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Starting your new business should be an exciting time and you should be looking forward to the great things you are about to do.
A private company is one of the business structures available to run a business. It can provide your business with:
- a separate identity distinct from you or the owner(s);
- the ability to access different avenues of funding;
- the capacity to seek business from government and international partners; and
- succession for the business.
Registering a Company imposes more compliance obligations on owners and managers than a Business Name so it requires some thought, knowledge and expertise. You will need to know what to do, when to do, and how to meet the obligations imposed by law and regulation in Nigeria.
Before you register your own company:
- Have the correct registration information: You need to know the intended business of the company (the objects), and the correct details of your proposed directors, and shareholders. Companies have run into trouble because they were registered with incorrect details due to a lack of planning, at the time they were looking to scale the business. When you are registering your business, be clear on the local content laws that may apply to your business. Also, find out if there are minimum share capital requirements for your chosen sector. Be armed with the right information, before you proceed to register your business.
- Be prepared to comply with post-registration obligations: As a new company owner, you may be unaware of the minimum compliance obligations you will be responsible for post-registration:
- Manage your company strictly following the provisions of your Memorandum & Articles of Association issued to the company on registration. Your Memorandum covers what business you can undertake or participate in, and your Articles of Association covers the rules for running the company day-to-day. However, you have the flexibility of amending your Articles of Association if they prove unsuitable for the way you operate your business, speak to a consultant now.
- You will need to hold your first Board meeting within 6 months of registration. It is also best practice to hold at least, one Board meeting every year, to consider the key aspects of your business and this is important if you would be considering additional investment in the future.
- You will need to hold an Annual General Meeting within 15 months of registration, and annually thereafter, to meet the mandatory requirement to appoint an auditor, circulate the accounts to the shareholders, and appoint/re-appoint any directors.
- You will need to file your company’s annual return with the Corporate Affairs Commission, within 42 days of the date of the Annual General Meeting. Failing to file your company’s annual return could result in your accumulating financial penalties or losing your company by striking off the Companies Register.
- You will have to maintain statutory registers in loose leaf, bound books or soft copy, and they must be open to inspection by the shareholders. You may or may not be aware that you are compulsorily required to keep certain registers, like, the Register of Members, Register of Directors & Secretary, Register of Directors’ shareholding, and Register of Charges.
- You have to issue share certificates to each shareholder. It is commonplace to find that private company owners do not know that they are compulsorily required to issue a share certificate to each shareholder within 2 months of allotting them shares.
- Apply for your TIN/VAT Certificate and file your monthly tax returns: There is the misconception that a start-up company is not required to pay taxes. Taxes are applicable to all stages of the life of a company, so you should apply for a Tax Identification Number/VAT certificate for the company as soon as it is registered. Having a TIN/VAT not only improves the credibility of the Company during fundraising activities but also allows the company to make its monthly VAT returns and annual Corporation Tax payments.
- Keep meticulous financial and other decision-making records: the owners and management of a new company should keep records of all decisions made for the company, significant or otherwise. The records of the company are one of the first set of documents requested by potential investors during a fundraising exercise. It is the difference between rejection and acceptance for funding.
Managing your company should not be daunting if you have the right team behind you. We can help you stay on top of your obligations post-registration, if you subscribe to our compliance service here.
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