Limited Liability company in Nigeria: Everything you should know

Are you interested in registering or starting a limited liability company in Nigeria? If yes, stay on this page to get knowledge of the formation, registration, and structure of a limited liability company in Nigeria.

A limited liability company refers to a type of company or business entity limited by shares. In other words, this implies that the shareholders are accountable for the debts incurred by the company. The liability of a shareholder or partner is limited to the quantity of share capital or the amount of money they have invested in the business.

Types of Limited Liability Company in Nigeria
There are 2 types of limited liability companies in Nigeria.

1. Company limited by Guarantee: These companies are not profit-oriented, they are not formed to make a profit but to encourage, and promote art, science, technology, or religion. Here, the liability of the shareholder is limited to their guarantee or promise.

2. Company limited by Share: The liability of the partners is limited to the amount they’ve contributed to form, control, and manage the company. In event of liquidation, the shareholders lose just their nominal shareholding. This type of limited liability company is further subdivided into two parts namely:
Private limited liability company.
Public limited liability company.

A private limited liability company is a business entity that uses the abbreviation ‘LTD’ or ‘UNLTD’, it has a minimum of 2 partners, and a maximum of 50.

On the other hand, a public limited liability company is one with a minimum of 7 persons, and it has no maximum number of members. The abbreviation of this company is ‘PLC’, it sells a part of its shares to members of the public to buy and become shareholders of the company.

List of Documents Required For Registering a Limited Liability Company in Nigeria
1. Identity Proof – National ID Card/Voter’s Card/International Passport/Driver’s License.
2. A copy of the Articles of Association, and Memorandum of Understanding, allotment of share capital form, particulars of directors, and particular of the company.
3. A proficiency certificate if it’s a professional service like legal services, school, legal services, consultancy, training, media, hospital, etc. Examples are certificates of a trade association, professional body, union, etc.
4. Payment receipt from the CAC.
5. Stamp Duty Certificate from the FIRS.
6. A notice of approval for business name Reservation from CAC.
7. A residence permit will be required if a foreign shareholder is a member.
8. Address of the company’s head office.
9. A statement of the nominal capital shared among the members.
10. All directors must sign and complete the filled forms, and the memorandum of the association before filing, stamping, and, verifying them.

How To Form a Limited Liability Company
The partners are to convene to start the company and the area of specialization of the business. If it’s a hotel business, the minimum share capital is N10 million, and they choose a name. The partners agree to the number of shareholders they want, a child or minor can be made a shareholder (if the company has 2 other adults listed as directors).

The members agree on the amount of capital required for the company to form the business as well as managing the business. Most importantly, it is important to get a legal adviser or hire a lawyer to help you register your limited liability company. A lawyer can draft documents such as Statement of Nominal Capital, memorandum, and article of association to file at the Registrar of companies. This can help you avoid costly mistakes and reduce stress.
The Corporate Affairs Commission (CAC) is the governmental body responsible for the registration of business entities, companies, and, business names in Nigeria.