Benefits And Requirements For Registering A Business Name In Nigeria

Although not compulsory, it’s very important for all businesses to register their business name in Nigeria with the Corporate Affairs Commission (CAC). In this post, you will learn the benefits of registering a business name in Nigeria, as well as the requirements.

Registering your business has many benefits, both for you and the business itself. We’ll walk you through all you need to know about this, including the documents needed and CAC registration fees.

Benefits And Requirements For Registering A Business Name In Nigeria

What Is CAC Business Name Registration?

There are many things to be done before you start running a business in Nigeria. One of those important things is registering your business name with the Nigerian Corporate Affairs Commission (CAC).

The Nigerian Corporate Affairs Commission (CAC) was created to regulate and supervise the formation, incorporation, and management of businesses in Nigeria. This includes small brands, new businesses as well as established companies.

Now that you know what CAC means, you may be wondering what you will benefit from registering your business.

Well, there are many benefits of registering your business as a legal entity in Nigeria. Here are some of them.

1. Registering a Business Name in Nigeria Gives You a Trademark (and Protects it Too)

To secure a reputation and protect the brand name, every business has to be distinguished from other businesses offering the same product or service. For that to happen, each business must have its unique name, and it should be the only one with that name.

This is only possible if a business name is registered. For instance, let’s assume that Mike, a business owner (that has started 5 years ago) named his business “Precious Footwears,” but didn’t bother to register the name.

Now if another man (Scott) starts a shoe business today, uses the same name and registers it, it will become his forever. This will affect Mike, as he can’t use the name to advertise, apply for bank loans and do many other things.

Scott might have used the name purposely even after knowing that Mike is also using it. Scott might also have used the name innocently without knowing that another business bears it.

Anyways, Mike will not have any legal right over the business name because Scott registered it first. Eventually, Mike may have to change his business name or start a new one.

2. Registering a Business Name Will Make it Look More Professional and Legit

We all know about the fraud activities rampant in Nigeria. Due to this, most people are now vigilant and cautious about doing business with strangers.

If you fail to register your business name in Nigeria, how will you convince a potential customer (that hasn’t done business with you before) that you’re credible?

If your business name is registered, you can ask potential customers to confirm it. You can also give them your business card (which contains your business registration details). That way, they will be sure that they’re not dealing with a fraudster.

Suggested For You – 5 Ways to Create Employment in Nigeria

3. A Registered Business Name Is Compulsory for Government and Bank Loans

The Nigerian government can’t give you loans and grants if your business doesn’t appear on their database. The same thing applies to banks and other official financial institutions.

4. Registering Your Business Name Shields You From Some Types of Arrests, Detention and Lawsuits

This is very beneficial, especially if it’s a sole proprietorship business. Imagine 3 innocent people dying as a result of an industrial accident that happened in your company.

The families of the 3 victims will get lawyers for a class-action lawsuit. Even if the industrial accident is caused by human error or negligence, the owner of the business will not be arrested. Instead, the business and its assets will be sued.

Although this will affect your business reputation, activities, sales and other things, none of it will affect you in person.

However, if you didn’t register that business, you will be in trouble. You will be asked to pay settlement fees to the victim’s family.

If your business doesn’t have enough money at the moment, you will have to pay it out of your own pocket or sell your own personal properties.

A lesson of the day: A registered business name can be a saviour!

5. Eligibility to Sell in Stock Exchanges and Protection of Personal Assets in the Event of Bankruptcy

If your business is registered as a Limited Liability Company (LLC), your personal properties will be untouchable in the case of bad debt or bankruptcy. Your business will be seen as a separate human being.

For instance, assume that your company owes a bank NGN 3 million. If you (the business owner) have NGN 20 million in that same bank, the bank has no legal claim or right to deduct the debt.

If your business is registered as a Public Limited Liability Company (PLC), you can also trade shares on stock exchanges. That way, you can get more investors to buy your shares and invest.

Mind you, only PLCs are eligible to sell their shares on a stock exchange.

Requirements for Registering a Business Name in Nigeria

You have to meet some requirements before you can register your business name in Nigeria. Here are some of them.

1. The business owner must be at least 18 years of age (for sole proprietorship)
2. This rule may not apply if 2 or more individuals are shareholders in the business
3. You must have a name that is not already in use. You must propose two names. If the first one is not available or rejected, the second one will be considered
4. The business owner must confirm the legal status of the business. It can be private limited, private unlimited, etc
5. You (as a person) must provide a valid means of identification. It can be your NIN, driver’s license, international passport or voter’s card
6. In the case of multiple ownership like partnerships, shareholding, etc, each individual involved must be named as well as the shares held by each

You May Be Interested In – 10 Top-Ranking Business Listing Sites in The World

List of Documents to Upload for CAC Business Name Registration

The documents needed vary based on the type of business. So be sure to check the documents you need for your business type.

• Memorandum and Articles of Association
• A form of identification for the Shareholders, Secretary and Director. This can be a passport, driver’s license or National Identity Card)
• Foreign Certificate of Incorporation and Board resolution for subscription to Nigerian company (if needed)
• Residence permit of resident foreigners (in the case of foreign partners and employees)
• Evidence of payment to CAC (the amount depends on your business type and volume of shares to be registered)
• Availability Printout, also known as the Approval Note
• Stamp Duty Certificate. This should be printed after the stamp duty fee is paid
• Memorandum and Article of Association (If applicable)

How Much Does it Cost to Register a Business Name in Nigeria? – CAC Registration Fees

CAC registration fees vary depending on the type of business. Also, the cost of each feature might be changed anytime, so always confirm from the official CAC website.

1. Name reservation (₦1,000 for business owners).
2. Name registration for a private company (with a share capital less than ₦1 million) costs ₦10,000.
3. A private company with a are capital (more than ₦1 million but less than ₦500 million) costs ₦5,000 for every ₦1 million shares.
4. A private company with over ₦500 million shares will pay a registration fee of ₦7,500 for every ₦1 million shares.
5. If it’s a public company the registration fee is ₦20,000 for the first ₦1 million shares.

The Bottom Line

Although registering your small business will cost you some money, time and effort, it’s worth the sacrifice. To be honest, it is a small price to pay considering all the benefits that come with it.

We wish you a successful registration and hope it turns out well for your business. See you at the top!