Giving your business a legal structure is the first thing to do as a startup. The legal structure of a business is a category of business organisation legally recognized in every country. Your business can either be an incorporated business structure or unincorporated one.
In Nigeria for example, an unincorporated business is registered as a business name whilst an incorporated business is a company.
When a business is incorporated, a separate legal entity is born, (created /incorporated), separate from its founders. For example Mr Chidi and Mr Ebuka incorporate a company called Lexis Limited, Lexis Limited is separate from them both and has the rights of a human being at law, although it is an artificial person. That incorporated business is called a company.
Registering a business name means you simply have a name, different from your natural name with which you do business. A single person(sole proprietor) or a group of people( as partners) can register a business name.
What advantages does a company have over a business name?
Because a business name structure is an extension of the proprietor(s), the business liabilities are unlimited. Legal protection for a business name almost doesn’t exist.
Also the lifespan of the business is tied to the lifespan of the proprietor and the death or exit of one of them (if they are partners) or the sole proprietor usually means the end of the business. This makes the business name structure unattractive to investors.
What makes a company unique is that it is a legal entity on its own, separate from the founders. The founders can also limit their liability by incorporating a limited liability company. That way they will not be personally liable for the companies’ debts.
Also, a company can outlive its shareholders as it is separate from its shareholders. We have companies that are over a century old and are still waxing stronger. I can bet that most (if not all the initial) shareholders have passed on but the company still exists.
These features make it easier for a company to attract angel investors, seed funding and venture capitalists because the investors’ funds are more protected. Companies can also raise capital by issuing shares.
In Nigeria, a limited liability company can be private or public.
A private limited liability company can only have a maximum of 50 shareholders and must have a minimum share capital of N10, 000. The name of private limited liability company must end with Limited or LTD.
A public limited liability company can as many shareholders as it desires and must have a minimum share capital of N500, 000. The name of every private limited liability company must end with Public Limited Liability or PLC.
Have any further questions regarding legal structure for businesses; please ask in the comment section. Thank you.
Tosin Omotosho is a real estate and business lawyer. As law is made for people and not the other way round, she believes in simplifying legal issues for everyone. She is the principal, Charis Legal Practice (a law firm dedicated to providing legal solutions for individuals and businesses. She shares legal tips on Facebook and Instagram at @legalsolutionswithtosin and @legitpropertyng.
Stakeholders chart path to building, construction sector’s growth
[FILE PHOTO] President of Nigeria Institute of Building (NIOB), Nduka N Kenneth; Project Coordinator Elan Expo, Jude Chime; Representative of the Egyptian Ambassador to Nigeria, Ugochukwu Nzurumuike; National Chairman NiMechE (Nigeria Institute of Mechanical Engineers), Felicia Agatuba of the Association of Professional Women Engineers in Nigeria (APWEN); and General Manager, Elan Expo, Suer Nihat at the ongoing BuildExpo exhibition at landmark Event Centre, Victoria Island, Lagos… November 2017
Experts have stressed the need for government to stimulate the economy through the building and construction sector stating that the industry is crucial to every nation’s socio-economic development.
Apart from the potential embedded with respect to employment generation, the various activities undertaken in the sector are germane to fostering effective sectorial linkages and enhancing, as well as sustaining economic development, they opined.
Speaking at the third edition of BuildExpo exhibition organized by Elan Expo in Lagos at the weekend, Past president, Nigerian Institute of Structure Engineers, Kunle Adebajo, said efforts at ensuring sound and sustainable national and economic development cannot be ignored, considering the importance of infrastructural and industrial development as well as provision of accommodation.
According to him, these are areas where the building and construction sector is indispensable.
Adebajo said the construction industry in the country due to the issues of the economy is still in its infancy stage despite the age of the country.
According to him, there is a lot to be done, an event like this is an opportunity to expand, explore what is happening in the industry looking at technology with improvement that can be made.
“We really need to get the country off the ground and what is clear is that technology and engineering and construction industry is basically the bedrock of the development that must take place,” he said.
President of Council for the Regulation of Engineering in Nigeria (COREN), Kashim Ali, noted that there has been growth in each successive year of the expo, which shows people appreciate what is going on and some markets have been created which industries have taking advantage of.
Ali said the expo gives opportunity for local manufacturer to improve on whatever content they are producing.
In his remarks, Project Coordinator, Elan Expo Nigeria/West Africa, Jude Chime, said exhibition is coming at a time when the government is trying to also promote investment.
Olaniwun Ajayi LP Offering Free Legal Advice
Olaniwun Ajayi LP will be offering confidential pro-bono advice from a Nigerian law perspective over the phone to interested members of the public on the first & last Tuesday of every month starting on 2nd of October, 2018 between 11am – 12pm.
With nearly 60 years’ experience in helping organisations and individuals achieve their goals, Olaniwun Ajayi LP has a track record of involvement in some of the largest and most complex transactions in dynamic sectors of the Nigerian economy. Our unparalleled capacity to handle intricate legal issues is the bedrock of our practice, and our clients depend on us to help translate their opportunity into reality.
The firm has consistently provided legal advisory services to private entrepreneurs, key sector operators, financial institutions, governments and governmental agencies as well as multinational corporations in an array of complex transactions. Olaniwun Ajayi has a strong dispute resolution department that handles litigation, arbitration and negotiation.
The other areas in which Olaniwun Ajayi renders legal advisory services are Energy and Natural Resource law, Intellectual Property law and policy, Engineering and Construction law, Insurance, Taxation, Shipping and Telecommunications law.
As a firm that is interested in providing qualitative services to its clientele, Olaniwun Ajayi is consistently evolving cost minimising techniques to meet client expectations. In tandem with this objective, Olaniwun Ajayi has developed close professional relationships with several leading international law firms, resulting in extensive access to law and practice in different jurisdictions.
Egypt, IFC inks agreement to support entrepreneurs, start-ups
CAIRO – Egypt signed a partnership agreement with the International Finance Cooperation (IFC) to support entrepreneurs, start-ups in Africa, boost innovation and drive economic growth.
The agreement was signed by Minister of Investment Sahar Nasr and IFC’s head of the Middle East and North Africa region Mouayed Makhlouf.
Upon this agreement, the Minister of Investment and IFC will select 100 promising entrepreneurs from all over Africa to connect them with international businessmen, investors, financial institutions and decision-makers at the 2018 Africa Conference during December in Sharm el-Sheikh, under the patronage of President Abdel Fattah Al Sisi.
Nasr said that this agreement will enhance Egypt’s position as a regional hub to attract entrepreneurs and emerging innovative companies and create a favorable enabling environment for these companies across Africa, which will help them grow, raise capital and maximize global reach.
IFC clarified that during the last two years, it provided around $65 million to technology companies and startups in the Middle East and North Africa, along with leading companies in business accelerators and funds such as Wamda and Flat 6 Labs and Algebra Fentures.
IFC Vice President for the Middle East and Africa Sergio Pimenta said that entrepreneurship is essential to create jobs, drive growth and foster innovation, adding that” overcoming the obstacles facing emerging companies will enable us to help Africa unleash its economic potential.”
For his part, Makhlouf stated that small businesses, including emerging ones, are the cornerstone of most economies in Africa and the Middle East.
“Governments across the continent can help create jobs and opportunities for their people by providing them with access to capital and guidance.” He added.
IFC invested in Egypt during current year $1.2 billion, which is the highest investment rate in the Middle East, especially after taking a lot of measures to improve the investment environment, according to Makhlouf.
He said that today’s agreement is the best opportunity to create jobs and remove obstacles that may face entrepreneurs and young people.
He explained that the growth rate in Egypt has become 5.8 percent, and the removal of obstacles to small investors and increase employment opportunities would lead to an increase in growth rate.
Egypt embarked on a bold economic reform program that included the introduction of taxes, such as the value-added tax (VAT), and cutting energy subsidies, with the aim of trimming the budget deficit.
Egypt also provides facilities in its economic climate and legislative reforms to encourage investors to invest in Egypt.
The legislative and regulatory aspects include the issuance of several laws and regulations, namely the new investment law and its executive regulations, the law of restructuring and reconciliation, bankruptcy and postponement of financing and privatization, and the amendments of the law of companies and the capital market and their executive regulations.
The new investment law includes a number of clear incentives and full guarantees for investors, providing them with several incentives and treats men, women, Egyptian and foreign investors equally.
The law also stipulates that foreign employees should not exceed 20 percent of the total number of workers in the projects established by non-Egyptian investors.
Moreover, the bankruptcy law regulates the financial and administrative restructuring for failed projects and companies, eliminating prison sentences in bankruptcy cases and limits punishments to a monetary fine.
It also aims to minimize the need for companies or individuals to resort to the courts and to simplify post-bankruptcy procedures.
The state also established the investors’ service center that provide services to aid in the procedures of establishing a firm, its contract, documentation, licensing and commercial registration.
On Wednesday, IFC announced that it supported the Middle East and North Africa’s private sector, boost innovation, drive economic growth, and create jobs with $2 billion in 2017/2018.
IFC, a member of the World Bank Group, provided over $1 billion in financing for its own account and mobilized another $1 billion from other investors in the region in fiscal year 2017/2018.
It referred a statement to its support which enabled businesses in the region to provide more than 119,000 jobs, distribute power to about 500,000 people, and deliver health care to more than 2.9 million people.
Subscribe via Email
- Aviation2 days ago
Medview relaunches flights to Yola, Maiduguri
- Technology2 days ago
GE Nigeria launches e-learning portal at Lagos Garage Week 2018
- Afripreneur6 hours ago
Uko Sokoni is bringing East Africans closer to the global marketplace for goods – Munwangari Cynthia
- Corporate Citizenship2 days ago
Dangote gets Top 5 Recognition in ‘Most Responsible Business In Africa’ Category
- Governance2 days ago
Europe’s Future Lies in the South and not the North, says Italian Finance Minister at Africa Conference
- Oil and Gas2 days ago
Belema oil set to provide jobs for youths
- Banking / Insurance5 hours ago
Standard Chartered deepens investments in digital solutions
- Banking / Insurance7 hours ago
Zenith Bank launches POS payments without cards