This is another height. It is however higher than the mountain we had to dwell in the last two weeks. It is our first attempt at the second course of this table that was set before the public four weeks ago. It is heartening that we are making good progress into the mainstay of the vision of this column, which was clearly stated in our maiden edition.
Today, we want to consider the first contact (s) our businesses should have with the law. It is a contact, if properly facilitated under the right atmosphere will lead to a harmonious marriage between our businesses and the law. The implication of this is that our businesses and the law will become one flesh to multiply and replenish our personal finances and national economy.
It is contracted in two ways:
- Incorporation of Company
- Registration of Business Name
For purpose of brevity, I choose to speak the rest of this piece in points:
Incorporation of Company
- Company and Allied Matters Act governs everything about incorporation and Registration of Business name
- CAMA established Corporate Affairs Commission (C.A.C).
- The C.A.C has the power to incorporate Companies and register Business Names. It also has the power to conduct investigations into the affairs of any company where the interests of the shareholders and the public so demand.
Formation of a company
- Two or more persons may form and incorporate a company having fulfilled the statutory requirements of the type of company they intend to incorporate.
- Formation of company is the exclusive responsibility of a legal practitioner.
Types of Company
There are different types of company but the most relevant to SME is Private Company.
The following are the features of a private company
- Membership-Maximum of 50 excluding employees and employee shareholders.
- The minimum share capital of a private company is N10, 000.00
- It is a legal person that can own property, sue and be sued
- Memorandum and Article of Association guard its activities: While Memo is the charter of the company and contains fundamental provisions, which among other things define and limit its powers; Article contains internal regulations for the management of the company.
- Private companies are entitled to pay tax under the federal taxation law
- Prohibited names
a) Identical with the name of a company, which is already registered or it nearly resembles that name as to calculate or deceive.
b) Contains the word, ‘Chambers of Commerce’
c) Capable of:
- Misleading as to the true nature or extent of its activities.
- It is undesirable or offensive
- Contrary to Public Policy
d) Would violate any existing Trade Mark or Business name unless the consent of the owner of the Mark or Business name has been obtained.
e) The use of the following words as a name is subject to the approval of C.A.C:
- Federal ii. National iii. Regional iv. State v. Government
- Any other name suggesting governmental patronage: Municipal, Chartered, Co-operative, Building Society, Group or Holding.
. Registration of Business Name
- Cheap: it is not as expensive as incorporation
- Flexible: it is in fact created with small businesses in mind and it is done within one week.
- Decentralized: while incorporation can only be done in Abuja, registration of business name can be done in the state office of C.A.C closest to you.
Names that can be registered
- Firm-names other than true surnames and true forename of the partners.
- If both names are not true surnames
- Where an individual is trading with his true surname without any addition other than true forenames or the initials
- An addition that indicates that the business is carried on in succession of the former owner of the business
- Where two or more individual partners bear the same surname and there the addition of an “s” at the end of the surname
- The business is carried on by a receiver or manager appointed by the court
- “And” will not render a name registrable if it copulates surnames.
- Similar to incorporation
Time of Registration
- Application of registration is to be submitted to the Registrar within 28 days of commencement of business.
- Certificate to be displayed conspicuously at the principal place of office
Default of Registration
- Penal Sanction Section 667
“If any firm or individual required under this Decree to be registered … fails to comply with the provisions… every partner in the firm or the individual shall be guilty of an offence and liable on conviction to a fine of 50 for every day during which the default continues, and the court shall order a statement of the required particulars to be furnished to the Registrar within such time as may be specified in the order…”
- Civil Remedies
a) Bar to action to enforce partnership rights
b) Effect on contract: Not void but unenforceable. However an application can be brought before a High Court in which any such contract would otherwise be enforceable for relief from the disability.
Effect of Registration
- It apprises the public of the true identity of the person(s), who trade under the name
- Registration gives priority to use of name even against registered companies.
- Registration does not confer legitimacy on a prohibited name
- Not proof of partnership.
- With the certificate of registration of business name you can open a current account for your business.
- Registration of business name does not make your business a legal person that is capable of owning property and being suing or sued
- When your business name is registered, your business is not entitled to pay tax under the federal taxation law. But this is without prejudice to the fact that we have a responsibility to pay tax as individuals.
- Annual Returns: to be delivered not later than 30th June each year except the calendar year in which the name was registered
- Removal from register
a) On notice by proprietors within 3 months of cessation of business.
I hope we have not had a boring day. The purposes of intimating us with the foregoing straight facts are only two:
- Many of us have not registered our businesses with the law, which limits our opportunities.
- Some of us, whose businesses are registered or incorporated, do not know the implications.
Let me promise you as we close that next week will surely be juicier. Shalom!