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FEB 2024 NEWS TITILOPE SINMI-ADETONA, FUNMILOLA ALIU, OGHOGHO MAKINDE AND CEPHAS CALEB

Under Nigerian law, the limited by guarantee (“Ltd/Gte”) entity is incorporated for not-for-profit activities which may include commerce, art, science, religion, sports, culture, education, research, charity or other similar objects. The consent of the Attorney-General of the Federation (“AG”) is required for the incorporation of a Ltd/Gte.[1]

The application for the AG’s consent is processed through the Corporate Affairs Commission (“CAC”). Upon review of the application and confirmation that the promoters have satisfied the requirements for incorporation of a company, the CAC will forward a request to the Federal Ministry of Justice (“FMoJ”) for the consent of the AG in connection with the registration of the Ltd/Gte.

The grant of the AG’s consent has historically taken several months to procure. However, the Companies and Allied Matters Act, 2020 now requires the AG’s consent to be issued within 30 (thirty) days unless the AG has cogent reason to withhold consent.[2] In light of this, the AG recently issued the Guidelines for the Issuance of the Attorney-General of the Federation’s Authority for the Registration of Companies Limited by Guarantee (“Guidelines”) to streamline the AG application process and ensure uniformity in procedures.

Under the Guidelines, chambers of commerce, trade associations, charitable foundations, research institutes, sports clubs, and associations can be registered as Ltd/Gte and[3] the conditions for grant of the AG’s consent are as follows:

  • The Memorandum and Articles of Association (“MemArt”) of the Ltd/Gte must include the standard terms prescribed under CAMA.[4] Top of Form
  • Objects aimed at professionalizing trades or issuing proficiency certificates are prohibited.[5]
  • The MemArt of the Ltd/Gte must not authorize participation in, or contributions to political campaigns, sponsorship of political candidates, or funding of political parties.
  • Promoters seeking to establish a research institute as a Ltd/Gte must obtain a letter of no objection from either (i) a statutory research body overseeing the subject of research, or (ii) a government agency whose regulatory activities or functions are related to or connected with the proposed activities.[6]
  • Where any government agency is involved in the promotion of a Ltd/Gte, the prior approval of its supervisory authority or ministry must be obtained.

Commentaries

Navigating some of the processes outlined in the Guidelines may present certain challenges.

Firstly, the Guidelines provide that, prior to obtaining the AG’s consent, foreign non-profit entities desiring to incorporate a Ltd/Gte must provide evidence of registration with the National Planning Commission (“NPC”). However, the NPC registration is done following the incorporation of the company, as the non-profit entity will be required to show its certificate of registration with the CAC. Thus, the requirement for NPC registration in the Guidelines before the incorporation of the Ltd/Gte creates a practical challenge. This requirement will need to be clarified by the FMoJ for a practical implementation of the Guidelines.

Furthermore, the Guidelines extends eligibility for registration as Ltd/Gte to various associations including religious bodies, associations and other similar entities. Interestingly, under the CAMA, these associations may be registered as incorporated trustees. While Ltd/Gte and Incorporated Trustees share similarities in their operational approach, they differ in compliance requirements. For instance, unlike Ltd/Gtes, Incorporated Trustees are not required to seek the consent of the AG before registration.

We are available to provide advice on registration of Ltd/Gte, including compliance with the NPC requirements. For more information on how we can assist, please contact businessadvisory@aluko-oyebode.com

 

 

[1] Section 26(4) of CAMA

[2] Section 26(5) of CAMA

[3] Paragraph 7(1) of the Guidelines

[4] This information includes the company’s name, registered office address, nature of its objects, any restrictions on the company’s powers, and whether it is a private or public company with limited liability by guarantee.

[5] Paragraph 6(4) of the Guidelines

[6] Paragraph 9(5) of the Guidelines