AN ASSIGNMENT

ON

PRACTICE OF BANKING [BFN 314}

TOPIC

COMPANY

PREPARED BY

ALABI SHEMA SHADE

HND I [MORNING]

SUBMITTED TO

DEPARTMENT OF BANKING AND FINANCE

SCHOOL OF BUSINESS STUDIES
FEDERAL POLYTECHNIC OF ADO EKITI
EKITI STATE
FEBRUARY, 2025.
Introduction

A company is a type of business structure that is a separate legal entity from its owners.

It’s a complex business structure, with higher set-up and administrative costs because of
extra reporting requirements and higher-level legal obligations. The structure, costs and
legal obligations make a company structure better suited to a medium to large business.

As a separate legal entity from its owners, a company can sue and be sued and incur debts.
The company’s owners (the shareholders) can limit their personal liability and are
generally not liable for company debts.

The company lodges an annual company tax return with the Australian Taxation Office and
must be registered for goods and services tax if the annual turnover is $75,000 or more.

The business operations are controlled by the company directors and owned by the
shareholders.

The company structure makes it easier to sell or transfer ownership of the business.

A company is an internationally recognised and respected business structure and confers a

perception of size and professionalism.

A company has its own advantages and disadvantages compared to other business
structures, so it’s very important to get legal advice early on about which structure will
best suit your business.

The Corporate Affairs Commission (CAC) is the body responsible for company
registration in Nigeria and all company registration applications must be submitted
directly to the CAC. The powers and authority of the CAC come from the Companies and
Allied Matters Act 2020 (CAMA).
The entire company registration processes are now done online through the CAC
accredited agent portal or an individual portal created by self solely for the purpose of
registration.

REQUIREMENTS FOR THE REGISTRATION OF A COMPANY IN NIGERIA

Below are the requirements for the registration of a company with the CAC:

1. Proposed name of the company (two names should be provided).

2. Details of the Company

 Address
 Email address and Phone number

3. Details of Director(s) and Shareholder(s)

 Names of Director(s) and shareholder(s),

 a copy of their means of identification ( e.g International passport or National
Identity Card or Voter's Card or Driver's License),
 Addresses, Phone numbers, Email addresses and Signatures on plain sheet of paper
 Incorporation Certificate of the company appointed as a shareholder (only
applicable if another company will be appointed as shareholder)
 Signatures sample of the directors and shareholders

4. Details of the Secretary (Secretary can be an individual or a company)

 Name and Address

 RC number of the Secretary (where it is a company)
 a copy of his or her means of identification (e.g International passport or National
Identity Card or Voter's Card or Driver's License) (where it is an individual)
 Phone numbers, Email addresses and Signatures on plain sheet of paper (where it is
a company, signature of one of the directors of the company.
It is important to take notice that appointment of secretary is no longer mandatory for a
local & small company.

5. The authorized share capital of the company

 This will depend on the services the company intends to engage in Nigeria. It is
important to note there is a mandatory share capital threshold applicable to certain
businesses in Nigeria.

6. The shareholding formula or percentage of each shareholder in the company if the

new company will have more than one shareholder.

7. Objectives of the company (i.e. the business the company intends to be carrying out
in Nigeria)

STEPS INVOLVED IN THE REGISTRATION OF A COMPANY

1. Name search

 The applicant will submit the two proposed names of the company on the CAC
portal for search as to its availability. An official fee will paid to CAC as regards the
name search.

 Where either of the names is available, an approval notice will be sent to the
applicant by CAC containing the approved name and an availability code that will be
required for the registration.

2. Registration

The steps for the company registration are as follows:

 The Applicant or accredited agent login into the CAC portal.

 The Applicant fills the following sections accordingly:

 o Company details
o Objects of the company(The activities the company intends to carry out)
o Authorized share capital (The sharing percentage for each shareholders if
they would be more than one shareholder)
o Witness details
o Directors details
o Secretary details (there is an option to skip this step)
o Shareholders details
o Persons with significant control (PSC) of the authorized share capital details
o An accredited agent's details
o Upload of necessary documents

 The Applicant proceeds to pay the CAC official fee and also the Stamp duty fee.

 After payment of the prescribed fees, the registration application is submitted and
stays pending until it is approved or queried by the CAC.

 Upon registration the CAC issues the soft copy of the following documents -
Certificate of Incorporation, Status Report and a Memorandum and Articles of
Association.

It is important to note that the CAC Certificate of Incorporation now comes with a Tax
Identification Number, which can be used for the tax filing of the company with the Federal
Inland Revenue Service (FIRS).

Finally, all the requirements for company registration can be submitted to an accredited
agent or directly to CAC online. The incorporation process in Nigeria can now be completed
without physical submission of any documents.

Companies wishing to be admitted to the official list of THE NIGERIAN STOCK EXCHANGE
must, in addition to complying with The Exchange’s rules Governing Listing, comply with
the relevant provisions of the Companies And Allied Matters Act 1990, the Investment and
Securities Act, 1999 Rules and Regulations made thereunder and other relevant statutory
requirements.

2. The detailed listings requirements of The Nigerian Stock Exchange are contained in
Chapters 1 to 10.

3. In broad outline, the methods for Listing of Securities on the Exchange are through:

a) Offer for subscription

An invitation by or on behalf of a company or other authority to the public, for subscription

of securities at a fixed price;

b) Offer for sale

An offer to the public by or on behalf of a shareholder, the proceeds which will go to the
vendor(s);

c) Placing
Sale by a broker to his clients, of securities, which have previously been purchased or
subscribed for;

d) Rights offer/issue
A privilege offer/issue to existing shareholders to acquire proportionately additional
shares in the company usually at a special price;

e) Capitalisation Issue
A bonus/scrip issue to existing shareholders;

f) Tender
An offer of specific quantity of shares and stock to the public by or on behalf of a company
or other authority or a third party for bidding;
g) Introduction
The Listing of securities already widely held;

h) Conversion
An exchange for or conversion of securities into other classes of securities;
i)Options
An offer to buy or sell some shares at an agreed price and time;

j) Any other method Council may prescribe.

General Requirements
a) Application for Listing will only be entertained if sponsored by a Dealing Member of The
Exchange.

b) The company must be a public company, which will issue or has issued an invitation to
the public to subscribe for its shares or has satisfied Council that the public is sufficiently
interested in the company’s shares to warrant Listing.

c) All securities for which listing is sought shall first be registered with the Securities and
Exchange Commission.

d) All application and documents to be considered or approved by Council should always

be submitted to The Exchange at the earliest possible date. The final prospectus for
approval must be forwarded to The Exchange at least seven working days before the date
for the completion board meeting.

e) Before the grant of Listing, all applicant companies shall sign a General Undertaking that
they will provide promptly certain information about their operations and that they will
follow certain administrative procedures.

f) Where it is desired to increase the authorized share capital, the directors shall state, in
the explanatory circular or other documents accompanying the notice of meeting, whether
or not they presently have any intention of issuing all or any part thereof.

g) A company which applies for Listing shall comply with the minimum public float
requirement prescribed by the Listing standard criteria chosen by the Issuer.

h) Subscriptions list must remain open for a maximum period of 28 working days.

i) A maximum of 10% of an offering will be allowed to staff of a company (or its

subsidiaries or associated companies) on special application forms. Such offerings may be
placed in Trust for the employees.

Where a proportion of the shares in a placement or public offer is reserved for employees,
the company shall provide The Exchange along with the General Undertaking a list of
members of staff who have been allotted shares, the number of such shares, the capacity in
which they work for the company and the number of years of service with the company.

j) All companies admitted to Listing on The Exchange shall pay a listing fee as laid down in
Appendix iv and these fees are subject to review from time to time.

k) All clauses in the company’s Memorandum & Articles of Association that restrict the
transfer of fully paid-up shares must be expunged.

l) All Listed companies shall advertise the Notice of their annual general meetings in at
least two widely read newspapers at least 21 days before the annual general meeting and
such advertisement must be conspicuously placed to cover a reasonable portion of a page.

m) The subscription monies pending allotment and return of funds to subscribers shall be
deposited in a designated bank account appointed by the Issuing House and the company.
All accrued interests in respect of cleared allotments shall be paid to the company to offset
part of the cost of the Issue.
n) Return monies arising from an unsuccessful application or abortion of an offer/issue
shall attract interest at the rate determined by the Commission.

o) These general requirements are not exhaustive and Council may add thereto or subtract
therefrom as considered necessary subject to the approval of the Securities and Exchange
Commission.

Difference between a public limited company and a private limited company

The main difference between a public limited company (PLC) and a private limited
company (Ltd) lies in their ownership structure, management, and level of regulatory
oversight. Here are some key differences between the two types of companies:

1. Ownership: A private limited company is owned by a small group of individuals or

entities, such as family members or investors, who hold shares in the company. In
contrast, a public limited company can have an unlimited number of shareholders,
and its shares can be traded on a stock exchange.
2. Management: In a private limited company, the management is typically controlled
by the shareholders, who may also be the directors of the company. In a public
limited company, the management is typically separate from the ownership, with a
board of directors elected by the shareholders to oversee the company’s operations.
3. Disclosure and transparency: A public limited company is subject to more
stringent regulatory requirements than a private limited company, including regular
financial reporting and disclosure of information to the public. This is because
public companies raise capital from the public through the sale of shares, and
therefore must provide a high level of transparency to ensure investor confidence.
4. Capital raising: Public limited companies have more options for raising capital than
private limited companies, such as issuing shares on a stock exchange or through a
public offering. Private limited companies typically raise capital through private
investment or loans from banks.
 5. Liability: Shareholders in a private limited company have limited liability, meaning
that their personal assets are protected from the company’s debts and liabilities. In
a public limited company, shareholders also have limited liability, but the company
itself may be held liable for any damages or losses incurred by its actions.

Differences between a Public and Private Company

S/N Public Company Private Company

The public holds ownership through

Ownership is privately held and limited to
1. freely traded stocks in the stock
owners, stakeholders, and private investors.
exchange market.

It is listed on a stock exchange and can

2. It is not listed on a stock exchange.
be traded freely.

It must be regulated by the standards Except it meets certain conditions, it doesn’t

3.
of the SEC. have to be regulated by the SEC.

It generates funds through the sales of It generates funds through independent

4.
stocks and bonds. investments from private investors.

It doesn’t have a limit on the maximum The maximum number of members is limited
5.
number of members. to 50.

In comparison to public companies, private

A public company is generally huge in
6. companies are usually small. But a big
size.
company can also be a private company.

It is required to give a financial report A financial report is only required if it is a

7.
every fiscal year. large proprietary company.

8. There is limited flexibility as changes in It can easily make decisions and adjust
objectives and policies require policies to meet situational demands without
 approval from the government. the hassle of bureaucracy.

Shares are easily transferable in a stock Shares in a private company are not easily
9.
exchange. transferable.

The terms "Corporation" and "Company" are sometimes used interchangeably, but have
different meanings. A corporation is a specific type of legal entity with certain
characteristics, the term "company" is a broader term that refers to any business
organization formed by a group of individuals. The distinction between a corporation and a
company lies in its legal structure, ownership, regulatory requirements, taxation, and other
factors.

Corporation

A corporation is a legal entity that is separate and distinct from its owners (shareholders).
It is created under the laws of a particular jurisdiction and has rights and liabilities similar
to those of individuals. Corporations are typically formed to conduct business, whether for-
profit or non-profit, and they can engage in various activities, including owning assets,
entering contracts, and suing or being sued.

Key Features of a Corporation:

 Limited Liability: One of the primary advantages of a corporation is that its

shareholders have limited liability. This means that the personal assets of
shareholders are generally protected from the debts and liabilities of the
corporation.

 Separate Legal Entity: A corporation is considered a separate legal entity from its
owners, which means it can enter into contracts, own property, incur debts, and
engage in legal proceedings in its name.
  Centralized Management: Corporations are typically managed by a board of
directors elected by the shareholders. The board of directors appoints officers, such
as the CEO and CFO, who are responsible for the day-to-day operations of the
company.

Company

A company is a business organization formed by a group of individuals, known as

shareholders, with the primary objective of engaging in commercial activities to generate
profit. A company can take various legal forms depending on the jurisdiction in which it
operates, including corporations, partnerships, limited liability companies (LLCs), and sole
proprietorships. However, in common usage, the term "company" often refers specifically
to a corporation, which is the most prevalent and well-known form of business
organization.

Key Features of a Company:

 Legal Entity: Like a corporation, a company is a separate legal entity from its
owners. This means that it can enter into contracts, own assets, incur liabilities, and
engage in legal proceedings in its own name.

 Ownership Structure: A company is owned by its shareholders, who invest capital

in the business in exchange for ownership interests represented by shares of stock.

 Profit Motive: Companies are typically established with the primary goal of
generating profit for their shareholders. They engage in various commercial
activities, such as manufacturing, trading, providing services, or investing in assets,
with the aim of maximizing revenue and profitability.
Difference between Corporation and Company

Basis Corporation Company

A corporation is a specific type of The term "company" is a broader term

legal entity that is separate and that refers to any business organization
Leagl Structure
distinct from its owners formed by a group of individuals,
(shareholders). regardless of its legal structure.

A corporation is considered a The legal identity of a company depends

separate legal entity from its on its specific legal structure. While some
owners. It can enter into contracts, types of companies, such as corporations
Legal Identity
own assets, incur liabilities, and and LLCs, have separate legal identities,
engage in legal proceedings in its others, such as partnerships and sole
own name. proprietorships, may not.

In a corporation, ownership is
Ownership interests in a represented by shares of stock, while in
Ownership corporation are represented by other types of companies, such as
Structure shares of stock, which are owned by partnerships and sole proprietorships,
shareholders. ownership may be held by individuals or
partners.

Ownership interests in a The transferability of ownership depends

Transferability
corporation are typically freely on the specific legal structure of the
of Ownership
transferable among shareholders. company.

Corporations are subject to specific

regulatory requirements under
corporate law, including the filing Regulatory requirements vary depending
Regulatory
of articles of incorporation, on the type of company and the
Requirements
maintenance of corporate records, jurisdiction in which it operates.
and compliance with corporate
governance standards.

Taxation Corporations are subject to Taxation varies depending on the type of

Basis Corporation Company

corporate income tax on their company. While corporations are subject

profits. to corporate income tax, other types of
companies, such as partnerships and sole
proprietorships, may pass through
profits to their owners, who are then
taxed at the individual level.

While corporations can be publicly

Some corporations may choose to
traded, other types of companies, such as
go public by offering shares of stock
Public Listing partnerships and sole proprietorships,
to the public through an initial
are typically privately owned and
public offering (IPO).
operated.