How to Register Limited Liability Company in Nigeria CAC

Registering a business in Lagos, Nigeria may take about 20 - 35 days depending on the nature of

business amongst other factors. However, there are some bureaucratic and legal hurdles an

entrepreneur must overcome to incorporate and register a new firm in Nigeria.

This is a summary of the procedures and the associated completion time and cost for setting up a standardized company. Also, you can find information on business registration requirements for Lagos, Nigeria.

Procedure 1

Check the availability of company’s name with the Corporate Affairs Commission (CAC)

The Corporate Affairs Commission online system allows for online search of unique company names upon the purchase of an e-payment card for a flat fee of NGN 200 from an accredited bank. The system is widely used, but in most cases applicants have to go to the CAC office to complete this procedure. The time to conduct the availability of name search, receive confirmation and reserve the company name is usually 2 days. The company name reservation lasts 60 days, but can be renewed for a similar period.

Time to complete: 2 days

Cost to complete: NGN 200

Procedure 2

Prepare the requisite incorporation documents and pay the stamp duty

There are two stamp duty offices located in the state. One of the stamp duty offices is housed in the same premises as the CAC.

a. Preparing and printing the memorandum and articles of association;

b. Completing the requisite statutory forms, and;

c. Having the memorandum and articles of association stamped by the Federal Board of Inland Revenue Service.

Time to complete: 7 days

Cost to complete: NGN 13,098 (stamp duty at 0.75% per share capital + NGN 500 for incorporation forms + NGN 1,000 for stamping of extra copies of memorandum and articles of association)

Procedure 3

Declaration of Compliance (Form CAC 4) signed before a Commissioner for Oaths or notary public

A sworn declaration that the requirements of the Companies and Allied Matters Act have been met must be sworn to by (i) a barrister or solicitor engaged in the formation of the company or (ii) by a person named in the memorandum and articles of association as a director or secretary of the company. This procedure can be done before a notary public or filed at the state or federal High Court. The common practice is for this declaration to be sworn before a Commissioner of Oaths at the state High Court.

Time to complete: 1 day

Cost to complete: NGN 200

Procedure 4

Register the company with the Corporate Affairs Commission

The applicant must file with the Corporate Affairs Commission the required incorporation documents and forms, which include:

a. Stamped memorandum and articles of association (2 copies);

b. Form CAC 3, Notice of registered address;

c. Form CAC 7, Particulars of directors;

d. Form CAC 4, Declaration of compliance and the prescribed registration fees;

e. Copy of the reservation of company name approval;

f. Form CAC 2, Statement of share capital and return of allotment of shares.

The Corporate Affairs Commission introduced a same-day incorporation option at an increased statutory fee (5 times that of standard incorporation). Fee schedule for registration is the following: for the first NGN 1,000,000 of nominal capital: NGN 10,000; for every NGN 1,000,000 or less thereof of nominal capital after the first NGN 1,000,000: NGN 10,000; filing fee for the certified true copies of 3 forms (CAC 3, CAC 2 and CAC 7): NGN 7,000. Payment is received at the cashier's desk in the CAC.

There is a legal requirement for the company's incorporators to hire a CAC accredited professional, usually a lawyer, to undertake the administrative incorporation procedures. Given that the use of lawyers for such purposes is mandatory throughout the country, lawyer fees are accounted for in the overall incorporation costs. On average, a lawyer will charge NGN 60,000 to handle the entire incorporation process in this state.

Time to complete: 11 days

Cost to complete: NGN 87,000 (NGN 60,000 for legal fees + NGN 20,000 registration fees (NGN 10,000 for first 1 million shares and then NGN 10,000 for every 1 million or part thereof)+ NGN 3,000 for certified true copy of memorandum and articles of association + NGN 2,000 for certified true copy of particulars of directors + NGN 2,000 for certified true copy of particulars of shareholders)

Procedure 5

Register with the integrated Tax Office of the Federal Board of Inland Revenue for income tax and VAT

Entrepreneurs can register for both corporate income tax and VAT at the new Integrated Tax Office. For corporate income tax, the Federal Inland Revenue Service (FIRS) will require the applicant to complete tax registration forms. The new company registers at a Federal Tax Office nearest to its place of business or registered office. A letter is written to the tax authority applying for a tax clearance certificate. A form obtained from the tax office is filled and the following documents submitted with it:

a. Taxpayer registration input form (TRIF/2006/001 COYS);

b. Completed FIRS questionnaire;

c. Copy of memorandum and articles of association;

d. Names and addresses of directors;

e. Copy of the certificate of incorporation;

f. Name, address of tax adviser;

g. Letter of appointment of tax adviser and a letter of acceptance.

The application forms must be in triplicate and the original certificate of incorporation must be presented for 'sighting' by the controller before registration can be completed. Upon receipt of the completed taxpayer registration input form and all documents, a tax reference number is allocated. An application must be filed for the tax clearance certificate. Its issuance is not automatic.

The fees for the tax clearance issuance are as follows: for newly registered companies within 6 months of incorporation: no fee; for companies that are yet to commence business and show up for registration after 6 months of incorporation, if they request for tax clearance certificate a pre-operation levy of NGN 25,000 is payable for the first time and NGN 20,000 is payable for subsequent years until it files a notice of commencement of business.

Companies required to register for VAT should complete the VAT registration form (VAT Form 001, obtainable free of charge from all FIRS offices) and return it to the nearest integrated tax office, which will issue a taxpayer identification number (TIN). According to the VAT Act, companies required to register for VAT must do so within 6 months from the date of starting business operations. The TIN is issued in 1-2 days, but it is mailed with the VAT certificate, which is issued in a week.

Time to complete: 4 days

Cost to complete: No cost

Procedure 6

Register for personal income tax PAYE at the State Tax Office

The employers in the newly incorporated company are required to register with the relevant state tax authority for the purposes of deducting income tax from employees. Once an application is filed with a copy of the certificate of incorporation attached, a reference file is then opened for the company. There is no cost related to this registration.

Time to complete: 2 days

Cost to complete: No cost

Procedure 7

Receive a visit from a local government inspection officer

The inspector visits the premises to determine their size and to ascertain that the business is not in an area prohibited or restricted by any law. The local government issues a demand notice of any fees or taxes to be paid, with details on the payment method, the receiving bank, and the due date. Upon payment, the company has in effect fulfilled its obligation. The local government periodically checks payment and enforces court action on any default. The state and the local government determine through physical inspections which businesses are operating within its jurisdiction and issue various levies, assessments, and charges for payment by the company concerned. Failure to pay can lead to legal action in state and lower division courts.

Time to complete: 7 days

Cost to complete: No cost

Procedure 8

Pay fees at a designated bank

The initial registration fee varies depending on the company size between NGN 5,000 for small businesses and NGN 50,000 for large-scale businesses. NGN 18,500 is the approximate cost of business premises registration for a medium sized company carrying on general commercial activities in the city. The registration must be renewed each year (NGN 5,000 for each renewal). Fees are paid into a government account in a designated bank.

Time to complete: 1 day

Cost to complete: NGN 18,500

More information: http://www.cacnigeria.org