There are many types of business organisations in Nigeria that can be reqistered with the Corporate Affairs Commission. Nigeria is essentially a free enterprise country, subject only to such regulations as are necessary for national interest. As such, any person can participate in the Nigerian Economy. This participation may be through sole proprietorship, partnerships, and unincorporated joint ventures, limited and unlimited liability companies.
The following are the different types of business organisations that can be registered, their features and the kind of business they are suitable for:
- Sole proprietorship
- Partnership; and
There are also in addition, what are categorised as NON BUSINESS ORGANISATIONS. like;
- Company Limited by Guarantee e.g. Nigerian Stock Exchange
- Incorporated Trustees
FACTORS AFFECTING CHOICE OF BUSINESS ORGANISATIONS
Below is a rundown of the main factors affecting the choice of types of business organisations in Nigeria.
- Nature of the business
- The capital available may affect the choice of business
- The number of members.
- Extent of liability of members.
- Commercial expediency.
- The extent and sphere of operation.
- Position of the law/statutory requirements.
- The cost of registration and expenses
- Speed of processing and completion of registration.
- Post registration compliance and regulatory supervision e.g. where persons intending to set up a business venture do not wish to be publishing their accounts and filing reports to CAC, they may be advised not to set up a public company.
- The desire of the client himself. The business venture which the client has in mind is to be considered, then fine tuned to meet up with the provisions of the law.
FACTORS CONSIDERED IN CHOOSING THE TYPE OF COMPANY TO ESTABLISH
- The number of the membership. For Ltd. it is 50 while in a PLC it is unlimited.
- The size and nature of the proposed business
- The cost/ capital intensity of the business. For Ltd it must have a minimum authorised share capital of N10, 000 while that of a PLC is N500,000.00
- Proposed date of incorporation
- Restrictions on the issue and transfer of shares. In Ltd that right is restricted but this is not so with a Plc. S. 22(2) of CAMA.
- The formalities to be complied with depending on the type of company incorporated like holding of statutory meetings, filling full or abridged statement of finance etc.
NOTE-A company’s asset is different from the share capital of the company. Shares give a member participating right to the affairs of the company and a right to dividend.
You can also visit the website of the CAC to find out more about the types of Companies permitted to be registered in nigeria