NIGERIA Law and Practice Contributed by: Yeye Nwidaa, Mariam Olayinka Akinyemi, Toluwalase Oliver-Jude and Adedoyin Odekilekun, Jackson, Etti & Edu
1. Introductory 1.1 Forms of Corporate/Business Organisations
is NGN2 million, with the exception of com - panies with foreign participation, for which it is NGN100 million, and regulated entities with specific capital requirements. • Company limited by guarantee: an LTD/GTE company is one in which the liability of its members is restricted by the agreement of the amount that each member pledges to contribute to the assets of the company in the event that it is wound up. It is typically used to promote commerce, art, science, religion, sports, culture, education, research, charity or another similar object, and the company’s income and property are to be applied solely to the promotion of its objects, with no por - tion paid to the company’s members except as permitted by CAMA. • Unlimited company: the defining feature of an unlimited company is that its members have unlimited liability so that, in the event of winding-up, members may be required to contribute without limit towards the com - pany’s debts and obligations. An unlimited company may be either private or public. • Incorporated trustee: these are non-profit organisations formed by a group of persons united by a common interest in areas such as religion, sports, education or scientific devel - opment. These entities are not permitted to engage in business activities nor make profits for distribution. • Limited liability partnership: an LLP is a busi - ness structure that combines the benefits of a partnership with that of a limited liability company. It must be formed by a minimum of two partners, for the purpose of carrying on a lawful business. In addition, there must be at least two designated partners, who must be individuals, with at least one resident in Nige - ria. The designated partners are responsible for ensuring the LLP’s compliance with appli -
The Companies and Allied Matters Act (CAMA) 2020 is the primary legislation that governs the formation, registration, operation and regulation of businesses and corporate entities in Nigeria, and provides for the following principal forms of corporate/business organisations. • Private company limited by shares (LTD): this structure is one of the most widely adopted forms of company registration in Nigeria, primarily because of its operational effi - ciency and uncomplicated nature. An LTD is a commercial entity established to conduct business for profit, and is a corporate entity separate from its owner(s) with perpetual succession, a common seal and the capac - ity to sue and be sued in its own name. The minimum share capital for private companies is NGN100,000, with the exception of com - panies with foreign participation, for which it is NGN100 million, and regulated entities with specific capital requirements. One of the key introductions of CAMA is the allowance of a single shareholder for private companies and a maximum is 50 members, excluding bona fide employees of the company. • Public company limited by shares: a public company is a distinct legal entity that exists independently from its shareholders and owners and is capable of perpetual existence. Similar to a private company, a public com - pany affords its shareholders limited liability, meaning that, in the event of the company’s insolvency, the shareholders’ losses are restricted to the amounts they initially invest - ed, and they cannot be held personally liable for any debts incurred by the company. The minimum share capital for public companies
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