INTRODUCTION
This is an allied matter which is the act of federal Republic of Nigeria to empower the corporate affairs commission (CAC) to register and incorporate companies in Nigerian. However, it is pertinent to understand the legal implications with regards to the various business students that can formed.
A prior understanding of these may save as from future hassles.
LIMITED LIABILITY COMPANY IN NIGERIA
This limited liability company can be referred as a non corporate business whose owners actively participate in the organization’s management and are protected against personal liability for the organization debts and obligations.
The limited liability company is a hybrid legal entity that has both the characteristics of a corporation and of a partnership. Limited liability company provides its owners with corporate, like protecting against personal liability it is usually treated as a non-corporate business organization for tax purposes.
It is important to know at the CAC is in charge of such task. And this CAC and it functions stands as corporate Affairs Commission (CAC) is the government body responsible for registering business names and companies in Nigeria. Now lets elaborate on how limited liability company in Nigeria can be registered.
Step I: it is advisable that you register your limited liability company through a lawyer. This will save you the legal headaches and help you avoid costly mistakes. It is pertinent to get a legal adviser in issues like this.
Step II: The minimum number of shares that can be registered for a limited liability company is one million shares.
Step III: It can be recognize by this three steps, example is XYX Global Ltd or XYZ Nigeria Ltd. Then a name search will be conducted by the CAC and it one of your chosen names is found suitable and unregistered it will be assigned to you.
Step IV: If your name is chosen, you will have up to 60 days to complete the whole registration by filling and filling the forms.
Step V: After the name search you need to choose your directors. That is after dividing the share ratio among the directors.
It is advisable you demand a CTC from your lawyer which is referred as (certified true copy) and most importantly, you must bear in mind that most price for registering a limited liability company is not static. This is due to the ever changing policy of CAC.
Note that the price you pay to incorporate a business depends on the caliber of the law firm you engage or how much your lawyer charges you for the services rendered.
Historically, this limited liability company is a relatively new business form in the United States, although it has existed in other countries for some time. In 1977, Wyoming became the first state to enact.
At this point states had little incentive to form an limited liability company because it remained unclear whether the internal Revenue service would treat an LLC as a partnership or as a corporation for tax purposes.
FORMATION OF LIMITED LIABILITY COMPANY IN NIGERIA
The state law governs the creation of an LLC. Persons firm an LLC by filling required documents with the appropriate state authority. The state authority usually requires for articles of organization. These are considered public documents and are similar to articles of incorporation, which establish a corporation as a legal entity. The minimum information requires for the articles of organization varies from state to state. Generally, it includes the name of the LLC, the name of the person organizing the LLC, the duration of the LLC, and the name of the LLC’s registered agent.
OPERATING AGREEMENT
Nearly even LLC maintains a separate within or oral operating agreement which is generally defined us the agreement between the members that governs the affairs of LLC. Members of an LLC are free to structure the agreement as they see fit. An LLC can usually amend or repeal provisions of its operating agreement by a vote of its members.
Thus, LLC states specifically provides that members of an LLC are not personally liable for the LLC’s debts and obligations. This limited liability is similar to the liability protection for corporate shareholders, partners in a limited partnership and partners in a limited liability partnership. Under certain circumstances, however, a member may become personally liable for an LLC’s debts.
STRUCTURE
The owners of an LLC are called members and are similar in some respects to shareholders of a corporation. A member can be a natural person, a corporation, a partnership or another legal association or entity. Unlike corporations which may be formed by only one shareholder, LLC’s in most states are formed and managed by two or more members. LLCs are therefore unavailable to sole proprietors, in addition, unlike some closely held, or 5 corporations, which allowed a limited number of shareholders, LLCs may have any number of member beyond one.
There are legal structure of the business. They exist on number of different structures that differ in several important aspects. Some of the common business structure are:
- Sole proprietorship
- General partnership
- Limited partnership
- Limited liability partnership
- Corporation (including s corporations)
- Professional associations
- Limited liability companies
- Business trusts
- Professional corporations.
This sole proprietorship of business legal structure is viewed as being one and the same as its owner. The sole proprietors in cause little expenses in setting up this form of business and it is the most common structure among small business.
In nutshell the above mentioned structure this is regarded as the various business structure.
General partnership is a collaboration between two or more people in business seeking a profit. General partnerships have pass through taxation and the owners are personally liable for the debt of the business. Thus, partnership can be formed with little formality, but because more than one person is involved.
– Limited partnership: It comprises both general partnership who run the business and are exposed to personal liability, and limited partners who invest in the business and have only their invested capital at risk.
– Limited liability partnership: Is equal to that of limited partnership except that all partners in an LLP enjoy limited liability.
– Corporation: This is the most common form of business entity among larger companies, unlike sole proprietorships and partnerships corporations are separate and distinct from their owners in the eyes of the law. It involves limited liability, easy transferability of shares and perpetual existence.
– Limited liability Company: It flows through taxation associated with LLC’s however, in many cases an LLC’s 13 better than 5 corporations for taxes because there are fewer hurdles and income can be allocated more flexibility.
In a nutshell the above mentioned structures are regarded as the various business structures and there classification in Nigeria.
CONCLUSION
Thus, on the other hand, the article of association, which forms the second part of the same document, specifies internal organization and relationship of members. It covers the conditions for transfer of shares as private company, the voting powers of the shareholders and proceedings at general meetings, the borrowing powers and duties of directors and the duties of the key functionaries. It also specifies among other things the use of the company seal and carries indemnity clause for the directors managers and other officers of the company Melcome Nig. Plc is a public limited liability company involved in both domestic and international business.
REFERENCES
Ahmed Abdulai (2001), Legality of Universal Banking. Business times April 9 15.
Bisi Oladipo (2001), Universal Banking. Banks, the Insurance Operators and Policy Holders. Business Times February 26 March 4.
Whynott, Philop P. 1999. The Limited Liability Company. Costa Mesa, Calif: James.
Callison, J. William, and Maureen A. Sullivan. 1994. Limited Liability.
