustee board member

• ID Card of Trustees

• Signature

Conclusion

From tax compliances to unique business banking account and avoidance of legal liabilities, there are many benefits of registering your business or company with the CAC in Nigeria. 

As an aspiring entrepreneur like Ademola, your business or company registration is a significant step to thriving in the Nigerian business ecosystem.