Benefits of Business Registration in Line With The New CBN and CAC Directives

There are directives from the Central Bank of Nigeria (CBN) and the Corporate Affairs Commission requiring operators of the Point of Sale (PoS) business to register with the CAC before July 4, 2024. There is also a directive from the CAC mandating all Skit makers with large followers on the social media platforms to register their businesses with it. These directives are not meant to witch hunt those engaged in the PoS operation and Skit making businesses. If for anything, the CAC is merely enforcing what is already provided in Sections 814(1), 815(2) and 863 of the Companies and Allied Matters Act (CAMA), 2020.

The Sections provide as follows:

Section 814(1):

“Every individual firm or corporation having a place of business in Nigeria and carrying business under a business name shall be registered in the manner provided in this Part if”

The “If” here means where the person does not carry on the business under his surname or forenames or a combination of any of them or their initials. For instance where a PoS operator

Carries on the business as “Ujor Lucky” or “U Lucky” or “Ujor L” without any other addition to the name, the registration of such business name is not compulsory. However, where there is any addition to the name as is often the case; let’s say for example “Lucky’s Pos business”, in this instance, the registration of such business with the CAC becomes compulsory according to the provisions of Section 814(1)(a)(b)

In the same vein, Section 815(1) of the CAMA stipulates the time from within which such business is to be registered with the CAC. The Section provides as follows:

Section 815(1):

“Every individual firm or company required under this Act to be registered shall, within 28 days after the individual, firm or corporation commence s the business in respect of which registration is required, furnish to the Registrar at the registry in the state in which the principle place of the business of the individual, firm or company is situated……..”

While Section 863 of CAMA

“(1) A person or association of persons shall not carry on business in Nigeria as a company, limited liability partnership or under a business name without being registered under this Act.

(2) If an individual, corporation or association of persons required under this Act to be registered carries on business without registration or under a name registration of which has been refused or cancelled under this Act, the individual, corporation or every partner in the firm commits an offence and is liable on conviction to a fine prescribed in the Commission’s Regulation from time to time or ₦200 every day during which the default registration of the business to be furnished to the Commission for registration within such time as may be specified in the order.

What this means is that business owners or PoS operators who are carrying on business in a name other than their surnames and forenames or a combination of their initials are required under the provisions of the Sections of the CAMA cited above to register their businesses. Now, for the purposes of clarity, let’s calculate the fine and then juxtapose it with the cost of registering the business (es) in order to bring to the fore the need and benefit of early registration of the business. For example, let’s say that John commenced a PoS business in May, 2019 (that is 5 years ago) under the name of John’s business Enterprises, the cost of registering the business as at that time under a business name would not have been more than ₦30,000 to ₦50,000. Now, having refused to comply with the directive from the CAC to register his business before the deadline, CAC has decided to institute an action against John for failure to comply with the provisions of the CAMA cited above. If John is convicted by the court (as I am certain he would be), he will be liable to pay a fine of ₦200 for each day of the failure to register after the grace period of 28 days. If you multiply that by 365days multiplied by 5years, John will pay a total sum of ₦365,000 (Three Hundred and Sixty-Five Thousand Naira) as fine. You see that there is no wisdom in not registering your businesses on time.

 More so, and apart from saving yourself from becoming an ex-convict and having to pay a huge amount as fine in place of the little amount a lawyer will charge to register the business for you, there are numerous advantages/benefits which business owners can enjoy by registering their businesses with the CAC and they are listed below;

•           Access to more funding in terms of loans and grants from commercial banks and governments which brings more opportunities to expand your business.

•           Credibility and enhanced image; your customers will be able trust you more when they know that your business is registered.

•           Ability to open corporate bank accounts: this helps in the efficient management of the business funds by allowing you to open an account in the name of the registered business separate from your personal account.

•           Visa applications: it makes it easier for you to be granted visa for business trips abroad.

•           Business name protection: it protects your name from usage by other business owners because you acquire exclusive usage of the name when your business is registered with the CAC and so much more.