How To Incorporate A Company📚🎲📚
THE 2 LEGAL WAYS OF DOING BUSINESS (PT. 2)
Last week on the Mini-Law-Series, we identified 7 benefits of Registering a Business Name. This week, we are moving to Incorporation of a Company.
Where your ideas can’t fit into a Business Name, the appropriate legal structure to put in place for your business is a Company and I will state briefly the reason for choosing to Incorporate a Company over the Registration of Business Name.
A Company can be formed by 2 or more persons, it could be limited by shares, unlimited or a Public Liability Company, bearing in mind the nature of this platform and the targeted audience, the discourse will be confined to a Private Limited Liability Company. Please note that the benefits highlighted in our last discourse as also applicable to a Company.
BENEFITS OF INCORPORATING A COMPANY
1. Legal Entity: A Company once Incorporated becomes a legal entity, with it’s own peculiar identity such that the Company can carry out functions such as acquisition of property, borrowing powers, power to enter into a validly binding contract through any of her designated directors. (remember our discourse on Secret Principles you don’t Know about Contract? Click on the link below for a refresher) And because it’s a legal entity, the persons who have formed it will not be held liable for any of her act (i.e. generally speaking). Let me cite an example, Some group of young men incorporated a Logistic Company named Carry Load Limited, Carry Load Limited was contracted by Madam Cash to transport some goods from Lagos to Ibadan. In the course of moving these goods, an accident occurred leading to the loss of the entire goods. Madam Cash has instituted an action at the High Court of Oyo State and she got judgment of N10,000,000.00 (Ten Million Naira) against Carry Load Limited. The position of the law is that she can’t execute the judgment against these group of young men.
2. Reputation with Customers: Regardless of the benefit of Registering a Business Name, an Incorporated Company has a greater advantage. Clients and Customers accord higher value to a Company, as same is not solely owned by an individual.
3. Continuity: A Company runs in perpetuity, the death of a Shareholder or any other Principal Officer does not bring the Company to an end.
4. Economical Hire: A Company can with ease take advantage of existing Government structure as it relates to labour. What am I saying? An Incorporated Company may request to the Directorate of the National Youth Service Corps (NYSC), that Youth Corp members be posted to her Organization, this Youth Corp Members having been paid certain allowance by the Government, the Company factors the Government allowance in paying remuneration. You will realize that the Company would have paid more if the allowance from the Government were absent or not reckoned with.
5. Power to Sue: Unlike a Business Name, a Company can sue and be sued i.e. maintain an action and equally defend an action. Here is the good news, debtors of the Company can be sued directly by the Company and the funds recovered.
6. Opportunity to include Members of your family and trusted allies: Because a Company is not a one man business, there is an opportunity to include as many people as possible (as long as they do not exceed the number prescribed by law), these persons may be family members, friends etc.
PECULIARITIES OF A COMPANY
Every Company has 2 class of persons, the Directors and the Shareholders. The Directors are saddled with the management and administration of the Company while the Shareholders are literally speaking the owners of the Company.
The law stipulates an age requirement for a Director of a Company and the removal is strictly governed by the provisions of the Companies and Allied Matters Act (CAMA)
The law equally regulates the Shareholders and has specified the age limit as well as the maximum number. Please note that the number varies depending on whether the Company is Private Limited Liability Company or a Public Limited Liability Company.
A Company is statutorily regulated and organized with designated meetings such as General Meeting, Statutory Meeting, Extra Ordinary General Meeting, Board Meeting etc.
Being statutorily regulated, her Annual Returns amongst other Statutory requirements (post incorporation documents) must be duly filed.
Do you want to Incorporate a Company? Do you want to convert your Registered Business Name into a Company? Please reach out to the Online Law Clinic Team on 08090956207 or onlinelawclinicteam@gmail.com
Thank You.
Oluwatosin Ajose Popoola Esq.,
For: The Online Law Clinic
#onlinelawclinic #onlinelawclinicteam #minilawseries #oluwatosinajosepopoola #nba #company #lawpavilion #corporateaffairscommission #doingbusiness #blog #blogger #onlinelawfirm
Last week on the Mini-Law-Series, we identified 7 benefits of Registering a Business Name. This week, we are moving to Incorporation of a Company.
Where your ideas can’t fit into a Business Name, the appropriate legal structure to put in place for your business is a Company and I will state briefly the reason for choosing to Incorporate a Company over the Registration of Business Name.
A Company can be formed by 2 or more persons, it could be limited by shares, unlimited or a Public Liability Company, bearing in mind the nature of this platform and the targeted audience, the discourse will be confined to a Private Limited Liability Company. Please note that the benefits highlighted in our last discourse as also applicable to a Company.
BENEFITS OF INCORPORATING A COMPANY
1. Legal Entity: A Company once Incorporated becomes a legal entity, with it’s own peculiar identity such that the Company can carry out functions such as acquisition of property, borrowing powers, power to enter into a validly binding contract through any of her designated directors. (remember our discourse on Secret Principles you don’t Know about Contract? Click on the link below for a refresher) And because it’s a legal entity, the persons who have formed it will not be held liable for any of her act (i.e. generally speaking). Let me cite an example, Some group of young men incorporated a Logistic Company named Carry Load Limited, Carry Load Limited was contracted by Madam Cash to transport some goods from Lagos to Ibadan. In the course of moving these goods, an accident occurred leading to the loss of the entire goods. Madam Cash has instituted an action at the High Court of Oyo State and she got judgment of N10,000,000.00 (Ten Million Naira) against Carry Load Limited. The position of the law is that she can’t execute the judgment against these group of young men.
2. Reputation with Customers: Regardless of the benefit of Registering a Business Name, an Incorporated Company has a greater advantage. Clients and Customers accord higher value to a Company, as same is not solely owned by an individual.
3. Continuity: A Company runs in perpetuity, the death of a Shareholder or any other Principal Officer does not bring the Company to an end.
4. Economical Hire: A Company can with ease take advantage of existing Government structure as it relates to labour. What am I saying? An Incorporated Company may request to the Directorate of the National Youth Service Corps (NYSC), that Youth Corp members be posted to her Organization, this Youth Corp Members having been paid certain allowance by the Government, the Company factors the Government allowance in paying remuneration. You will realize that the Company would have paid more if the allowance from the Government were absent or not reckoned with.
5. Power to Sue: Unlike a Business Name, a Company can sue and be sued i.e. maintain an action and equally defend an action. Here is the good news, debtors of the Company can be sued directly by the Company and the funds recovered.
6. Opportunity to include Members of your family and trusted allies: Because a Company is not a one man business, there is an opportunity to include as many people as possible (as long as they do not exceed the number prescribed by law), these persons may be family members, friends etc.
PECULIARITIES OF A COMPANY
Every Company has 2 class of persons, the Directors and the Shareholders. The Directors are saddled with the management and administration of the Company while the Shareholders are literally speaking the owners of the Company.
The law stipulates an age requirement for a Director of a Company and the removal is strictly governed by the provisions of the Companies and Allied Matters Act (CAMA)
The law equally regulates the Shareholders and has specified the age limit as well as the maximum number. Please note that the number varies depending on whether the Company is Private Limited Liability Company or a Public Limited Liability Company.
A Company is statutorily regulated and organized with designated meetings such as General Meeting, Statutory Meeting, Extra Ordinary General Meeting, Board Meeting etc.
Being statutorily regulated, her Annual Returns amongst other Statutory requirements (post incorporation documents) must be duly filed.
Do you want to Incorporate a Company? Do you want to convert your Registered Business Name into a Company? Please reach out to the Online Law Clinic Team on 08090956207 or onlinelawclinicteam@gmail.com
Thank You.
Oluwatosin Ajose Popoola Esq.,
For: The Online Law Clinic
#onlinelawclinic #onlinelawclinicteam #minilawseries #oluwatosinajosepopoola #nba #company #lawpavilion #corporateaffairscommission #doingbusiness #blog #blogger #onlinelawfirm
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