Are you thinking of starting a business in Nigeria? If so, you will need to register a limited liability company (LLC). An LLC is a legal entity that is separate from its owners, which means that the owners’ personal assets are protected in the event of a lawsuit.
The process of registering an LLC in Nigeria is relatively straightforward. However, there are a few things you need to do in order to get started. In this blog post, we will provide you with a step-by-step guide to registering an LLC company in Nigeria in 2023.
Business name Vs LLC Company name registration
When you’re starting a business, one of the first decisions you’ll need to make is whether to register a business name or an LLC company name. Both have their own advantages and disadvantages, so it’s important to understand the differences before you make a decision.
A business name is simply a name that you use to identify your business. It doesn’t offer any legal protection, so if someone sues your business, your personal assets could be at risk. However, registering a business name is relatively simple and inexpensive.
LLC Company Name
An LLC company name is a type of business entity that offers limited liability protection. This means that if someone sues your business, your personal assets are not at risk. LLCs are also more flexible than other business entities, and they can be taxed in a variety of ways. However, registering an LLC company name is more complex and expensive than registering a business name.
Which is Right for You?
The best way to decide whether to register a business name or an LLC company name is to consider your specific needs and circumstances. If you’re just starting out and you’re not sure how your business will grow, a business name may be a good option. However, if you’re looking for more legal protection and flexibility, an LLC company name may be a better choice.
Take for example, a trader that takes a loan for their importation business. If unfortunately their their goods gets lost during shipping, they will have to payback their lenders from their personal assets like the banks might foreclose their house to cover the loan if they only have a business name. However, if they have an LLC company, only the trader’s company assets will be used to settle the loan and their personal assets will remain unaffected.
Here is a table that summarizes the key differences between business names and LLC company names:
|Characteristic||Business Name||LLC Company Name|
|Flexibility||Less flexible||More flexible|
|Cost||Less expensive||More expensive|
From the above, one can deduce that LLC company name registration might be more expensive to register, but it offers more advantages in the long term.
How much is CAC company registration in Nigeria?
The Corporate Affairs Commission (CAC) is the government agency that registers companies, businesses and other corporate bodies in Nigeria. The cost of registering a company with the CAC varies depending on the type of company you’re registering.
For example, if you’re registering a small LLC company with a share capital of not more than ₦1 million, you’ll need to pay ₦10,000 in stamp duty, total registration fee is ₦50,000. This includes the cost of filing the articles of incorporation, the memorandum and articles of association, and the certificate of incorporation. Here is a breakdown of the CAC fees you will need to register your LLC;
- Name reservation – N500
- Filing for incorporation of company – N10,000
- Stamp duty – N8767
- Certified true copy of documents – N5,000 each.
These are the mandatory fees to register an LLC company name in Nigeria. However, there are other optional fees a business owner might pay for value added services during registration. For example, N25,000 for restriction of proprietor’s address. This will remove the business owner’s residential address from public records when their company name is being searched on the CAC database.
The requirements for registering an LLC company
In order to register an LLC company in Nigeria, you will need to meet the following requirements:
- You must have at least two shareholders.
- You must have a traceable office or residential address in Nigeria.
- You must have a name that is not already in use.
- You must have a Memorandum and Articles of Association.
- You must have your NIN number ready.
- You must pay the prescribed fees.
The steps involved in registering an LLC Company in Nigeria
There are two main steps to register your company. After you’ve decided the type of registration you want for your business, the first step is to search on the CAC portal to make sure that your proposed company name isn’t already in use by another company.
CAC name reservation
- Search the CAC database for your proposed company name
- Create a profile with your valid email address on the CAC portal to reserve your company name.
- From your dashboard, go to “Name Reservation”
- Select “COMPANY” and “PRIVATE COMPANY LIMITED BY SHARES” under classification and specific type respectively.
- You will have to options to propose your company name, CAC will reserve one of the names for you.
- On the next page, provide objectives, the services your new company intends to provide.
- Preview and pay the sum of N500 only to reserve the name.
The CAC has the following guidelines and will not register a company name if the proposed name is;
- is identical with that by which a company or limited liability partnership in existence is already registered, or so nearly resembles that name as to be calculated to deceive, except where the company or limited liability partnership in existence is in the course of being dissolved and signifies its consent in such manner as the Commission requires;
- contains the words “Chamber of Commerce” unless it is a company limited by guarantee;
- in the opinion of the Commission, is capable of misleading as to the nature or extent of its activities or is undesirable, offensive or otherwise contrary to public policy;
- in the opinion of the Commission, would violate or conflict with any existing trademark or business name registered in Nigeria or body corporate formed under this Act unless the consent of the owner of the trademark, business name or trustees of the body corporate has been obtained;
- contains any word which, in the opinion of the Commission is likely to mislead the public as to the nationality, race or religion of the persons by whom the business is wholly or mainly owned or controlled;
- is, in the opinion of the Commission, deceptive or objectionable in that it contains a reference or suggests association with any practice, institution, personage, foreign state or government, international organisation or international brand or is otherwise unsuitable; or
- is capable of undermining public peace and national security.
CAC name reservation is usually processed within 24 hours after payment. Ones the name has been reserved, you will receive an email with your name reservation code, proceed to your dashboard to register your company.
CAC company registration involves 10 pages of data you are required to fill out correctly.
- Entity details: Enter the details of your company including the description of activities you intend to be doing at the company and company address.
- Objects of memorandum: Here enter the details of activities the company will be involved in. For example “To design, develop, and maintain websites for businesses of all sizes,” for a web development company.
- Articles of Association: there is already a template available on the CAC website, you can adopt or edit as required. Also provide the details of one witness.
- Directors: provide your details as the director of the company or the details of others if required.
- Secretary: Companies that have N1,000,000 or less in shares are exempt from this requirement, but you can provide the details of one if you have a secretary.
- Statement of Issued share capital: provide the details of how the company shares is distributed. You can allot 100% of the shares to your self if you are a sole proprietorship.
- Person with significant control: upload your details as the owner of the company.
- Statement of compliance:
- Document upload: Take a picture of your signature on a clear white background. You will be required to upload your signature, the signature of witness and a means of identification.
- Preview and payments: There is a N10,000 filing fee as well as stamp duty before your company can be submitted for incorporation. All payments are processed through Remita.
Tips for registering an LLC
Here are a few tips for registering an LLC in Nigeria:
- Hire a lawyer: If you are not familiar with the registration process, it is a good idea to hire a lawyer to help you.
- Start early: The registration process can take some time, so it is a good idea to start early.
- Be prepared: Make sure you have all the required documents and information before you start the registration process.
- Be patient: The registration process can be frustrating at times, so be patient and persistent. The CAC website does not have smooth registration process, you will have to refresh pages when stuck
For a limited liability company (LLC) business name, the registration fee is ₦50,000. This includes the cost of filing the articles of incorporation, the memorandum and articles of association, and the certificate of incorporation. Add legal fees to that if you are using a lawyer.
CAC will reserve and approve your business name within 24 business hours after making payment.
CAC will incorporate your LLC company business name within 3-7 business days if all filings are done correctly.