We look at the requirements for Private Limited Company Registration in Nigeria. private limited company limited by shares is the most common type of company for business undertakings in Nigeria.
By a virtue of section 18 of the Companies and Allied Matters Act 2020 (“CAMA”), one or more shareholders can form a small company limited by shares. A company is small if, amongst others, the turnover is less than N25,000,000 and it has no foreigner or government corporation as a shareholder.
So, unless banks, mortgage institutions, bureau de change, etc., require approval in principle from the Central Bank of Nigeria (“CBN”) before they can be registered, any other company can be registered without any delay.
The CAMA 2020 requires a company to have at least two (2) directors though small companies may have one (1) director pursuant to section 271 of CAMA 2020.
Shareholders could be individuals, companies, or LLPs, but only individuals can become directors of a company. A director need not be a shareholder of the company and shareholders need not necessarily be directors as well.
- Shareholders / Members are the persons holding shares in a company.
- Directors of the company are responsible for the management of the company affairs and legal compliance under various laws. Directors are normally appointed by shareholders. Nigerian company laws specify that only an individual can be appointed as a director of a company.
This guide is designed to help you understand the minimum requirements you must fulfil in order to form a Nigerian limited company (limited by shares).
What are the requirements for Private Limited Company Registration in Nigeria?
Every business type has its own set of requirements before it is incorporated. The very minimum requirements of private limited company in Nigeria are:
- There must be at least one director appointed.
- All directors must be at least 16 years old.
- There must be at least one natural person appointed as a director (Not solely other companies acting as corporate directors)
- The company must have a registered office address in Nigeria.
- The chosen company name must not be exactly identical, or too similar, to any other company name currently held on the register at Companies House.
- The company must issue a minimum of one share at the time of incorporation.
Other points worth noting:
- Company Secretary is an optional position for private limited companies. You can appoint one if you feel it will assist in administering your company.
- The director, secretary, and shareholders do not have to be based in Nigeria. Virtually anyone can own and manage a Nigerian private limited company but there must always be one real person who is at least 16 years of age appointed.
- Corporate bodies can act as directors, secretaries, and shareholders but there must still be another director who is a natural person. Using corporate entities as directors and shareholders can make opening a bank account more difficult in some circumstances.
- A company can be set up with one natural person as the director who also holds the shares and can use their home address as the business and registered address. You just need to keep in mind that CAC makes your home address publicly available on their website if you use it as the registered address and director's service address. This can be avoided by purchasing an address service from us on an annual basis.
Required particulars for Registering a Private Company in Nigeria
The following are particulars required for incorporation of a private company limited by shares in Nigeria:
- Name of the Company:
Two preferred names for the proposed company are to be presented to CAC for Name Availability Search and Reservation. A name approved by the CAC is reserved for 60 days to enable presenters enough time to complete registration (even though the registration can now be completed on the same day of application).
- Amount of Share Capital:
A private company limited by shares (LTD.) is required to have a minimum issued share capital of 100,000 whilst a publicly quoted company (PLC) must have 2,000,000 minimum issued share capital (all shares must be issued). However, where a foreigner is a shareholder, then the company must be registered with not less than 10,000,000 issued share capital.
– Please note that certain designated businesses have industry-prescribed minimum share capital.
– Please note also that a company’s issued share capital is the basis for calculating Government Fees which comprise registration cost (payable to CAC) and stamp duty (payable to Federal Inland Revenue Service (“FIRS”)).
- Registered Address:
Every company registered with CAC is required to have its registered address in Nigeria. A proposed company can use a virtual office in Nigeria as its registered address.
- Company’s Email and Telephone Number:
The CAC requires an email to be designated for the proposed company for future correspondence. A Gmail or Yahoomail will suffice.
- Particulars of shareholders, directors, and company secretary:
The names, address, occupation, date of birth, distribution of shares amongst the shareholders, a government-issued means of identity, as well as electronic signature of shareholders, directors, and company secretary are required for incorporating a company.
– Please note that by section 18 of the CAMA 2020, one (1) individual can be a sole shareholder and sole director of a small company. However, there are some sector-specific businesses that may be required to have more than one (1) director.
– Please note also that directors and shareholders can hide their personal information from the public members who may later conduct searches into the company using the CAC online portal. This privilege costs extra per person.
– Please note also that where a foreigner with a Nigerian address is a director, proof of his or her Combined Expatriate Residence Permit and Aliens Card (CERPAC) must be uploaded into the CAC portal. CERPAC can be obtained from the Nigerian Immigration Service (NIS).
- Certificate of Proficiency (if any):
Where the proposed company is being set up for a professional service such as engineering, accounting, legal, engineering, etc., the CAC may require one or more of the promoters to present a copy of their qualifying certificate in the field of business the proposed company is being set up to operate.
What is the Timeline for Completing the Incorporation of a Private Company Limited by Shares in Nigeria?
The registration of a company can now be completed on the same day of application (24 hours). On the same day, the company gets its electronic certificate of incorporation, the business number (known as RC number), and the tax identification number.
We will obtain the Certified True Copies of your company incorporation documents from the Corporate Affairs Commission after registration. These documents will be required by Nigerian Banks when you want to open a corporate bank account for the company.
Are there any mandatory regulatory registration and filings for a registered company in Nigeria?
Yes. Regardless of the sector or nature of business, a registered company is required to register with the following bodies and file statutory returns:
1. Special Control Unit for Money Laundering (SCUML) to which all suspicious transactions must be reported periodically;
2. Federal Inland Revenue Service (FIRS) to which all Federal taxes are to be paid and tax returns filed, such as:
– Company Income Tax (CIT): 0% for small companies with turnover less than N25,000,000; 20% for medium companies with turnover above N25,000,000 but less than N100,000,000 or 30% for large companies, if the Company’s annual turnover is above N100,000,000. Income Tax Return is due for filing not later than 18 months post registration or 6 months after the end of the accounting period.
– Value Added Tax (VAT): 7.5% upon goods and services rendered by the company.
– Education Tax: 2% of the company’s assessable profit.
– The National Information Technology Development Levy: 1% of profit before tax (PBT) for companies with annual turnover above N25,000,000.
– There are other taxes like Petroleum profit tax, capital gain tax, stamp duty, etc. that are chargeable depending on the sector or transactions undertaken by the company.
3. Industrial Trust Fund (ITF): 1% of the annual payroll for the development of industrial training.
4. National Social Insurance Trust Fund: 1% of employee’s monthly payroll.
5. Local Government Council in charge of the business address of the company for the payment of Television and Radio License Fees of N250,000 annually for big companies in the urban area.
6. State Inland Revenue Service to which the personal income tax of employees will be paid.
7. Pension Fund Administrator (PFA): PFAs are private companies licensed by the Pension Commission (PenCom) to receive mandatory monthly pension contributions from companies with 5 or more employees. Mandatory monthly pension contributions are made by both the employer (which contributes 10% of the employee’s monthly emolument) and the employee (which contributes 8% of his or her monthly emolument). The Pension Reform Act 2014 mandates every eligible employer to deduct monthly pensions and remit to the employee’s PFA. The penalty for default is 2% of the unpaid amount.
8. National Health Insurance Scheme (NHIS) Contribution: 10% (by employer) and 5% (by the employee) of the monthly basic salary of every employee must be contributed towards health insurance.
9. National Housing Fund (NHF) Contributions: Employers are required to register with NHF and deduct 2.5% of the employee’s monthly basic salary and remit to NHF.
If you are still not sure which one to pick for your business, feel free to reach out to us and our experts will guide you in making the right decision.
Private Company Limited by Shares (LTD) Incorporation
SplashDict is equipped with accredited experts and the necessary resources to assist you in completing the Incorporation of a Private Company Limited by Shares (LTD) in Nigeria.
- Instant Delivery of Digital Copies of all incorporation documents once approved (Certificate Of registration, Status Report, MEMART, and Certified True Copy of Application Form).
- Support for the drafting of the Memorandum and Articles of association.
- Bank Account Opening support.
- Priority Customer Support.
- 3 - 14 days delivery.
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