Things to know before registering a business
An Individual Enterprise is an unincorporated business with a single owner who pays personal income tax on profits earned from the business. It is the simplest business to set up, making it popular among individual self-contractors, consultants or small business owners. Individual Enterprise owners do business under their own names because creating a separate business or trade name isn’t necessary. However, they are allowed to have one.
One of the big advantages of running a business as a company is that all debts incurred by the company are the company’s own liabilities – they are not directly the legal liabilities of the shareholders or of the directors., unlike an unincorporated business, the company exists as a separate legal ‘person’ from the shareholders and the directors. Just like a natural or ‘real’ person, the company can own property (such as money, land, intellectual property etc) and can also be responsible for its own debts. In this way, the liability of the people who run the company is said to be ‘limited’; their liability extends only to the ‘stake’ that they have in the company.
Any incorporated company belongs to any of the following 2 categories:
Private Company
Limited by shares
It is a company formed by physical or moral persons, limited to their shares; it does not require any minimum initial share capital. Minimum shareholder is 1 and maximum of 100 shareholders. The shares usually refer to the stake held by the company’s shareholders. In such a company, the shareholders’ obligation is to pay the company for the shares they have taken in it. The individual puts money into the company, and in return the company gives it a percentage of ownership, in the form of shares (how much of a company the individual in question owns depends on how many shares he/she has in comparison with the other people, if any, who own shares in that company).
Limited by guarantee
A company limited by guarantee is owned by individuals and/or corporate bodies known as ‘guarantors’. Guarantors do not have any shares in the company and, generally, they do not take any of the profits. The owners of a company limited by guarantee will agree to pay a sum of money, known as a ‘guarantee’, if the company has any debts or becomes insolvent. The majority of companies limited by guarantee are set up by non-profit organizations such as sports and social clubs, unions, or cooperatives etc.
Unlimited
An unlimited company is very much like a regular private company limited by shares, since it does not have to use unlimited in its company name; the main difference arises when insolvency occurs. When formal liquidation happens and the company is unable to pay off its debts, the creditors will be able to use the personal assets of the directors and shareholders in order to pay off the liability. This means that regardless.
Public Company
A Public Limited Company is formed by physical or moral persons; liabilities are limited to their shares and minimum initial share capital is set by Regulators. A Public Limited Company has no limitations on the type of business in which it may engage in, on the number of shareholders and on listing its shares on a stock exchange. Minimum shareholders is 1 and there is no set maximum number.
Dispensation to add the abbreviation “Ltd”
Where it is proved to the satisfaction of the Registrar General that a limited company to be formed has an objective of promoting commerce, art, science, religion, charity or any other useful objective, and intends to apply its profits or other income in promoting its objectives, and that it does not intend to distribute its dividends to its shareholders, the Board of Directors may direct that the entity be registered as a limited company without the addition of the abbreviation “Ltd” to its name.
NB
A company limited by shares and by guarantee may be public or private. However, a company limited by guarantee or an unlimited company cannot be a public. Private Companies cannot engage in the business of banking, insurance, and finance. Investors wishing to participate in these sectors are required to set up public companies
Subsidiary
A business whose parent holds a majority stake or is a majority shareholder of 50% or more of all shares. It is a separate legal entity from the holding company and can operate different business from parent organization. Some subsidiaries are wholly owned, meaning the parent corporation owns 100% of the subsidiary.
Branch
A branch is set up by a parent company to conduct the same business operations at a different location; it has no separate legal standing and performs same business operations as parent organization.
Requirements for registering a company
Services related to business registration are delivered within 6 hours when the application complies with the requirements, services related to the secured transaction are delivered within 24 hours when the application complies with the requirements and the service of Intellectual property are delivered as follows:
- Patent: 12 Months (minimum period)
- Utility Model: 12 months (maximum period)
- Trade Mark: 3 months
- Industrial Design: 6 months
- Copyright: 1 week
The Registrar General shall not reserve a name:
Domestic companies with a turnover of less than 400,000,000
- Income statements and statement of financial position
- Resolutions for amendment, if any
Domestic companies with a turn over 400,000,000 and above
- Income statements
- Statement of financial position
- Statement of cash flow
- Statement of change in equity
- Financial statement notes
- Auditors and/or directors report
- Resolutions for an amendment if any
Holding Companies
- Consolidated Income statements
- Consolidated Statement of financial position
- Consolidated Statement of cash flow
- Consolidated Statement of change in equity
- Financial statements notes
- Auditors report
- Resolutions for amendment if any
Foreign Companies
- Income statements
- Statement of financial position
- Statement of cash flow
- Statement of change in equity
- Financial statements notes
- Notice on the business particulars of the applying branch
- Auditors report
Enterprise
- Provide income statements and statement of financial position for the last 2 previous years and provision for the current year.
Companies
- File all annual returns, if applicant has never filed any
- Income statement (profit and loss account) and statements of financial position (balance sheet) for current year, signed by company director or two directors (if applicable)
