Finance

Benefits of Registering your Business Name with CAC (Corporate Affairs Commission)

The benefits of registering a business name with Corporate Affairs Commission (CAC) are very many expecially if it’s a new business. It give your company a good standing with the laws of the Federal Republic of Nigeria. Not only will you establish a legal legitimacy to it, you will also gain access to formal financial systems.

However, the process does not only support your business’s credibility, it also provides a solid foundation for its growth and success.

The Corporate Affairs Commission (CAC), is a representative of the Nigerian government whose sole duty is regulation and management of companies in Nigeria.

It came into existence in 1999 following the enactment of the Companies and Allied Matters Act (CAMA). The benefits of business name registration include the following:

Obtain a Certificate of Incorporation Upon Registering Your Business

As a business person, when you register a business name with CAC, you will receive a certificate of incorporation once the registration process is complete.

This certificate of incorporation is important because it shows the authenticity of your business. Additionally, the CAC provides e-certificates that are recognized globally and can be used for international business ventures without your physical presence.

This means that, you don’t have to go through the struggle, time commitment, and financial burden of personally collecting the registration and incorporation certificates at any CAC office.

Transforms The Business Into an Independent Legal Entity

When you register your business name with CAC, your business gains the status of a separate legal entity, this means that it is now recognized by the law.

Therefore, this legal incorporation allows your business to exist independently from other owners or controllers in the industry.

This separation means that the business can engage in legal activities, like feeral or state contracts application, or other company contracts, participating in financial transactions, and even facing legal actions if any, an independent entity under the law.

It Draws The Attention of Investors

When your business has CAC registration, it becomes more appealing to potential investors. They have a feeling of safety investing in a registered company compared to one that does not have registration.

This is because they feel it does not have a proper structure. This makes it easier for you to get a lot of money to grow your business over a long time.

CAC Registration Enhances your Business Reputation Among Customers

Registering your business with CAC is not just paperwork, it is a smart public relations move.

It further supports your brand’s image and credibility, influencing how people perceive your business. People will take you more seriously in the business market.

This upgrade in reputation encourages customer trust. When your business is registered, it makes it easier to track and make verifications, thereby making customers more at ease to do business with you.

This increase in trust translates to a feeling of security when they want to make payments for your products or services directly into your business account, rather than a personal one.

Other Benefits Include

Provides legal protection for your business
Flexibility in obtaining loans and other financial aids
Saves your business From unnecessary sanctions
Protects the business from liability

Registering your Business With CAC

Many people think about how to register a business with CAC as a difficult procedure. But fortunately, the registration process is no longer manual, you can apply and get the registration done online.

You can do so from the comfort of your home, office or even business place. However, it requires some careful, yet easy steps to ensure everything goes smoothly. Let me show you these steps briefly:

Think About A Business Name

As a business owner, creating a business name demands careful consideration. It involves taking into account factors like the business’s values, industry, customer attraction, and most importantly, checking on the official CAC website, if the name is available.

Entrepreneurs must conduct searches to know if the business names they have in mind is already in use by some other person.

Reserve Your Business Name

Once you have the confirmation that the business name is still available, you can proceed to submit it for application.

When the business name gets approval, it is set aside for 60 days. During this time, the business owner needs to finish the registration process.

This can be done either in person or online by visiting the official CAC website.

Preparing The Memorandum and Articles of Association

As a business owner, you must create a memorandum and article of association, that will suit your company type.

This step is legally significant and requires the services of a legal practitioner. The lawyer prepares the necessary documents, including the names of initial directors or partners and, if applicable, shareholders.

Those involved in the agreement or document should be at least 18 years old and above and possess valid identity documents, such as identity cards. The CAC reviews all these particulars.

Fill out the Incorporation Form

Another stage in registering a business name with the CAC is acquiring and filling out the incorporation form. This comes after the memorandum and articles of association have been fully formed and processed. The form is expected to be submitted along with other documents. This For Might also need the assistance of a lawyer or a secretary. The following forms will be filled out:

CAC Form 7: this is to be filled by the directors, and all particulars of the directors must be filled.
CAC Form 2: This is filled by a director, and it includes share capital and return of allotment form.
CAC Form 3: A director and secretary of the company will fill out the notice of situation or change of address form.
CAC Form 4: This form can be filled by another individual or company accredited by CAC; this is the declaration of compliance along with the requirements of the CAMA form.
Two directors will fill out a form that appoints a secretary for the company.

Submission of The CAC Application Forms

After completing the forms either online or in person and making the necessary payments, the next thing to do is to submit the forms upon payment approval.

The CAC will however, do a review of the documents before notifying the entrepreneur about its approval. This process usually takes about a week.

Following this, the business name will be prepared for collection. Although the timeframe can vary due to factors like bureaucracy, workload, limited staff, geographical location, and the entrepreneur’s availability.

CAC Registration Requirements: List of Documents you Need to Complete the CAC Registration Process

What are the documents needed for CAC registration in Nigeria? The Corporate Affairs Commission (CAC) registration requirements in Nigeria includes the following documents for various types of business entities.

For Business Names (Sole Proprietorship or Partnership):

Proposed business name.
Two passport-sized photographs of the proprietor(s) or partners.
Valid means of identification (National ID, Driver’s License, International Passport, or Voter’s Card).
Duly completed CAC 1.1 Form (available on the CAC website).

For Limited Liability Companies:

Availability and reservation of proposed company name.
Memorandum and Articles of Association (MEMART).
Statement of Share Capital and Particulars of Directors.
Duly completed CAC 1.1 Form.
Valid means of identification for directors and shareholders.
Passport-sized photographs of directors and shareholders.
Evidence of payment of filing and registration fees.

NOTE: Please note that the requirements vary depending on the specific type of company and other factors. These document requirements are complete as at the time of writing this article in 2023 as seen in the official CAC website. Our editors will add any additional information on the required documents and processes for business registration in Nigeria whenever there is a change in requirements.

Meanwhile, it is very important to register your business name as a Nigerian entrepreneur, businessman or production company. Registering a business name with Corporate Affairs Commission (CAC) holds a lot of tremendous benefits for every business, from small-scale to medium to large-scale businesses.

Continue reading for more details because this article addresses all you need to be know about and after registering a business name or limited liability company in Nigeria with CAC as well as the numerous benefits that it holds.

What are the Benefits Of Registering A Business Name With Corporate Affairs Commission (CAC)?

The CAC refers to the Corporate Affairs Commission. It is the Nigerian government body responsible for regulating and managing companies in Nigeria. It was an entity introduced in 99 with the passing of the Companies and Allied Matters Act. Plenty of benefits come with registering a business name with CAC. They include;

1. Registration Comes With A Certificate Of Incorporation:

Registering a business name with CAC comes with incorporation once registration is complete, which can be handy for authentication purposes. The CAC also issues e-certificates that can now be used worldwide without being physically present. A business owner or agent does not have to obtain the certificate of registration and incorporation by walking in to be physically present, which can be tedious, time-consuming, and non-economical.

2. The Business Becomes A Separate Legal Entity:

Registering a business name with CAC makes a business a separate legal entity. This means that the business is like a person recognised by the law. The incorporated business is regarded by the law to be a separate entity and will be independent of the members or people controlling it. This also means that it can be sued and be sued and can get into financial transactions and processes as a separate entity.

3. It Attracts Investors:

The ability of a business to attract investors is higher and is easier when a business is registered. Investors feel safer investing in a registered company rather than an unregistered business without a formal structure. This way, it is easier to raise significant capital.

4. Improves The Reputation Of A Business With Customers:

It can be considered a public relations strategy. Registering a business with CAC enhances a brand image credibility and the perception of a business. It also improves the trust of customers in a business as they have more confidence to deal with an o registered organisation that can be tracked. They feel safe and comfortable paying for services and products into a business account with the name of a business instead of paying into a personal account.

5. Provides Business Legal Protection:

When a business is registered with the Corporate Affairs Commission, the business name is protected from being used by any other business in Nigeria, which means the possibility of the company’s name being used for fraudulent purposes is very low.

6. Flexibility In Obtaining Loans:

Getting a loan becomes easier for a business incorporated with the CAC. It improves the confidence of investors and lenders in a business by providing credibility and trust.

7. Saves Business From Sanctions:

Registering a business name is a compulsory regulation in Nigeria and saves businesses from complications that can be avoided, including sanctions and impersonation.

8. Protects Businesses From Liability:

A business registered as a private liability company protects business owners from having to pay with personal properties when they fail to meet up with loans since the business is now a separate legal entity. Businesses can be registered as a sole proprietorship, partnership, public limited liability, or private limited liability company.

How To Get Your Business Incorporated With CAC In Nigeria

Thankfully, the registration process is not fully manual any more. It can be simply done from the comfort of your home or wherever even if you choose to be mobile. However, it takes some thoughtful and careful processes:

1. Think About A Business Name:

A business owner needs to come up with a business name. Of course, certain factors have to be put to consideration, such as the values of the business, the industry of the business, customer appeal, and, almost most importantly, a business owner needs to check that the business name is available. Business owners can search for the business names they have in mind here on the CAC portal.

2. Reserve Your Business Name when Registering:

Once it is confirmed that a business name is not in use, then the business name can be submitted for application. If the business name is approved, it is reserved for a 60-day period. The business owner must complete the registration process within this period. You can rather do it in person or online by visiting the official CAC website.

3. Preparing The Memorandum and Articles of Association:

Business owners will be required to write a memorandum and article of association, which depends on the type of the company. This is a very legal stage, and the services of a lawyer will be needed. The lawyer prepares the documents, which require the names of the first directors or partners as well as the shareholders if they are. The participants in the agreement or documents must be age 8 and above. And they must have valid documents to verify their identity, which can include identity cards. All these will come under the scrutiny of the CAC.

4. Filling out The Incorporation Form when Registering your Business:

Another stage in registering a business name with the CAC is acquiring and filling out the incorporation form. This comes after the memorandum and articles of association has been fully formed and processed. The form is to be submitted along with other documents.

This will definitely require the services of an legal practitioner, or secretary. The following forms will be filled out:

CAC Form 7: this is to be filled by the directors, and all particulars of the directors must be filled.
CAC Form 2: This is filled by a director, and it includes share capital and return of allotment form.
CAC Form 3: A director and secretary of the company will fill out the notice of situation or change of address form.
CAC Form 4: This is filled by another individual or company accredited by CAC; this is the declaration of compliance along with the requirements of the CAMA form.
Two directors will fill out a form that appoints a secretary for the company.

5. Submission of The Forms for Registering Your Business:

Once the forms listed above have been completed online or onsite, along with payments for these forms. The next step to take is to submit the forms once the payments have been approved. The CAC will then scrutinise the documents before notifying the entrepreneur of approval. The entire process typically takes a week.

After that, the business name is ready for collection. However, the duration could also be dependent on lagging factors such as bureaucracy, workload, low quantity of staff, geographical location or distance or unavailability of personnel on the entrepreneur’s part.

Full List of Documents Needed to Complete the CAC Business Registration Process in Nigeria

Below is a list of the documents you need to make available during the CAC registration process:

The proposed name of the business.
The proposed objective of the business
The business memorandum and articles of association
Statement of the authorised share capital
Form CACC 1, reservation and availability of Name.
Names and addresses of the parties incorporating the company
Two recent passport photographs of every director and authentic means of identification.
Statutory declaration of compliance by a legal practitioner.
Name and address of the company secretary
Address of the principal business office
Filing with the Federal Inland Revenue Service for the purpose of tax.
Also any other documents you will be asked to provide by the commision.

Requirements to open a Corporate Bank account for your business after getting your CAC Certificate of Incorporation

After registering your business with the Corporate Affairs Commission (CAC), the next step is to open a Corporate company account to allow your do your business transactions seamlessly. Using a business account for financial transactions gives your company or business an official standing with your customers.

Note that, the requirements for opening a corporate bank account in Nigeria has slight differences from one bank to another, but generally, they would include the following documents and information. Requirements to open corporate accounts in a Nigerian bank are:

Certificate of Incorporation: This is a legal document that proves your company’s existence and registration with the Corporate Affairs Commission (CAC).
Memorandum and Articles of Association (MEMART): This document outlines the rules and regulations governing the company’s internal affairs. It’s a requirement to establish the company’s structure, share distribution, and management details.
Board Resolution: A board resolution is a formal document issued by the company’s board of directors, authorizing the opening of a bank account and designating signatories. This will typically specify who is authorized to operate the account on behalf of the company.
Valid Means of Identification: Valid means of identification for the authorized signatories, directors, and possibly major shareholders. This can include National ID, International Passport, Driver’s License, or Voter’s Card.
Passport-sized Photographs: Passport-sized photographs of the authorized signatories and possibly the directors and major shareholders.
Proof of Address: Proof of address for the company’s registered office, which could include utility bills or other official documents.
Tax Identification Number (TIN): A Tax Identification Number is required for regulatory and tax purposes.
Business Plan or Proposal: Some banks might request a business plan or proposal, especially for newer businesses. This outlines the nature of your business, your products or services, market analysis, and financial projections.
Bank Reference Letter: Some banks may request a reference letter from another bank where you have an account, especially if your business is established and has existing banking relationships.
Utility Bill: Proof of address for the company’s registered office or place of business.
Ownership Structure: Details about the ownership structure, including names and shareholding percentages of major shareholders.
Industry-Specific Documentation: Depending on the nature of your business, you might need additional documents or licenses related to your industry.

Conclusion

Registering your business name with CAC moves your business forward positively.

This move helps to boost sales and ensure that customers have confidence and trust in your brand.

Fortunately, the registration process is now less demanding, with many steps happening mostly online. The insights I have shared in this article can help you simplify the process and go through it without much stress.