The very first company law came up in Nigeria in 1912. It was established in Southern Nigeria; Lagos to be precise. This same law got amended some 5 years later in 1917 and it was then able to cover all parts of Nigeria. It was labeled then as the Companies Amendment and Extension Act of 1917. The two of them were replaced by the Companies Act of 1922 in 1922. Later in 1968, the Companies Decree took over from the 1922 Company Act. As at today, the recognized Company Law in Nigeria is the Companies and Allied Matters Decree of 1990.
The Corporate Affairs Commission (CAC) is responsible for regulating the Company and Allied Matters Decree of 1990. Aside its regulatory function, the CAC is also responsible for supervising the formation of companies. They equally oversee the process involved in the registration of companies as well as company management. The CAC should also be put in the know if the company decides to wind up.
In order to perform its duties as it should be done, the CAC has offices in practically all states of the country. They are assigned the responsibility of conducting investigations into internal affairs of a company, especially if the issues of shareholders are concerned. They are equally compelled to intervene if the interest of the general public is at stake. However, any issue related to transfer of shares or transfer of ownership of a company does not in any way concern CAC. The death of any of the shareholders too does not concern the CAC.
No one has the right to establish a company without due consultation and approval of the CAC. Before two parties can finally agree to form a company, they are supposed to inform the CAC and carry the commission along. This is because the CAC will be involved in the event need to dissolve the company arises. The company can only expand to new areas with the consent of the CAC.
A company must be registered before it has the right to begin operation.
Before you can establish a company, the CAC insists that you meet up with the following criteria:
- You must not be less than 18 years old, except if you are joined by at least two other individuals, who are at least 18 years of age
- You must have sound mind
- You must not be bankrupt
- You must not be disqualified under the section 254 of the Company Act, which will prevents you from being the director of a company. The said Section 254 said anyone guilty of fraud or any offence related to management, formation and promotion of a company is not qualified to form any company
- You must not be the owner of a liquidated company
- You can only form a company in Nigeria as a foreigner if you have the capacity to participate in or undertake business or trade in that regard.
Finally, the CAC classifies companies under either private or public company. This is according to Section 22, subsection 1 of the Companies and Allied Matters Decree of 1990.