This forum will answer legal questions concerning the Nigerian business environment. From copyright and trademark laws to labour laws, tax laws, e-commerce laws, telecommunications laws, consumer protection laws, insurance laws, banking laws e.t.c it will try to provide an accurate assessment of the legal situation and render advice that you may be needing, all for free

Q. What are the various forms of companies in Nigeria

(i) Sole proprietorship or sole trader;
(ii) Partnership; and
(iii) Incorporated company.

Sole Proprietorship
The sole proprietorship form of doing business is typically used by an individual intending to do business on his account. In general, this form of business is open to anyone in Nigeria wishing to engage in any kind of lawful business activity. The major statutory requirement for this form of business is registration of the business name where a name other than the name of the owner is to be used as the trade name.

Partnership
A partnership generally is "the relationship existing between persons carrying on a business in common with a view to make profit. Partnerships can either be ordinary, i.e., general partnership or limited partnership. Limited partnerships exist only in Lagos State and must be registered at the State's Limited Partnership Registry.
The partners are the joint owners of the partnership property and are personally liable (both jointly and severally) for the debts and obligations of the firm. The surname and initials of all the partners must be disclosed on letter head papers and trade circulars of the firm.

Incorporated Companies
In Nigeria, the word "company" is used to describe a company incorporated with limited or unlimited liability and registered under the Nigerian Companies and Allied Matters Act. Subject to certain exceptions, the CAMA
provides that no foreign company shall carry on business in Nigeria unless it is incorporated in Nigeria. There are three primary types of incorporated companies - an unlimited liability company, a company limited by guarantee and a company limited by shares. An unlimited liability company has no limit on the liability of its members and, therefore, has little attraction for investors. A company limited by guarantee limits its members' liability to the amount of their respective guarantees. This type of company is generally not for commercial purposes. By far, the most common type of company is company limited by shares whereby the members' liability is limited to the amount, if any, unpaid on the shares respectively held by them.

Q. What is the procedure for Liquidating an Incorporated Company in Nigeria?


• A statutory declaration declaring that the company intended to be liquidated is able to pay off all its debits within 12 months of commencing the liquidation, is issued by the directors (or the majority of them) within 5 weeks prior to the passage of a special resolution authorizing the liquidation;

• A general meeting is called where the special resolution for the liquidation of the company is passed;

• At the general meeting, one or more liquidators are appointed; after the appointment of the liquidator, the powers of the directors shall cease, except as far as the company in general meeting or with the approval of the liquidator;

• Within 14 days of his appointment, the liquidation must publish in a gazette and 2 daily newspapers a notice of his appointment and also send notification of his appointment to the CAC.

• Where the liquidator is of the opinion that the company will not be able to pay up its debt within the period stated in the solvency declaration, he is obliged to summon a meeting of the creditors and lay before them, a statement of the assets and liabilities of the company;

• where the liquidation will continue for more than one year, the liquidator is obliged to summon a general meeting of the company at the end of the first year from the commencement of the date the resolution was passed and of each succeeding year, or at the first convenient date within three months from the year or such other date the C.A.C. shall allow; laying before the meeting, an account of his dealings and the conduct of the liquidation during the preceding year ;

• when the affairs of the company have been wound up, the liquidator shall call a general meeting by notice published in gazette and in some newspaper printed in Nigeria and circulating in the locality where the meeting is being called, and lay an account - giving an explanation thereof - of the conduct of liquidation and how the property was disposed; and within 7 days, send a copy of the account to the C.A.C.

• as soon as the liquidation is completed, the liquidator shall prepare and send to every member of the company, financial accounts showing the conduct of the liquidation and the results of any trading done by the company; and convene a general meeting to lay before the members and explain the accounts; and within 7 days after the meeting, forward to the C.A.C. for registration, copies of the account and a statement of the meeting and the date it was held;

• prior to the laying of the accounts before the general meeting, the account should be audited by the auditor (s) of the company, who are obliged to also annex a report to the effect that, in their opinion and to the best of their information, they obtained all the information necessary for the audit, and proper records were maintained by the liquidator, and also that the accounts were in accordance;

• Three months after the registration of the statement of account of the liquidation with the CAC, the company is officially liquidated and will cease to exist.