TYPES OF COMPANIES
The law regulating the registration of companies in Nigeria is the Companies and Allied Matters Act (CAMA).
TYPES OF COMPANIES
PRIVATE COMPANY LIMITED BY SHARES (LIMITED OR LTD)
The standard trading company and by far the most usual type of company. It confers full limited liability on its members, must have at least one director and one shareholder. Check that you have all the required information and register.
As a shareholder of a private limited company, the shareholders’ personal possessions remain separate (unless they are secured against the business for borrowing), and the shareholders’ risk is reduced to only the money they have invested in the company and any shares the shareholder holds which has not be paid for.
It is the most commonly registered business in Nigeria and it is often considered as prestigious by other companies and the general public due to its legitimate nature and the way important information is recorded at the Corporate Affairs Commission.
The liability of the shareholders to creditors of the company is limited to the capital originally invested, i.e. the nominal value of the shares and any premium paid in return for the issue of the shares by the company.
Consequently, the shareholder’s personal assets are protected in the event of the company’s insolvency, but any money invested in the company may be lost.
PUBLIC COMPANY LIMITED COMPANY
A public company is any company other than a private company. The minimum membership is two but there is no maximum as is the case with a private company. Public companies are also more regulated than private companies as they are subjected to different external laws outside the CAMA for them to operate. For instance, every public company must comply with the provisions of the Investment and Securities Act (ISA) and the Rules and Regulations of the Securities and Exchange Commission (SEC) in inviting the public to subscribe for any of their shares or debentures.
PUBLIC COMPANY LIMITED BY GUARANTEE
A guarantee company is not for profit and it is the type mostly formed by charitable organisations. A guarantee company does not have share capital, and the members do not own the company as they do not receive any profits and have no claim to the company’s assets.
All income generated is used to cover operating costs and to achieve the objectives of the company
The share capital of guarantee or unlimited (ULtd.) company is similar.
UNLIMITED LIABILITY COMPANY
An unlimited liability company in Nigeria is the one where its members' financial liability in the event of it being wound up has no limit. Where the financial liability of the company exceeds its assets, the company may reach into its members' personal property to liquidate its debt. In other words, its members have a joint and non-limited obligation to contribute to the assets of the company to enable settlement of its financial liability, if any, in the event of the company's insolvency
In conclusion it can be said that every kind of
Company be it Public, private or One Person Company has both limitations & advantages. Hence, it primarily depends on the nature of business, number of members & the mode of issuance of securities which needs to be considered while considering the option of incorporating a company. All the features, tax & statutory compliances need to be thoroughly analyzed while choosing the form of Company. The above discussed companies can be further divides into various other types viz. limited by shares, limited by guarantee, holding or subsidiary company, government company, foreign company as may be prescribed by the Act.
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 firstname.lastname@example.org
WRITTEN BY CHAMAN LAW FIRM TEAM
TEL: 08065553671, 08024230080