TYPES OF BUSINESS AND NON-BUSINESS ORGANISATIONS


There are three types of business organizations viz:
1.     Sole Proprietorship (also called sole trader)
2.     Partnership; and
3.     Incorporated companies.
There are two types of non-business organization viz:
1.     Company limited by guarantee; and
2.     Incorporated Trustees.
SOLE PROPRIETORSHIP
It is a business organization in which an individual engages in commercial activities with a view to making profits. In such organization, he takes all the profits and bears all the risk. Therefore, if he is ill or dies, the business dies with him.

A sole proprietor need not register his business if he carries on his business under his surname or full name. This kind of business organization is cheaper and easy to set up without any legal constraint or formalities. A sole proprietor may engage in any legal business of his choice but if it involves a profession like legal practice, medical practice, surveying, etc. he must be professionally qualified
FEATURES
1.     It is cheap
2.     It is easy to set up.
SUITABILITY
1.     It is meant for a sole trader
2.     It enables quick decision making
PARTNERSHIP
According to section 1(1) of Partnership Act, 1890, partnership is the relationship which subsists between persons carrying on a business in common with making profit a view. That is, it involves not less than two persons to start a partnership but not more than twenty (20) persons. A partnership of more than 20 persons will, as a general rule, be an illegal association – Akinlose v. A. I. T. Co. Ltd (1961) WNLR 503.
It lacks legal capacity and the partners are personally liable for the debts and liabilities of the partnership unless it is a limited partnership. The formation and terms may be evidenced by partnership articles under seal or by mere agreement which may be written or oral – Ojemen v. Okoafuda (1977) NCLR 192 at 197 – 198.
A partnership does not have perpetual succession like incorporated companies. Equality is the rule in partnership unless otherwise expressly stated. Though, every partner is also jointly and severally liable for the liability of the firm because there is no separate legal personality.
Partnership is based largely on the agreement of the parties. As such, there are several essential elements of partnership which are agreement, contribution to capital, and sharing of profit.
Finally, every partner has a right to participate in the management of the firm except a sleeping partner (that is, one who is not active in the management of partnership) – section 5 and 24(5) of the Partnership Act. And, a partnership is not limited or circumcised by the ultra vires doctrine as they are empowered to undertake any kind of legitimate business of their choice.
FEATURES
1.     It has a minimum of 2 members and maximum of 20 members.
2.     It lacks legal capacity.
SUITABILITY
1.     There is the practice of equality amongst partners.
2.     It has simplicity of formation, flexibility and confidentiality.
INCORPORATED COMPANIES
Incorporated companies are also referred to as body corporate or registered companies. They have legal personality, that is, they can sue and be sued because they are legal entities distinct and separate from the persons of which they consist upon registration.
FEATURES
1.     The liability of members may be limited or unlimited
2.     It has a legal personality.
SUITABILITY
1.     It is good for making profit.
2.     It is capable of acquiring, disposing or holding of all types of property.


COMPANY LIMITED BY GUARANTEE
A company without a share capital (most times, it is not a profit organization). This is a company whose liability of its members is limited by the memorandum to such amount that members have undertaken to contribute to the assets of the company in the event of liquidation – section 21(1)(b) of CAMA. Such companies are incorporated for purposes of promoting commerce, art, science, religion, etc. and the income and assets are applied for the promotion of the objects and not available for distributing to members as profits – section 26(1) of CAMA. A company limited by guarantee shall not be registered with a share capital – section 26(2). Furthermore, the company and every such member is liable to a daily default fine if it carries out business for profit sake – section 26(6) of CAMA.
The total liability of the members of a company limited by guarantee to contribute to the assets of the company in the event of its being wound up should not at any time be less than N10,000 – section 26(7) of CAMA. This is intended to give some assurance to third parties dealing with the company.
Finally, section 26(5) of CAMA provides that the memorandum of such a company shall not be registered without the authority of the Attorney-General of the Federation.
FEATURES
1)    The liability will only have to be implemented after the commencement of winding up of the company.
2)    Members liability are limited by memorandum to such amount as they may respectively undertake to contribute to assets of the company in event of it being wound up.
SUITABILITY
1)    It is incorporated for purposes of promoting commerce, art, science, religion, etc.
2)    The income and assets are applied for the promotion of the objects and not available for distributing to members as profits.
INCORPORATED TRUSTEES
This is provided under PART C of CAMA. It is any class of persons bound together by custom, kinship, nationality or any association for educational, literary, cultural or charitable purpose – section 590 of CAMA. It must not be profit oriented.
From the date of registration, the trustee(s) shall become a body corporate by the name prescribed in the certificate and shall have perpetual succession, common seal, legal capacity, and power to hold and dispose land – section 596(1) of CAMA. The common seal must have a device approved by the Commission, and any instrument to which the seal is affixed in apparent compliance with the regulation for the use of the seal is binding on the corporate body notwithstanding any defect or circumstance affecting the execution of such instrument – section 604 of CAMA. The corporate body may contract in the same form as an individual – section 605 of CAMA. Though, no portion of the property may be paid or transferred in any form to any of the members of the association – section 603(1); except as bona fide and reasonable payment for services – section 608(5) of CAMA.
The name or objects of the corporation may be altered or changed – section 597 of CAMA. the trustees shall apply to the commission in the prescribed form setting out the alterations desired and attaching a copy of the resolution approving the change and duly certified by the trustees. If satisfied that the proposed change is prima facie lawful, the committee shall cause it to be published in two daily newspapers in the same way as an application for incorporation, calling for objections. It shall also direct the corporation to display a notice for the proposed change or alteration in a conspicuous place at the corporation’s office and any such place where a majority of members are likely to see it for a period of at least 28 days – section 597(2) of CAMA. If the Commission assents to the application, the alteration shall be made and in the case of a change of name, the Commission shall issue a new certificate in the new name in place of the former certificate – section 597(4) of CAMA.
A trustee must not be an infant, a person of unsound mind, an undischarged bankrupt or has been convicted of an offence involving fraud or dishonesty within five years of his proposed appointment – section 592(1) of CAMA.
The trustees of a corporation are required to deliver to the Commission an annual return showing, inter alia, the particulars of the corporation, that is, the name, address and occupations of the trustees, and members of council or governing body, etc. The return must be submitted not earlier than 30th June or later than 31st December of each year, but no return is required for the year in which trustees are incorporated – section 607(1) of CAMA.
The corporation may be dissolved by the court on a petition which may be brought for that purpose by the governing council or body, or by one or more of the trustees, or by members of the association constituting not less than fifty percent (50%) of the total membership or by the commission – section 608(1) of CAMA. It shall be dissolved if the aims and objectives have been fully realized and there is no longer need for its existence, or that its aims and objectives have become illegal or otherwise contrary to public policy, or that it is form for a specified period which has elapsed, or that it is just and equitable in all the circumstances that it should be dissolved – section 608(2) of CAMA.
After dissolution of the corporation, and satisfaction of its debts and liabilities, any remaining property of the corporation cannot be distributed to members of the association, but must be given or transferred to some other institutions having objects similar to those of the body – section 608(4) of CAMA. In cases where the property is not transferred to such institutions, it may be transferred to some charitable object – section 608(5) of CAMA.
                                                                    FEATURES
1.     It is a non-profit organization
2.     A trustee must not be an infant, a person of unsound mind, etc.

SUITABILITY
1.     It is suitable for club members, religious bodies, etc.
2.     It enjoys tax exemption.

BUSINESS NAME
Section 573(1) of CAMA provides that the Registrar shall cause business names to be registered in accordance with the provisions of this part of this Act. That is, a firm or company having a place of business in Nigeria and carrying on business under a business name must register in the manner provided by the Act.
It is cheaper, has privacy and can be easily dissolved but has no limited liability or perpetual succession.
It need not be registered but can be registered where a company, firm or individual wants to carry a name other than his real surname(s). The registration of a business name must be submitted to the Commission within 28days after commencing with an application form duly completed (Form 1 for a firm and Form 2 for an individual); two passport photographs of each partner; the availability of name form; and if they are professionals, their qualifying certificates.
It should be noted that registration of a business name does not give legal personality rather priority for the use of the firm’s name; and registration is also not a proof that there is a partnership unless the essentials of partnership exist.
Instances where there is a minor, the minor’s signature must be counter-signed by a senior police officer or a lawyer, and the word ‘minor’ must be written opposite his name.
TAKING INSTRUCTIONS/CLIENT INTERVIEW TOWARDS PREPARATION OF DOCUMENTS REQUIRED FOR REGISTRATION OF COMPANIES
Taking instructions involves obtaining information about personal details of client(s).
The personal details of the clients namely, the full names, addresses, occupation and age of the clients and every other person(s) concerned in the promotion of the company, for example, the subscribers. In taking instructions, note that the name, occupation and address should not be abbreviated.  The age of subscribers would need to be clearly stated to determine whether or not they have capacity.
DATE FOR THE COMPLETION OF REGISTRATION
The date for completion is necessary for the purposes of charging the fees and tax.  It should be noted that CAC now makes provision for the incorporation of a company on the same day the necessary incorporation documents are delivered to it.  This is done for a fee of N50,000 outside the normal statutory fees. 
NAME OF THE COMPANY
You need to take instruction on the name to be used along with alternative names. You must get a minimum of two names from your clients so that if one name is not available, you can change to another name without having to go back to your client(s) to ask for another name. 
It should be noted that as a rule, individuals have absolute right to trade in their personal names provided it is not restricted by law. It may be an individual’s name or a combination of names. It may also be an invented name. It may also be a geographical or a generic name but you should advice your client on the problems of choosing a generic name – Lagos Chamber of Commerce v. The Registrar of Companies, Vol 14 WACA 197, where it was decided that you cannot claim a monopoly on a generic name. Therefore, it is not well advisable to use it.
You are expected to conduct a search on whether the proposed name is already in use or not. A desk search can be conducted using the Directory of Registered Companies, published by the CAC. A proper search for the availability of the name must be conducted at the CAC.
The search for the availability of names can now be done online. The proposed names together with two alternative names are fed into a computer at the CAC and the details of the names are then printed out from the system. The printout is then used for payment at the bank. The search fee is N200 (Two hundred naira). The receipt is submitted along with the printout. The result of the availability should ordinarily come out within 24 hours.
Where the name proposed is available for use, a signed acknowledgement is given to the applicant.  But if the name is not available, the application is returned together with similar names to the applicant.
RESERVATION OF NAME – Section 32 of CAMA
Where the name is available, it will be reserved for a period of 60 days to enable the applicant file the incorporation documents – Section 32(1) and (2) of CAMA.
            Section 32(1) of CAMA provides that:
The Commission may, on written application and on payment of the prescribed fee reserve a name pending registration of a company or a change of name by a company.

            Section 32(2) of the CAMA provides that:
Such reservation as is mentioned in Section 32(1) shall be for such period as the Commission shall think fit, not exceeding 60 days and during the period of reservation no other company shall be registered under the reserved name or under any other name which in the opinion of the Commission bears too close a resemblance to the reserved name.
PROHIBITED AND RESTRICTED NAMES

PROHIBITED NAMES – section 30 of CAMA
Section 30(1) of CAMA prohibits the registration of a company with a name which is identical with that of a company that is already in existence or so nearly resemble that name as to be calculated to deceive – Niger Chemists LtD V. Nigeria Chemists (1961) All NLR 171, the plaintiff’s contention was upheld and the defendant was not allowed to register. 
An existing company in the course of being dissolved may signify its consent to the use of its name.
Such prohibited names are:
1.     A name that contains the words “Chambers of Commerce” unless it is a company limited by guarantee;
2.     A name which is capable of misleading as to the nature or extent of the activities of the company or undesirable, offensive or otherwise contrary to public policy; and
3.     A name where in the opinion of the Commission, would violate any existing trademark or business name registered in Nigeria unless the consent of the owner of the trademark or business has been obtained.

RESTRICTED NAMES
No company may be formed with the following names except the CAC consents to it.
Names that includes the words such as “Federal”, “National”, “Regional”, “State”, “Government” or such other names that may suggest government patronage, for example, “Ministry” or “Government Department”.
Names that contain the words such as “Municipal” “Chartered” or suggest any connection with municipality or local authority.
Names containing the words “Co-operative” or “Building Society”.
Names that contain the words “Group” or “Holding” unless the permission of the CAC has been obtained.
CAPACITY TO FORM A COMPANY – Section 20 of CAMA
Section 20 of CAMA provides that an individual shall not be eligible to incorporate a company if:
1.     He is less than 18 years of age, unless there are two other persons of “full age and capacity” who have already subscribed to the Memorandum of Association of the company.
2.     A person who is of unsound mind and has been so found by a Court in Nigeria or elsewhere.
3.     A person who is an undischarged bankrupt, and
4.     A person who is disqualified under Section 254 of the Act from being a Director of a company – having been convicted.
However, it should be noted that Section 20(3) of CAMA also provides that a corporate body in liquidation shall not join in the formation of a company under the Act.
Section 20(4) of CAMA provides that an alien may join in the formation of a company provided he complies with the provisions of any enactment regulating the rights of aliens to engage in business in Nigeria. For example, Sections 19 and 20 of the Nigerian Investments Promotion Council Act provide that before an alien can join in the formation of a company in Nigeria, he is required to register with the Council, among other requirements, failing which such an alien will lack capacity as provided under Section 20(4) of CAMA.

CLASSIFICATION OF COMPANIES
There are three classes of companies namely:
1.     CHARTERED COMPANIES – These are companies incorporated by the grant of a Charter by the Crown under the Royal Prerogative or a special statute, for instance, BBC in England.  In Nigeria, we do not have such companies.
2.     STATUTORY COMPANIES – These are companies incorporated by an Act of Parliament or a National Assembly and are normally formed to carry out special public duties, for instance, the Federal Mortgage Bank.
3.     REGISTERED COMPANIES – We have Registered Companies incorporated under the Companies Act.  This is the most common type of companies in Nigeria today and the most suitable business organisation for running an investment for profit.

CHECKLIST OF DOCUMENTS AND ITEMS REQUIRED FOR REGISTRATION OF BUSINESS AND NON-BUSINESS ORGANISATION
1.     Name – The proposed name of the company.
2.     Nature of business – The aims and objectives of the business, and sphere of operation.
3.     Type of company – Whether it is private or public, business or non-business organization
4.     Capital structure – Nominal value of shares.
5.     Issue of shares – Whether shares are to be issued to the public. If yes, how many shares.
6.     Articles of Association – Containing the internal regulations for the management of the company and the conduct of its business.
7.     Subscribers – Containing the names, addresses, occupation, age and nationality.
8.     First directors – Whether any of the above subscribers can be appointed, including their tax clearance attached.
9.     Secretary – Whether any of the subscribers can be appointed as secretary.
10.  Expatriate officers – Whether the company intends to employ expatriates.
11.  Address of registered office – An address other than a post box or private mail bag.
12.  Formation agreement – Whether it is intended that the company will bear the expenses of formation, including the promoter’s cost.
13.  Bankers – Bankers of the company and the authorized signatures to cheques.
14.  Taxation – Whether the company will claim any tax relief.
15.  Date of incorporation – The date when it is expected that the company will be incorporated.
16.  Any other matters.
CHECKLIST OF ITEMS REQUIRED FOR REGISTRATION OF BUSINESS NAMES
1.     Proposed name – To enable for search of name, availability and reservation.
2.     Nature of the business – The kind of business to be carried by the company.
3.     Address or principal place of business.
4.     Names of the partners or individual proprietor.
5.     Commencement – Date of commencement of business.
ITEMS TO BE INCLUDED IN A SIMPLE PARTNERSHIP AGREEMENT
1.     Names and address of partners.
2.     Name of partnership – This will determine whether or not the name should be registered.
3.     Nature of business – This will determine the extent of liability of the firm.
4.     Place of business – Where the business will be situated.
5.     When to commence business – The time or period when the business will commence.
6.     Duration of the business – How long the business will last.
7.     Contribution – The amount expected of each member to be contributed for partnership.
8.     Management – How the partnership agreement will be managed.
9.     Premium – The amount paid by a partner to be admitted into partnership.
10.  Profit – The mode of sharing profit.
11.  Salary – The mode of salary and what each partner will be entitled to.
12.  Partnership properties – The mode of acquired properties.
13.  Bankers – Bankers of the partnership.
14.  Accounts – Who the signatory to the accounts will be.
15.  Retirement – Where partnership is not for a fixed period, the retirement of any partner will dissolve the partnership. However, if it is for a fixed duration, no partner can retire except by the consent of other members.
16.  Expulsion or Suspension – No majority of partners can expel or suspend a partner except otherwise stated.
17.  Dissolution – A partnership is dissolved by death or bankruptcy of one partner except otherwise stated.
18.  Arbitration – Partners can go into arbitration to settle disputes.
ITEMS TO BE INCLUDED IN THE FORMAL CONSTITUTION OF INCORPORATED TRUSTEES AS REGULATED BY CAMA – Section 593
1.     Name
2.     Commencement
3.     Supremacy
4.     Nature of the association
5.     Registered address
6.     Aims and objectives
7.     Sources of fund
8.     Board of Trustees
9.     Common seal
10.  Auditors
11.  Officers of the Association
12.  Functions of the officers
13.  Election of officers
14.  Tenure of office of officers
15.  Vacation of office by officers
16.  Remuneration of officers
17.  Executive committee
18.  Powers and duties of Trustees
19.  Bye-election
20.  Meetings
21.  Amendments
22.  Special clause.
The constitution may be dated and signed by the Chairman or Secretary of the association.
ETHICAL ISSUES
1)    Association for legal practice – a lawyer shall not form a partnership with a non-lawyer or with a lawyer who is not permitted to practice law in Nigeria – Rule 5(1) of RPC.
2)    Engagement in business – Rule 7(1)(2)(3) of RPC.
3)    Lawyers in salaried employment – Rule 8(2)(3)(4) of RPC.
4)    Practicing fees – Rule 9(2) of RPC.
5)    Dedication and devotion to the cause of the client – Rule 14(1)(2)(3)(4)(5) of RPC.
6)    Representing client within the bounds of the law – Rule 15(1)(2)(3)(4)(5) of RPC.
7)    Representing client competently – Rule 16 of RPC.
8)    Conflict of interest – Rule 17 of RPC.
9)    Agreement with client – Rule 18(1)(2) of RPC.
10) Privilege and confidence of a client – Rule 19(1)(2)(3)(4)(5)(6) of RPC.
11) Lawyer as witness for client – Rule 20(1)(2)(3)(4)(5)(6) of RPC.
12) Withdrawal from employment – Rule 21(1)(2)(3)(4) of RPC.
13) Calling at client’s house or business or place of business – Rule 22(1)(2)(3)(4) of RPC.
14) Dealing with client’s property – Rule 23(1)(2) of RPC.


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