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BENEFITS OF CAC BUSINESS REGISTRATIONS

The benefits of CAC business registrations are numerous. First of all, congratulations for taking a step within the entrepreneurship route. the idea you’ve got is what we elect to call a stellar one. Ideas rule the planet, so, if you’ve come up with a particular business idea, or an improvement to an existing business concept, there is likelihood that you simply will succeed.

Below are some reasons registering a company or a Business Name in Nigeria may be a smarter legal and business decision than simply operating without a registration.

LIMITED LIABILITY

One of the explanations to the choice of people registering a business is in order that they will acquire corporate legal personality. Under Nigerian law (and the laws of just about every country in the world), there’s a legal fiction where a corporation is deemed to be a separate legal entity from the individual(s) that operate it. Therefore the company has powers to enter into contracts, buy property, sue or be sued in its name etc.

The implication of this is if the company is indebted to a bank as an example , it’s the company that owes the bank and not the Directors/members of the company, therefore the bank cannot sue the administrators in their personal capacities to recover the debt, save during a situation where the Director(s) gave personal guarantees for the loan facility.
This benefit is more pronounced with companies as against Enterprises/Business Name.

Starting a business in Nigeria is in some cases, an adventure in the sense that you simply put in your personal finances and may even need to borrow from your friends and family, and in some instances, you trade a secure and doubtless lucrative job. you would like to be rest assured that your risk is restricted to what you’ve already put in to start out the business in the unfortunate event that the business fails. This way, you’re ready to protect your property and private assets from getting used to pay the business debts incurred by you through your company. Registering a company will keep you safe from this embarrassing scenario.

PROFESSIONALISM AND PUBLIC CONFIDENCE.

Registering your business tends to project a professional image. It shows that you simply are focused on the business and also committed to abide by the professional ethics governing the industry you play in. It also signals that you simply are likely to attend to corporate governance directives which the regulatory body in Nigeria (Corporate Affairs Commission) has put in place.

Having your business registered suggests to your clients/customers that the business has permanence and is committed to effective and responsible management. It also engenders public confidence in your brand by customers/clients and suppliers.

SUBMISSION OF TENDERS AND BIDDING FOR CONTRACTS.

In Nigeria, most Government ministries, departments, agencies and multinational firms have rules that for you to bid for contracts and be awarded same, you’d need to be a registered business in Nigeria. Hence, failure to submit your tender as a registered business could potentially reduce your chances of success when bidding for contracts.

It is no secret that state governments, federal government and multi-nationals have bias for companies over unregistered businesses.

TAX BENEFITS

Under Nigerian Tax laws , registered businesses names don’t pay company tax, rather, they pay income Tax. The implication of this in a Federal State like Nigeria is that if you are a Director of a company, you pay your company tax to the Federal Inland Revenue Service (FIRS), while you pay your income tax to the relevant State Inland Revenue Service.

If you’re a sole proprietor of a registered business, you’re only mandated to pay income tax to the relevant State Inland Revenue Service. While on the face of it, handling two different tax bodies might sound tiring, there are benefits thereto . However, there’s need for you to plan your taxes by consulting with a tax professional.
For example, in an incorporated company, the shareholder director will receive a salary that’s subject to non-public tax at one rate, then dividends that’s taxable at another rate. What a savvy person will do therefore is elect to receive the foremost tax efficient mixture of salary and dividends.

It is also worthy of note that the majority benefits and expenses are taxable, however, if you are a registered company in Nigeria, you’ll legally offset certain costs that are taxable as benefits in a similar way under income tax.

BUSINESS CONTINUITY

One of the benefits of CAC business registrations is continuity of business. As already discussed, a registered company has its own legal identity, therefore when third parties contract with the ‘company’, they are doing so with a separate legal entity and not the individual directors and shareholders of the corporate . This suggests that companies survive the death or incapacitation of the owners and it’s possible for the administrators and shareholders involved in the company to change over time.

For those conversant with the concept of risk management, one of the key things in understanding the danger profile of a business is business continuity. This is often important not only from a day-to-day running of the business perspective, but also from a legal perspective.

Suffice to mention that business continuity of a registered business is extremely risk-prone and thus third parties are wary about over-commitment to such businesses. aside from third parties, this is often also important to employees.

However, if it’s a registered company, its existence will only cease if it’s formally wound up , liquidated or by an order of the Nigerian courts or Registrar of Companies. Amongst other benefits, this will provide more perceived security for workers and third parties than other business structures.

RAISING FUNDING

In general and simplified terms, there are two broad ways to boost funding – debt and equity. Debt is essentially , give me X for my business and i can pay you back at a future date with X% interest; equity is give me X for my business and that i will offer you X number of shares within the business also.

For debt, both business structures – registered business and registered company, can raise funding this manner, however in the case of a registered business name, the proprietors are responsible personally for the debt until it’s discharged, except for the registered company, as discussed earlier the company is the debtor and not the shareholders.

For equity, registered businesses generally need to raise new capital from their own resources or from family and friends. However, registered companies in Nigeria are ready to raise capital at any time by issuing new shares. The new shares are often offered to existing shareholders or new investors, although only public limited companies offers shares to the general public. The ease of securing business loan is one of the benefits of CAC business registrations.

FUTURE EXIT

If you’ve got a registered business, upon retirement, it’s very likely that the business will retire with you. However, registering a business as a Ltd. can aid the likelihood of selling it in the future. The first shareholder/owner of the corporate are going to be ready to achieve a totally clean break and obtain a disburse for the business.

ACCOUNT OPENING

One of the good benefits of business registration is just bank account opening.
This means that the bank account will bear your BUSINESS NAME and not your personal name.

For instance, your business name is FIGO Ventures, and you would like to open a bank account which will bear the name intrinsically . This would be FIGO ventures as your bank account name and not your personal name.

And having a bank account together with your BUSINESS NAME causes you to look professional, and build trust in your customers, bank and your product supplier.

FEDERAL GOVERNMENT SMALL BUSINESS INCENTIVES

When you register your business name, you stand an opportunity of growing your business through the various business incentives extended to Micro, Small and Medium Enterprises (MSMEs) by the Federal Government. This is often one benefit business registration enjoys.

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REGULATORY BODIES ON CORPORATE LAW IN NIGERIA

There are 3 principal institutions or bodies, which are statutorily vested with regulatory, supervisory and controlling authority over companies and their activities in Nigeria. These are the Corporate Affairs Commission (CAC), Securities and Exchange Commission (SEC), and Nigerian Investment Promotion Commission (NIPC).

FEATURES AND FUNCTIONS OF THE REGULATORY BODIES AND THEIR RELEVANCE ON CORPORATE LAW PRACTICE

Corporate Affairs Commission

This is the apex of the regulatory bodies for companies in Nigeria, which was established under Section 1 of the CAMA as a body with full legal capacity like incorporated companies. Thus, it has perpetual succession and a common seal, capable of suing and being sued in its corporate name, of acquiring, holding or disposing of any property, movable or immovable, for the purpose of carrying out its functions.

The establishment of the Corporate Affairs Commission as an autonomous body was as a result of the perceived inefficiency and ineffectiveness of the erstwhile Company Registry, a department within the Federal Ministry of Commerce and Tourism, which was then responsible for the registration and administration of the repealed Companies Act of 1968.

Features of CAC

The features are that the Commission has a membership of 15 persons representing a wide variety of interests – the business community, labour, the legal profession, accountancy profession, Manufacturer’s Association of Nigeria, association of Small Scale Industries, the Institute of Chartered Secretaries and Administrators, the Securities & Exchange Commission and the Ministries of Trade and Tourism, Finance and Economic Development, Justice, Industry, and Internal Affairs. The chairman who is appointed by the President on the recommendation of the Minister of Trade and Commerce must be a person who is experienced in or has acquired specialised knowledge of corporate, industrial, commercial, financial or economic affairs and is thus able to make outstanding contributions to the work of the commission – Section 2 of the CAMA.

There is a provision for a Registrar-General of the commission who must be a person who has qualified to practice law in Nigeria for not less than 10 years and he must have had experience in company law practice or administration for not less than 8 years. He is entitled to represent the Commission in legal proceedings in court – Section 8(1) of CAMA.

Members of the Commission other than ex-officio members hold office for 3 years and are eligible for re-appointment for one further term of 2 years. With the exception of the Registrar, generally, they are all part-time members – Section 3 of CAMA.

A member of the commission ceases to hold office, if he becomes of unsound mind or is incapable of carrying out his duties, if he becomes bankrupt or has made arrangement with his creditors, if he is convinced of a felony or any offence involving dishonesty– Section 3(4) of CAMA.

Members, other than the representatives of the Ministries, the Securities and Exchange Commission, the Institute of Chartered Securities and Administrators and the Registrar-General are entitled to such remuneration and allowances as the president may direct – Section 4 of CAMA.

The quorum for meetings of the Commission is 5: Section 5(3).

Functions of CAC

The functions of the Commission as set out in Section 7 of the Companies and Allied Matters Act, includes the following:

  1. To regulate and supervise the formation, incorporation and winding up of companies.
  2. To regulate, register and wind-up business names and partnerships
  3. To regulate, incorporate and wind-up incorporated Trustees/Associations.
  4. To maintain companies registry and offices in all the States of the Federation
  5. To arrange and conduct investigation into the affairs of any company where the interest of the shareholders and public so demands
  6. To perform such other functions as specified in any Act or Law
  7. To undertake such other activities as are necessary or expedient for giving full effect to the provisions of this Act.

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SON Certifies First Law Firm, Ace Solicitors, To Broadcast Law Practice In Pidgin

Ace Solicitors, a medium-sized law firm with offices in Abuja and Lagos was recently was on Wednesday, given an approval by Standards Organisation of Nigeria (GON), to commence part of  its law practice in Pidgin English.

Ace Solicitors, was certified as NIS ISO 9001:2015 Quality Management System (QMS) standard compliant by the Standards Organisation of Nigeria (GON)and the certificate presentation ceremony was held at BON Hotel, Maitama District, Abuja.

The programme was launched by SON in collaboration with the Nigerian Broadcasting Commission (NBC) tagged  “Law in Pidgin English Radio.”

Speaking at the event, the Director-General of the Standard Organisation of Nigeria (SON), Mr. Osita Aboloma, who was represented by Mr. Olumide Alade, said the presentation of the law broadcast in Pidgin English on radio would go a long way in educating Nigerians on their rights and privileges and also help them in understanding the laws of the federation better.

He said: “This is towards customer satisfaction. It is a drive towards customer focus and they are trying to make sure that they render services to the grassroots in a manner that no one has done before.

“When this has been broken down, all the parties involved in any legal issue will have a better understanding of what are their rights and privileges. This is the understanding that we didn’t have before. But now, with this Pidgin English language radio it has really become something that an average Nigerian can understand better.”

Also speaking, chairman of the occasion, Mr. Mark Emakpre, reiterated that the Law in Pidgin Radio would help the ordinary man on the street to understand the law and know what to do when confronted with issues bordering on law.

“It helps the ordinary man on the street because pidgin English is pervasive in the society. It is more understood by more people than any other language. So, it will help people more to understand their predicaments if they face the law or their rights. It will help people to understand the circumstances of their situations when they come face to face with the law,” Emakpre said.

In the same vein, Ambassador Brownson Dede was full of praise for the Chairman of Ace Solicitors, Igbako, acknowledging him as a man of high quality. Dede said law would be brought to the understanding of the ordinary man with the launch of “Law in Pidgin” on the radio.

Similarly, the Managing Director of Infinity Trust Mortgage Bank, Obaleye Olabanjo, also commended Ace Solicitors and urged it not to relent in its sense of innovation.

Chairman of Ace Solicitors, Mr. Bright Igbako, in his submission, said the broadcast of law in Pidgin language would help in decongesting the courts of many cases. It would take law to the door steps of ordinary citizens because the programme would interpret law in the language they could understand.

“We believe that to be able to make law relevance and to enable a cross section of Nigerians to understand the environment in which they work the legal system that governs the work and their lives must be interpreted to them in a language they understand,” Igbako said.

According to the statement by the made available to the press, the firm opened her doors for business in the year 1994 in Lagos as Ese Igbako & Co., and rebranded as Ace Solicitors in May 2006. The firm serves various clients ranging from individuals and families; start-ups and medium-sized private companies; of multinationals, government agencies, non-governmental and religious organisations. 

“The ISO 9001:2015 QMS certification process started with the quest of Mrs. Ese Igbako, Managing Partner of Ace Solicitors to get the firm to attain internationally recognised standard of service delivery. 

“With approval of the Board of Partners, she approached Mrs. Mfon Bankong the MD of Osborne Global Consulting for help in that regard. Bringing in the consultant turned out to be one of the best management decisions taken by the firm in recent times.

“The consultant took Ace Solicitors management and staff through many sessions of introduction and reorientation into the world of Quality Management Systems. After receiving rigorous training and complying with all the requirements of the standard, the firm was audited by officials of SON and certified in July 2019; making Ace Solicitors the first law firm in Nigeria to be certified as ISO 9001:2015 QMS standard compliant.

“The improvement in the quality of legal services rendered by the firm is evident by the feedback from existing clients and increase in the number of prospective ones. The other very major event which took place at the occasion was the launch of thefirm’s radio programme on the law in pidgin English designed for the benefit of
Nigeria’s very large population of pidgin English speakers as part of the firm’s Corporate social responsibility.

“The objective of the programme is to communicate the basic components of the Nigerian law and help the common man have the basic appreciation of the legal environment in which he lives and works as a citizen and residentsof the country. The programme christened law in Pidgin English seeks to bring the broad outlines of the Nigerian law to the common man’s level of understanding. 

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