Company Law: – Business Creation in Nigeria – The Right and Ability to Create a Company
This article will examine the fundamental topic of business formation in Nigeria under the Companies and Allied Matters Act (CAMA), particularly the following sub-topics:-
– The right to create a company in Nigeria
– Limitations of legal entities alternatives to companies
– The capacity of individuals to create a society
– Regulations according to the different types of companies in Nigeria
The right to create a company
The CAMA provides that: –
– Since the entry into force of this law, two or more pPersons may establish and incorporate a company by complying with the requirements of this Act with respect to company registration.
– Notwithstanding the provision mentioned above, only one person can constitute and incorporate a private enterprise by complying with the requirements of this Law with regard to private enterprises.
-A company cannot be created or constituted for illegal use aim.
Limitations of alternative associations to companies with more than 20 members
On this subject, the law provides that:
– No association or partnership made up of more than 20 people must be incorporated for the purpose of carrying on a business with a view to making a profit or gain by the association, partnership or individual members thereof, unless it is registered as as a company under this Act, or whether it is incorporated under certain other laws of force in Nigeria.
– Nothing in this provision applies to the following exceptions:
(a) any cooperative society registered under the provisions of any enactment in force in Nigeria; Or
(b) any partnership for the purpose of carrying on:
(i) as legal practitioners, by persons each of whom is a legal practitioner Or
(ii) as accountants by persons each of whom is authorized by law to practice as an accountant.
– If at any time the number of members of an association or partnership eexceeds 20 in contravention of this section and carries out its activities for more than 14 days while the contravention continues, any person who is a member of the company, association or society during the time it exercises thus its activities are punishable by the prescribed fine. by the Commission for each day during which the default persists
Ability of individuals to start a business
The law provides that an individual cannot participate in trainingof a company under this Act if he is:
a) under 18 years of age;
(b) who is of unsound mind and has been adjudged so by any court in Nigeria or elsewhere;
(c) an undischarged bankrupt; Or
(d) disqualified, under sections 281 and 283 of this Act, from being a director of a company.
– A person will not be disqualified under paragraph (1) (a), if two other persons not disqualified under this paragraph have subscribed to the memorandum.
-A legal entity in liquidation cannot participate in the constitution of a company under this Act.
– Subject to the provisions of any text regulating the rights and capacity of foreigners can undertake or participate in business or commercial activities, a foreigner or a foreign company can join in establishing a company
Regulations according to types of businesses
– A private company is a company that is mentioned in its constitutive actIt is not a private company.
– Subject to the provisions of its statutes, a private company may restrict the transfer of its shares and also provide that:
(a) the company shall not, without the consent of all its members, sell any assets having a value greater than 50% of the total value of the company’s assets;
(b) a member must not sell his shares in the company to a non-member without first offering these shares to existing members; And
(c) a member, or a group of members acting together, must not sell or accept any sell more than 50% of the shares of the corporation to a person who is not then a member, unless such non-member has offered to purchase all of the existing members’ interests on the same terms.
– The total number of members of a private company must not exceed 50, excluding persons who are bona fide in the service of the company or who, while in such employment and continued after the determination of such employment, were members of the company.
– When two or more people jointly hold one or more shares in a companythey are, for the purposes of the law, considered as a single member.
-A private company cannot, unless authorized by law, invite the public to:
(a) subscribe to any shares or obligations of the Company; Or
(b) deposit money for specified periods or payable in cash, whether or not it bears interest
-Any company other than a private company is a public company and its The statutes must indicate that it is a public company.
-An unlimited liability company must be registered with a share capital not lower than the minimum issued share capital permitted under section 27(2)(a) of this Act.
Companies limited by guarantee
– When a company must be created for the promotion of trade art, science, religion, sports, culture, education, research, charity or other similar objects, and the income and property of society shall be used solely for the promotion of its items and no part of them must be paid for or transferred directly. or indirectly to the members of the company, except as permitted by this Act, the company shall not be registered as a company limited by shares, but may be registered as a company limited by guarantee.