January 12, 2021 In Consultancy, Corporate governance, Finance

5 PROCEDURAL STEPS FOR SETTING UP A BUSINESS ENTERPRISE/COMPANY IN NIGERIA.

Following the legal steps in setting up business enterprise or starting a company has enormous advantages that cannot be over emphasised especially when regard is given to the business and/or legal legitimacy it accords such businesses. Such business also enjoys some of the incentives which the law or government policies gives it under any sector which it operates.

It is based on the above premise that it is important to outline the basic steps involved in setting up a business or starting up a company in Nigeria for a successful business operation thus;

  1. Registration with the Corporate Affairs Commission: The first is to get the proposed business/company name registered with the Corporate Affairs Commission (CAC). First, the proposed business/company name will have to be submitted to CAC for search and approval if it’s free and available. Once the proposed busines/company name is available and has been approved for registration by CAC, it will be registered with CAC by the person in charge of the registration which is now entirely done via CAC’s website online. Note that if the owner of the business has the expertise to undertake the registration, he/she can do it but it is advisable that a service of an experienced professional be engaged in doing that especially with the new CAC website that is more complex to the earlier one.
  • Tax Identification Number (TIN): this is obtainable from the Federal Inland Revenue Services (FIRS). Though this TIN is now automatically assigned upon a successful registration of business/company with CAC. However, the hard copy of the certificate is not issued by FIRS unless a formal application is made to them and because business account cannot be opened by commercial banks without the hard copy of the TIN certificate, hence the requirement to make a formal application to FIRS to issue the hard copy certificate to the business/company upon the completion of the registration.
  • Special Control Unit for Against Money Laundering (SCUML): This certificate is issued and without which no business bank account can be opened for any business/company in Nigeria. It is a mandatory requirement of the law and which banks are mandated to comply with strictly. 
  • Intellectual Property Registration (IP): IP protection is very important and the knowledge economy orchestrated by technological innovation is already being driven by intellectual property. Thus, the knowledge and protection of IP rights continues and will continue to play a major role in business development, growth and expansion in the knowledge economy. Therefore, depending on the industry sector where the business operates, it will determine whether IP right protection is a precondition for starting a business operation or merely a strategy for business growth. For example, IP protection for starting a record label company or food processing company is precondition for starting the business. Whichever one that is the case or if the business promoters are not certain, the advice of IP expert is needed to guide the business start-up so as to prevent avoidable mistakes that might cause the business fortunes or regulatory sanction for failure to comply if it’s a precondition. If it starts operation without compliance. For example, some businesses are required to get their tradename registered with the trademark registry before they can start operation.
  • Other Regulatory Compliances: depending on the industry sector, there are other regulatory compliances which some businesses require before they can start business operation some of which includes registering and obtaining certificate of registration with the followings;
  1. National Agency for Food Administration and Drug Control (NAFDA)
  2. Standard Organization of Nigeria (SON)
  3. Department of Petroleum Resources license (DPR)
  4. National Communication Commission (NCC)
  5. Certificate of Capital Importation (CCI)
  6. Nigerian Investment Promotion Commission (NIPC)
  7. National Office for Technology Acquisition and Promotion (NOTAP), etc.

It is very important to reemphasis that some of this compliance are dependent on the sector of operation of the business if required in a particular sector, it is a mandatory requirement to obtain their certification/license before commencing business operation in Nigeria to avoid being visited with regulatory sanctions.

Finally, it is very apposite to note that the above industry regulatory compliances are pre-operational licenses because they are regulatory compliances which a company/business are expected to comply with before starting business operation. In the next article, we will deal with post-operation regulatory compliances which are regulatory compliances companies/businesses are required to comply with after commencing business operation in Nigeria.

Setting up a company or a business enterprise in Nigeria entails the setting of a business structure to engage in a business operation in any sector of the Nigerian economy. While some small scale and micro enterprises/businesses do not follow a more structural steps in setting up their business for lack of funds and the likes, entrepreneurs and business developers do not underestimate the need to follow legal procedures in setting up/starting a business enterprise as it is very important for optimal business growth and expansion of business interest.

Comment (1)

Edu Ekaette

Jan 1, 2021, 6:42 pm

A well penned and balanced introduction. Keep it up!

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