It’s not only required by law that you must register your business in Nigeria before starting an operation, but it has some benefits too. You might want to ask, what does the owner of the business owner stand to gain after registration? In this post, we take a look at the advantages of registering a business name with the Corporate Affairs Commission (CAC).
In spite of the many challenges which confront the rule of law in Nigeria, Nigeria is still, gratefully, a country where the law rules many, many aspects of life. Thus, it is common sense that at the advent of any business, the face of the law should be sought and pleased for ease of business.
This is because, for any business that aspires to astronomical growth to meet the profiteering dreams of its proprietor or proprietors as the case may be, compliance with the law is basic to take full advantages of the sea of protections flowing through the law and to forestall sour skirmishes with those who enforce the law.
What are then the advantages of registering your business?
The whole idea of business law is to arm businesses and those who do them with what the law requires of them and the full guarantees it offers them.
If knowledge is power, it is especially so for those who do business because, without the knowledge of the law under which any business must operate with compliance, mistakes are bound to be made.
These mistakes which could be costly could even determine the life of a business. Surely, this cannot be the vision of anyone who seeks to do business.
Now, the Companies and Allied matters Act which is the principal legislation regulating corporate affairs in Nigeria minces no words in its irreducible demand that business names must be registered. In this wise, section 573 of the Companies and Allied Matters Act is instructive. It provides thus:
- Every individual, firm or corporation having a place of business in Nigeria and carrying on business under a business name shall be registered in the manner provided in this part of this Act if-
(a) in the case of a firm, the name does not consist of the true surname of all partners without any addition other than the true forenames of the individual partners or the initials of such forenames;
(b) in the case of an individual the name does not consist of his true surname without any addition other than his true forenames or initials thereof;
(c) in the case of a corporation whether or not it is registered under this act, the names do not consist of its corporate name without any addition.
(2) Notwithstanding subsection (1) of this section where-
(a) the addition merely indicates that the business is carried on in succession to a former owner of the business, that addition shall not of itself render registration necessary;
(b) two or more individual partners have the same surname, the addition of an `s’ at the end of that surname shall not of itself render registration necessary; and
(c) the business is arrived on by a receiver manager or appointed by any court, registration shall not be necessary.
From the foregoing, and it is abundantly clear that the law as encoded in the Companies and Allied Matters Act mandate that a business must be registered under the law to enjoy recognition under the law and all its attendant benefits, what then are some of these benefits?
Read more: How to register a company in Nigeria
Benefits of Business name registration in Nigeria
1. Government patronage
It is only a company that exists in the eyes of the law by virtue of registration that can lay any claim whatsoever to government patronage when the occasion arises.
For example, when a business is bidding for a government contract to do a thing for the public through the government or to supply a thing, it must be that the full evidence of the registration of such a business must be displayed before there is even consideration of such a bid not to talk of an award. The law mandates this.
When a business cannot show itself registered by displaying the certificate of the said registration, it simply cannot expect that it would land government patronage.
2. Government Policies
It is common knowledge that every government in Nigeria usually has an economic policy de jour to ease business in Nigeria.
With the recent emphasis on Small and Medium Scale Enterprises (SMEs) as a way of boosting the economy and empowering Nigerians, it can only be that whatever benefits coming from such emphasis flowing through the proper channels to businesses would first and principally rest on those businesses recognized by the law. This is another key advantage.
No government wants to waste key and scant resources on charlatans and their chimeric business, thus, the winnowing fork becomes registration.
3. Corporate Personality
This is a corporate jargon of staggering significance. For those companies doing business under registered companies as distinct from business names, the ritual of registration confers the holy grail of corporate personality.
This simply means that in the event of a conflict which is, in any case, inevitable, a company in its recourse to a court of law for adjudication can elect to sue or be sued in its name. This key advantage of registration forestalls many legal nightmares.
It is no secret that a business could sometimes need to take a loan either to sustain its original dream or to expand the precincts of that dream.
It is also no secret that the government in its bid to boost businesses usually comes up with financial incentives and stimulants to boost the small business and ensure their survival and virility.
With this in mind, can a business that is not registered in any way even be countenanced for any financial stimulants?
This is far-fetched. But in a country where corruption runs amok, anything is possible. But the shorter and less anxious route would be to get your business registered so that you can take full advantage of whatever financial package is available and attractive.
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