Nigerian business owners are increasingly at risk as the Corporate Affairs Commission intensifies efforts to delist inactive companies from its official register.
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This action, known as ‘striking off,’ effectively removes a company’s legal status and renders it non-existent in the eyes of the law.
Many entrepreneurs remain unaware of the consequences until it’s too late—often discovering their company has been struck off during critical moments like applying for loans, seeking investment, or bidding for contracts.
To help businesses navigate the process and avoid being delisted, here are the six critical steps for correct company registration and post-incorporation compliance, based on the provisions of CAMA:
1. Choose a Unique Business Name:
Before anything else, select two distinct company names and verify their availability on the CAC online portal. To be approved, names must not be identical to existing companies, misleading, or prohibited under Section 30 of CAMA 2020. Once approved, the name can be reserved for 60 days for a fee of ₦500.
2. Prepare Key Governing Documents:
Businesses must draft a Memorandum of Association (outlining business objectives and share capital) and Articles of Association (detailing internal governance rules). These documents, which can be prepared using templates from the CAC portal, must comply with Sections 27 and 28 of CAMA 2020 and be signed by the company’s promoters.
3. Declare Share Capital:
The company’s authorized share capital must be specified, with a minimum of ₦100,000 for private companies. This is a statutory requirement under Section 27(2) of CAMA 2020, with higher share capital leading to increased filing fees and stamp duty.
4. Appoint Directors and Shareholders:
Provide the details of at least two directors (or one for small companies) and at least one shareholder. Directors must be at least 18 years old and of sound mind, as stipulated in Sections 20 and 271 of CAMA 2020. Required information includes names, addresses, occupations, and valid identification.
5. Submit Registration Documents:
All required documents, including CAC Form CAC1.1, the Memorandum and Articles of Association, and details of directors and shareholders, must be submitted via the CAC online portal. This is followed by the payment of statutory filing fees and stamp duty, which vary based on the company’s share capital.
6. Comply Post-Registration:
After receiving the Certificate of Incorporation, a company’s legal existence is confirmed. However, the work is not done. Businesses must register for a Tax Identification Number (TIN) with the Federal Inland Revenue Service (FIRS) and obtain any necessary permits. Most critically, they must file annual returns within 42 days of their company’s anniversary to avoid being delisted. This includes submitting yearly forms, declaring Persons with Significant Control (PSC), and paying all fees on schedule.
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