Statutorily, all persons carrying on businesses such as: business names  (in names other than the entrepreneur’s given names, companies and incorporated trustees must register or incorporate their business save where such business forms or names are not required to be registered under the law.

There are four forms of business registration and incorporation available, these are Companies (Private or Public), Incorporated Trustees, Partnerships, Sole Proprietorships, Limited Liability Partnerships and Limited Partnerships

The statutory body that oversees incorporation in Nigeria is the Corporate Affairs Commission (“CAC”). This Commission is divided into separate registries for incorporation of companies, registration of business names and incorporation of trustees.

Setting up an entity in Nigeria is fast becoming less onerous given the Commission’s concerted effort to ensure the ease of doing business in Nigeria is seamless, this has led to the digitization of the Commission’s  registries and registrations can now be done online by paying the requisite fees, completing and uploading the prescribed documents and forms.

After incorporating or registering a company, there are various post-incorporation processes which are mandatory for a company to remain in good standing.

The following requirement must be carried by a business with the Corporate Affairs Commission (“CAC”) after incorporation or registration:

1. FILING OF ANNUAL RETURNS.

This is a yearly statement that gives a fair view of the company’s performance for the year and its financial position. It is statutorily required that all duly incorporated companies, registered businesses and incorporated trusteeship submit their annual returns to the Corporate Affairs Commission (“CAC”) on a yearly basis.

The Companies and Allied Matters Act (“CAMA”) mandates that all businesses, companies, and incorporated trustees should submit their annual returns for filing: (i) within 42 days after holding Annual General Meeting for companies, (ii) between the 30th of June and the 31st of December each year for Incorporated Trustees, and (iii) not later than the 30^th day of June of each year for business names.

The CAC is empowered to strike off names where it reasonably believes that the incorporated or registered entity is no longer in operation.

1. SIGNIFICANT CHANGES IN THE BUSINESS

A company must notify the CAC of any significant changes in the company’s structure including:

1. Increase or decrease in the share capital;
2. Changes in the shareholding structure of the company;
3. Change of the company or businesses registered address;
4. Change of company officials such as the board of directors or company secretary, change in proprietorship in a registered business name, change of trustees in incorporated trustees, etc.;
5. Change of name of the company, business or trusteeship;
6. Notice of mergers/acquisitions; and
7. Notice of winding up of companies, cessation of business or dissolution of incorporated trustees

There is regulatory oversight over commercial activities in Nigeria, as there are Ministries, Departments and Agencies (MDA’s) that oversee aspects businesses and their operations in various sectors of the economy. e.g. The Central Bank of Nigeria for Banks and Financial Institutions, Nigerian Communications Commission for Television and Radio Stations and the Standards Organization of Nigeria for Manufacturers amongst others.

There may be a need to register with a professional body or organization that oversees the sector in which the company intends to do business if such registration is mandatory. Failure or omission to carry out requisite registration and compliance with the relevant organizations regulations could result in penalties, fines and other punitive measures against the business.

Office space can be rented by using real estate firms. It is advisable that a lawyer be retained in transactions of this nature to minimize risks and ensure proper compliance with tenancy laws in Nigeria.

Deed of Lease, Deed of Sub-Lease and Deed of Conveyance (Deed of Assignment and/or Contract of Sale). Relevant title documents will also be required for sighting.

In Lagos State, the procedure for perfection is as follows:

1. Submission of an application for Governor’s Consent at the Lands Bureau. This application must be accompanied by relevant documents and evidence of payment of preliminary levies such as Application Fee, Charting Fee, Endorsement Fee and Administrative Charges, as prescribed by the Lands Bureau.
2. The application is referred to the office of the Surveyor General of Lagos State for the purposes of:

1. charting the relevant survey plan;
2. ascertaining that the land is free from government acquisition; and
3. ascertaining that the coordinates of the land as reflected in the relevant original survey, do not fall outside the vendor’s property.

1. Thereafter the application is returned to the Lands Bureau and an assessment letter is issued requesting the applicant to make the following payments:

1. Consent Fee;
2. Stamp Duty;
3. Capital Gains Tax;
4. Registration Fee;
5. Business Premises Charge (payable if the property is a business premises or if one of the parties is a company);
6. Direct Assessment (personal income tax of parties to the transaction); and
7. (vii)Neighbourhood Improvement Charge, (where applicable).

1. Payment receipts obtained in respect of the payments mentioned under (c) above, are then forwarded to the Lands Bureau.
2. The Deed is forwarded to any of the designated commissioners for the endorsement of the relevant portion of the Deed on behalf of the Governor, evincing the requisite Governor’s Consent to the transaction.
3. Subsequently, the Deed is stamped by the Lagos State Internal Revenue Service (where parties are individuals) or the Federal Inland Revenue Service (FIRS) (where one of the parties is a company). It is instructive to note that by virtue of section 22(4) of the Stamp Duties Act, every instrument relating to any property situate in Nigeria must be duly stamped (following payment of appropriate duties). Without stamping, such instrument will not be acceptable for registration at the Lands Registry and will also be inadmissible in evidence in any court proceedings.
4. Following stamping, the Deed is presented to the Lagos State Lands Registry, for registration. Registration signifies the completion of the perfection process and a duly perfected original Deed (together with one counterpart Deed) is returned to the applicant

Non-Executive directors do not partake in the daily affairs of the company. They are not employees of the company.

Supervisory directors are appointed to hire executive directors and promote the interests of the stockholders of the company.

Independent Directors have no pecuniary interest in the company and are engaged mainly to protect minorities’ rights and provide objective judgments. 

Directors are persons appointed (except shadow Directors) by the company to direct and manage the business of the company.

Directors are trustees of their companies. Therefore, a director has a fiduciary duty to and is required to exercise due care, skill and diligence in the discharge of his/her duties. Directors are personally liable for any breach of duty or negligent act occurring in the discharge of their duties.

Directors also have duty: not to act contrary to the interest of the company; not to use their power for an improper purpose; to avoid conflicts of interest; to retain discretion and not make secret profits.

If a company receives money by way of an advance payment and with the intent to defraud, fails to apply the money or other property for the purpose for which it was received, every Director or other Officer of the company shall be personally liable to the party from whom the money or property was received.

The Directors of a company can also be held personally liable for their executive actions where such actions are not in conformity (i.e. ultra vires) with the company’s charter or its objects as set out in its Memorandum and Articles of Association.

Additionally, Directors are personally liable for executive actions aimed at a particular group of shareholders where those actions are fraudulent or illegal.

A director in his dealings with the company has a duty not to place himself in a position where there is conflict of interest between his duties and his personal interest and if any conflict arises, he must disclose it to the company.

The common law principle laid down in the case of Foss v Harbottle, states that only a company can sue for wrongs done to the company. However, there are certain exemptions for the protection of minority shareholders. By the provisions of the Companies and Allied Matters Act, actions that can be taken by minority shareholders to protect their interest in the company include; Personal or Representative Action and Derivative Action. There is no specific level of shareholding required to carry out these actions.