TYPES OF COMPANY IN NIGERIA.
A company is a legal entity created by an association of people but separate from the people who created it, for a common goal.
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TYPES OF COMPANY IN NIGERIA.
A company is a legal entity created by an association of people but separate from the people who created it, for a common goal. A company is a legal representation of the people that established it. It is a type of business structure that is a separate legal entity from its owners. There are various types of businesses that can be established in Nigeria depending on the vision and mission of the establishment.
There are two main categories of company in Nigeria in which the types of company may fall in. Namely; Private and Public company.
1. PRIVATE COMPANY:
A private company is one stated in its memorandum of association to be a private company. It does not offer or trade its company stock to the general public on the stock market exchanges, but rather the company's stock is offered, owned and traded or exchanged privately or over-the-counter.
2. PUBLIC COMPANY:
A public company is any company other than a private company and it is also stated in its memorandum of association as a public company. Public company unlike a private company offers to trade its company’s shares to the general public, members of the public can own shares in a public company making them members of the company.
The following are the recognized types of companies in Nigeria;
SOLE PROPRIETORSHIP:
This is a type of company established by a single person. It is the least complex type of business and a great deal of businesses work with this model where the pioneer is the sole proprietor of the business in Nigeria. To begin this sort of business, you simply have to enroll your business name with the Corporate Affairs Commission (CAC), notwithstanding, there are many sole traders in Nigeria that are unregistered. This kind of business enjoys the benefit of the pioneer partaking in all of the benefit yet this additionally implies that the proprietor bears the entire gamble of the organization.
COMPANY LIMITED BY SHARES:
A company limited by liability is one, where in the members are liable to pay only amount owed by them in the company’s share capital in the events of the company winding up. A member will not need to pay where he/she has paid up his own share of money. Liability is only to the extent of unpaid amount by shareholders of the company. This type of company can either be a private or a public company. It is provided for under Section 21(1a) of CAMA. ·
COMPANY LIMITED BY GUARANTEE:
A company limited by guarantee is one, where in liability is to the extent of guarantee made by shareholder. In essence, a shareholder who undertakes to pay a certain amount or undertakes to make a certain contribution will only be liable to the extent of the amount undertaken by him/her to pay. This is provided for in Sections 21 (1b) and 26 of CAMA. However, a company limited by guarantee cannot be incorporated with the goal of making profit or for business purposes. ·
UNLIMITED LIABILITY COMPANY:
An unlimited liability company is one that has no limits on the liability of its members. The shareholders are jointly held liable for liability incurred and they have the obligations to meet any insufficiency in the assets of the company to enable settlement of any outstanding financial liability in the event of the company’s winding up. This liability on the shareholders to pay outstanding liabilities of the company will only apply in the eventuality of the company winding up. Section 21(1c) of CAMA provides for unlimited liability company.
CONCLUSION.
It is apparent from the foregoing that the different type suites different business vision and mandate and therefore, it is important that before going to register or even at the verge of registering you ask questions to be certain of which type to register your business under.
NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com
WRITTEN BY CHAMAN LAW FIRM TEAM
EMAIL: chamanlawfirm@gmail.com
TEL: 08065553671, 08024230080