Business Options Available Under the Nigerian Law
On the other hand, a “Business Name” is defined as:
Without having to go into legalese, the key difference between a company and a business name is that a company becomes a person (in the eye of the law) the moment the company certificate is issued to you, whereas, if what you registered is a business name, you merely have a licence to do business in that particular business name once a certificate of registration is issued to you. By implication, a company has a life of its own (distinct from its investors), but a business name (being a mere permission to trade in that name) does not have a life of its own as it is merely your style of trading.
A company registered in Nigeria will usually end with one of the following expressions:
- "LTD/Limited" Meaning that the liability of the joint owners of the company is "Limited by shares"
- "ULTD/Unlimited" This means that the liabilities of the joint owners of the company is unlimited. The fact that each owner's liability is unlimited makes this kind of company undesirable for investors.
- "LGTE/Limited by Guarantee" This expression is used to refer to a company having the liabilities of its owners limited by what each person guarantee (promise) to pay in the event that there is a call on the owners to settle the company's liabilities. Please note that this kind of company does not have share capital and is generally not allowed to be operated as a profit making venture- these factors therefore makes the consent of the Attorney General of Nigeria necessary before such company can be registered.
While the above explanation goes for the types of company arrangement under the Nigerian Law, broadly speaking, a company will either be a PRIVATE COMPANY or a PUBLIC COMPANY.
There are many differences between a private company and a public company, but here are the key differences:
- If you start a public company, you will be able to sell your shares "publicly" (and this includes through public adverts and the floor of the Nigerian Stock Exchange), but if your company is a private company, you can only lure people to buy shares in your company by private means including one on one marketing otherwise known as "private placement"
- Private companies do not permit for more than 50 joint owners (except in limited instances) whereas a public company is allowed to have as many joint owners as it wishes to have.
This article is designed for information purposes alone and is not intended to take the place of a legal advice. Readers are therefore advised to seek proper legal advice.