Company Formation – Regville Associates

THE ROLES AND RESPONSIBILITIES OF SHAREHOLDERS AND DIRECTORS IN A COMPANY: WHAT SETS THEM APART AND WHAT BRINGS THEM TOGETHER

In any company, shareholders and directors are two key groups of stakeholders, each with a unique set of roles and responsibilities. Although there are some similarities between the two, there are also significant differences that distinguish them from one another. Understanding these differences and similarities is essential for effective corporate governance and the long-term success of the company.

SIMILARITIES

Shareholders and directors both have a vested interest in the company’s success. Shareholders invest their money in the company, while directors oversee its management and make strategic decisions that can impact its performance. Moreover, both groups have legal duties and obligations that they must fulfill. Shareholders must act in the best interests of the company, while directors must act with due care and diligence and in good faith to promote the company’s best interests.

DIFFERENCES

The primary difference between shareholders and directors is their level of involvement in the company’s day-to-day operations. Shareholders do not typically participate in the management of the company and do not have the authority to make decisions on its behalf. Instead, they elect the board of directors, approve major decisions such as mergers or acquisitions, and receive dividends based on their share ownership.

In contrast, directors are responsible for managing the company’s operations and making strategic decisions that can significantly impact the company’s success. They oversee the company’s executives, set corporate policy, and make major business decisions such as approving budgets and investment decisions. Furthermore, directors have a legal duty of care and loyalty to the company, which requires them to act in the company’s best interests.

Another significant difference is in their liability. Shareholders are generally not personally liable for the company’s debts or legal obligations. Directors, however, can be held personally liable for breaches of their legal duties or for decisions that harm the company.

EXAMPLES

One example of shareholder involvement is the recent proxy fight at ExxonMobil. Activist investors sought to replace several members of the company’s board of directors with candidates who would prioritize the company’s transition to clean energy. Although the vote was unsuccessful, it demonstrated the power of shareholders to influence the company’s strategic direction.

On the other hand, a recent example of director involvement is the decision by Netflix’s board of directors to increase the company’s content budget by $1 billion in 2021. This decision aimed to maintain the company’s position as a leader in the streaming industry.

CONCLUSION

In conclusion, shareholders and directors are both important for the success of a company, but they play different roles and have distinct responsibilities. Shareholders have a financial stake in the company and elect the board of directors, while directors are responsible for managing the company’s operations and making strategic decisions. By understanding their roles and obligations, shareholders and directors can work together effectively and ensure the long-term viability of the company.

Regville Associates offers end-to-end legal, secretarial, tax and compliance service for companies. Our services aid companies in achieving and sustaining compliance with regulations.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

Mastering the Art of Pitch Decks: Key Elements to Attract Investors

Aspiring entrepreneurs and startups seeking investment capital need to create compelling pitch decks that convey the essence of their business idea to investors. A pitch deck is a visual presentation that provides investors with a concise overview of a company’s business model, market opportunity, and team. Creating a successful pitch deck can make the difference between securing funding and failing to attract investor interest. Here are some key elements that entrepreneurs should include in their pitch decks to attract investor attention.

First, the pitch deck should contain a clear and concise problem statement. The entrepreneur must demonstrate a solid understanding of the problem that their business idea addresses, and why this problem is worth solving. This is where the entrepreneur can leverage market research, industry data, and customer feedback to back up their claims.

Second, the pitch deck should provide a compelling solution that solves the problem. Investors want to see how the entrepreneur’s product or service provides a better solution than existing alternatives in the market. This requires a deep understanding of the competitive landscape and the ability to articulate a unique value proposition.

Third, the pitch deck should demonstrate a solid understanding of the target market and the size of the opportunity. Investors want to see that the entrepreneur has identified a market segment that is large and growing, and that there is a clear path to capturing a significant share of this market. This requires research on industry trends, customer behavior, and competitive dynamics.

Fourth, the pitch deck should explain the business model and revenue strategy. Investors want to see a clear plan for how the company will generate revenue and achieve profitability. This may include details on pricing strategy, sales channels, and customer acquisition costs.

Fifth, the pitch deck should showcase the team’s qualifications and experience. Investors want to see that the entrepreneur has assembled a team with the right skills and expertise to execute on the business plan. This may include resumes, bios, and LinkedIn profiles of the team members.

Finally, the pitch deck should include financial projections that demonstrate the growth potential of the business. Investors want to see a realistic and achievable plan for how the company will scale and generate returns on investment. This requires a deep understanding of the industry and the ability to forecast revenue and expenses over time.

In conclusion, creating a compelling pitch deck is a critical step in attracting investor interest and securing funding for a startup. By including a clear problem statement, a compelling solution, a deep understanding of the target market, a solid business model, a qualified team, and realistic financial projections, entrepreneurs can increase their chances of success. By following these key elements, entrepreneurs can create pitch decks that capture investor attention and propel their businesses towards success.

Regville Associates offers end-to-end legal, secretarial, tax and compliance service for companies. Our services aid companies in achieving and sustaining compliance with regulations.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

WHY STARTUPS FAIL: COMMON PITFALLS AND STRATEGIES FOR SUCCESS

Startups are often considered the backbone of innovation, creativity and growth in the business world. However, the journey of a startup is full of challenges and obstacles, and the odds of success are often stacked against them. According to statistics, over 90% of startups fail within their first year of operation. This alarming figure raises the question of why startups fail. In this article, we will explore some common reasons behind startup failure, citing examples and statistics to shed light on this important topic.

1. LACK OF MARKET DEMAND

One of the most common reasons behind startup failure is the lack of market demand for the product or service being offered. Startups often have a great idea that they believe will revolutionize the industry, but they fail to validate their assumptions and conduct market research to gauge customer demand. As a result, they end up investing time, money and resources into a product that nobody wants to buy. A classic example of this is Juicero, a startup that raised $120 million to develop a high-tech juice press that could only work with proprietary juice packets. However, the company failed to recognize that customers preferred to buy fresh juice from a grocery store instead of investing in an expensive machine and subscription service. Consequently, Juicero went bankrupt in 2017, just two years after its launch.

2. POOR CASH MANAGEMENT

Cash flow is the lifeblood of any business, and startups are no exception. Many startups fail because they underestimate the amount of money they need to keep the business running and fail to manage their cash flow effectively. This often leads to a situation where the startup runs out of cash before it can generate sufficient revenue to sustain itself. A prominent example of this is Webvan, a startup that aimed to revolutionize the grocery industry by delivering groceries directly to customers’ homes. Despite raising $1.2 billion in funding, the company failed to manage its cash flow effectively and went bankrupt in 2001, just two years after its launch.

3. LACK OF A SOLID BUSINESS MODEL

Another common reason for startup failure is the lack of a solid business model. A business model is a plan that outlines how a startup will generate revenue, create value for customers, and sustain itself in the long run. Many startups fail because they don’t have a clear understanding of how they will make money and how they will scale their business. A prime example of this is Color, a startup that aimed to disrupt the photo-sharing industry by creating a social network that allowed users to share photos and videos with their friends. Despite raising $41 million in funding, the company failed to monetize its platform and went bankrupt in 2013, just two years after its launch.

4. POOR TEAM DYNAMICS

The success of a startup depends not only on the idea but also on the team behind it. Many startups fail because of poor team dynamics, lack of experience, or simply because the team is not aligned with the vision and mission of the startup. A prime example of this is the story of Blippar, a startup that aimed to revolutionize the augmented reality industry. Despite raising $130 million in funding, the company failed to achieve its goals due to poor team dynamics and leadership issues. The company’s co-founders were in constant conflict, which led to a lack of focus and poor decision-making. As a result, the company went bankrupt in 2018, just seven years after its launch.

CONCLUSION

Startups are risky ventures that require a lot of hard work, dedication, and perseverance. While failure is a common outcome, it is important to learn from the mistakes of others and avoid making the same mistakes. In this article, we have explored some common reasons behind startup failure, citing examples and statistics to illustrate the importance of market research, cash management, business modeling, and team dynamics. By addressing these issues and taking a strategic approach to building a sustainable business, startups can increase their chances of success and achieve their goals.

In addition to the reasons mentioned above, there are many other factors that can contribute to startup failure, including regulatory challenges, legal issues, and macroeconomic factors. For example, the COVID-19 pandemic has had a significant impact on startups, with many struggling to survive due to the economic downturn and disrupted supply chains.

Despite these challenges, there are many success stories in the startup world, with companies like Airbnb, Uber, and Spotify revolutionizing their respective industries and achieving immense success. By understanding the factors that contribute to startup failure, entrepreneurs can take a proactive approach to building their businesses and increase their chances of success.

In conclusion, startups are an essential part of the business world, but they face many challenges and obstacles on the road to success. By learning from the mistakes of others, startups can avoid common pitfalls and build a sustainable business that creates value for customers and investors alike. With the right approach, dedication, and hard work, startups can achieve their goals and make a significant impact in their industry.

Regville Associates offers end-to-end legal, secretarial, tax and compliance service for companies. Our services aid companies in achieving and sustaining compliance with regulations.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

CONTRACT MANUFACTURING: THE BENEFITS AND EXAMPLES OF COMPANIES EMBRACING OUTSOURCING FOR OPERATIONAL EFFICIENCY AND COST SAVINGS

Contract manufacturing has become increasingly popular in recent years as companies seek to streamline their operations, reduce costs, and take advantage of specialized expertise. In this article, we will explore what contract manufacturing is, why companies are embracing it, and provide examples and statistics to illustrate its impact.

WHAT IS CONTRACT MANUFACTURING?

Contract manufacturing is a business model where a company outsources the production of certain components or products to another company, known as a contract manufacturer. This means that the hiring company does not produce the goods themselves, but instead relies on the expertise and resources of the contract manufacturer to produce the goods on their behalf.

The contract manufacturer typically provides the necessary production facilities, equipment, and labor to produce the product according to the hiring company’s specifications. This can include everything from product design and engineering to materials sourcing, manufacturing, quality control, and shipping.

WHY COMPANIES ARE EMBRACING CONTRACT MANUFACTURING

There are several reasons why companies may choose to embrace contract manufacturing:

1. COST SAVINGS: Contract manufacturing can be more cost-effective than in-house production, as the contract manufacturer may have lower labor costs or economies of scale in purchasing materials or using specialized equipment. A report by Technavio found that contract manufacturing can help companies achieve cost savings of up to 25%.

2. EXPERTISE: Contract manufacturers may have specialized knowledge or skills that the hiring company does not possess, such as in the production of complex electronic components or specialized chemicals. This can help companies improve the quality of their products and stay competitive in their markets.

3. FLEXIBILITY: Contract manufacturing allows the hiring company to quickly and easily adjust production levels without the need for significant investment in new equipment or facilities. This can be particularly valuable for companies that experience fluctuations in demand or have seasonal products.

4. RISK MITIGATION: Contract manufacturing can help companies reduce their risk by outsourcing certain production processes to specialized manufacturers with experience in managing quality, compliance, and supply chain risks. This can help companies ensure that their products meet regulatory requirements and are produced to the highest standards.

EXAMPLES OF COMPANIES EMBRACING CONTRACT MANUFACTURING

Many well-known companies have embraced contract manufacturing to achieve their business goals. Here are a few examples:

1. Apple: Apple contracts with manufacturers such as Foxconn and Pegatron to produce their iPhones, iPads, and other devices. This allows Apple to take advantage of the specialized expertise and resources of these manufacturers to produce high-quality products at scale.

2. Nike: Nike uses contract manufacturers to produce its footwear and apparel products. This allows Nike to focus on its core competencies of design and marketing, while relying on the expertise of its manufacturing partners to produce its products.

3. Procter & Gamble: Procter & Gamble has used contract manufacturing for many years to produce its consumer goods products, including detergents, soaps, and personal care products. This has allowed the company to take advantage of cost savings and operational efficiencies while ensuring high-quality products for its customers.

STATISTICS ON CONTRACT MANUFACTURING

The global contract manufacturing market is expected to reach $395.4 billion by 2025, growing at a CAGR of 8.8% from 2020 to 2025, according to a report by Mordor Intelligence. The report cites factors such as cost savings, expertise, and flexibility as key drivers of growth in the contract manufacturing market.

Another report by Technavio found that the contract manufacturing market in the Americas is expected to grow at a CAGR of over 9% during the period 2020-2024. The report cites factors such as cost savings, expertise, and risk mitigation as key drivers of growth in the contract manufacturing market in the region.

CONCLUSION

In conclusion, contract manufacturing is a popular business model that allows companies to take advantage of specialized expertise and resources to produce high-quality products at scale. With cost savings

Regville Associates offers end-to-end legal, secretarial, tax and compliance service for companies. Our services aid companies in achieving and sustaining compliance with regulations.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

ENSURING SHAREHOLDER PROTECTION: THE IMPORTANCE OF A WELL-DRAFTED SHAREHOLDERS AGREEMENT

A shareholders agreement is a legal document that outlines the rights and responsibilities of the shareholders of a company. It serves as a contract between the shareholders, and it is designed to protect their interests in the company. The agreement can cover various issues, including ownership rights, management control, decision-making, dispute resolution, and exit strategies. This article provides an overview of the importance of a shareholders agreement, what it should contain, what it shouldn’t, and some examples of clauses.

IMPORTANCE OF A SHAREHOLDERS AGREEMENT

A shareholders agreement is crucial in protecting the interests of shareholders in a company. It clarifies the rights and obligations of shareholders and helps to prevent disputes and disagreements. It also provides a clear framework for decision-making, management control, and ownership rights, which helps to avoid misunderstandings and conflicts. A well-drafted shareholders agreement can be beneficial in several ways, including:

1. PROVIDING CLARITY ON OWNERSHIP AND MANAGEMENT CONTROL: A shareholders agreement outlines the ownership structure of the company and the rights and obligations of each shareholder. It also outlines the roles and responsibilities of the management team and helps to prevent disputes and misunderstandings about management control.

2. PROTECTING SHAREHOLDER INTERESTS: A shareholders agreement provides protection for minority shareholders, ensuring that they are not unfairly treated by majority shareholders. It also sets out the rights of shareholders in the event of a company sale or liquidation.

3. SETTING OUT DECISION-MAKING PROCESSES: A shareholders agreement outlines the decision-making process for significant company decisions, such as mergers and acquisitions, and helps to avoid disputes over these issues.

4. RESOLVING DISPUTES: A shareholders agreement can provide a clear framework for dispute resolution, which can help to avoid expensive legal battles and preserve the relationships between shareholders.

WHAT A SHAREHOLDERS AGREEMENT SHOULD CONTAIN

A shareholders agreement should be tailored to the specific needs of the company and its shareholders. However, there are some key provisions that most agreements should include:

1. SHAREHOLDERS’ RIGHTS AND OBLIGATIONS: This section should outline the rights and obligations of each shareholder, including voting rights, dividend entitlements, and the transfer of shares.

2. MANAGEMENT AND CONTROL: This section should outline the management structure of the company, including the roles and responsibilities of directors and officers.

3. DECISION-MAKING: This section should outline the decision-making process for significant company decisions, including mergers and acquisitions.

4. DISPUTE RESOLUTION: This section should outline the dispute resolution process for any disputes between shareholders.

5. EXIT STRATEGIES: This section should outline the process for a shareholder to sell their shares, including any restrictions on the sale of shares.

WHAT A SHAREHOLDERS AGREEMENT SHOULDN’T CONTAIN

A shareholders agreement should not contain any provisions that are illegal, contrary to public policy, or discriminatory. Additionally, it should not contain provisions that give one shareholder an unfair advantage over others, or that limit the ability of minority shareholders to exercise their rights.

EXAMPLES OF SHAREHOLDERS AGREEMENT CLAUSES

Here are some examples of common clauses that may be included in a shareholders agreement:

1. DRAG-ALONG RIGHTS: This clause allows the majority shareholders to require minority shareholders to sell their shares in the event of a company sale.

2. TAG-ALONG RIGHTS: This clause allows minority shareholders to sell their shares along with the majority shareholders in the event of a company sale.

3. RIGHT OF FIRST REFUSAL: This clause gives existing shareholders the right to purchase any shares that another shareholder intends to sell.

4. NON-COMPETE CLAUSE: This clause prevents shareholders from starting or participating in a competing business while they are shareholders in the company.

5. DEADLOCK RESOLUTION CLAUSE: This clause outlines the process for resolving a deadlock between shareholders on a significant company decision.

CONCLUSION

A shareholders agreement is an essential document for any company with multiple shareholders. It provides clarity on ownership and management control, protects the interests of shareholders, and outlines the decision-making process for significant company decisions. A well-drafted shareholders agreement can help to prevent disputes and misunderstandings, and provide a clear framework for dispute resolution.

When drafting a shareholders agreement, it is essential to ensure that it is tailored to the specific needs of the company and its shareholders. The agreement should contain key provisions, including shareholders’ rights and obligations, management and control, decision-making, dispute resolution, and exit strategies. However, it should not contain any provisions that are illegal, contrary to public policy, or discriminatory.

Finally, it is essential to seek the advice of legal professionals when drafting a shareholders agreement. They can help to ensure that the agreement is legally binding, enforceable, and protects the interests of all shareholders. With a well-drafted shareholders agreement in place, shareholders can feel secure in their ownership rights and confident in their ability to manage the company effectively.

Regville Associates offers end-to-end legal, secretarial, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

ENSURING COMPLIANCE: A STEP-BY-STEP GUIDE ON HOW TO CHECK IF YOUR COMPANY IS ACTIVE OR INACTIVE ON CAC NIGERIA AND WHAT TO DO NEXT

The Corporate Affairs Commission (CAC) is the regulatory body responsible for the registration and regulation of companies in Nigeria. It is essential to know if your company is active or inactive on CAC Nigeria as it determines the legal status of your business. In this article, we will guide you on how to check if your company is active or inactive on CAC Nigeria and what to do next.

STEP 1: Visit the CAC Nigeria Website

The first step to check the status of your company is to visit the CAC Nigeria website, www.cac.gov.ng. The website is user-friendly and easy to navigate. On the homepage, you will see a tab that says “Public Search”. Click on it to proceed.

STEP 2: Enter Company Name

Once you have clicked on “Public Search”, you will be redirected to a new page. On this page, you will see a search bar where you can enter the name of your company. It is important to note that you must enter the exact name of your company as it is registered with CAC Nigeria.

STEP 3: Review Search Results

After entering your company name, click on the “Search” button. The website will display a list of companies that match the name you entered. Review the search results to locate your company.

STEP 4: Check Company Status

When you have located your company, check the status column to see if it is active or inactive. If your company is active, it means that it is currently in good standing with CAC Nigeria, and all necessary filings and fees have been paid. On the other hand, if your company is inactive, it means that it is no longer in good standing with CAC Nigeria. This may be due to the non-payment of annual fees or non-compliance with regulatory requirements.

What to Do Next If your company is active, congratulations! You are compliant with all CAC Nigeria regulations, and your business is in good standing. However, if your company is inactive, there are a few steps you should take to remedy the situation.

STEP 1: Determine the Reason for Inactivity

The first step is to determine the reason for your company’s inactivity. This may be due to non-payment of annual fees, non-filing of annual returns, or non-compliance with regulatory requirements.

STEP 2: Address the Issue

Once you have determined the reason for your company’s inactivity, take steps to address the issue. For example, if your company is inactive due to non-payment of annual fees, make the necessary payments to bring your account up to date. If your company is inactive due to non-filing of annual returns, submit the necessary documentation to CAC Nigeria.

STEP 3: Seek Professional Assistance

If you are unsure about how to address the issue, seek professional assistance from a lawyer or accountant. They can guide you through the process and ensure that you are in compliance with all CAC Nigeria regulations.

Conclusion

In conclusion, it is essential to check if your company is active or inactive on CAC Nigeria to ensure that your business is in good standing with the regulatory body. By following the steps outlined in this article, you can easily check your company’s status and take the necessary steps to address any issues. Remember, compliance with CAC Nigeria regulations is essential for the success and longevity of your business.

Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

CHOOSING BETWEEN A DELAWARE C-CORP OR LLC: PROS, CONS, AND FINDING THE PERFECT MATCH

When starting a new business, one of the most important decisions that an entrepreneur will have to make is what type of legal entity to form. In the United States, two of the most popular options are the Delaware C-Corporation and the Delaware Limited Liability Company (LLC). Both of these legal structures have their own unique advantages and disadvantages, and the choice of entity will depend on the specific needs and goals of the business.

The Delaware C-Corporation is one of the most popular types of legal entities for startups, particularly in the technology industry. According to data from the National Venture Capital Association, 43% of venture-backed companies in the United States are structured as C-Corporations. One of the key advantages of a C-Corporation is that it offers limited liability protection for the company’s shareholders, which means that they are not personally liable for the company’s debts and obligations. Additionally, C-Corporations are taxed as separate entities, which allows for greater flexibility in terms of raising capital and issuing stock.

Another advantage of the C-Corporation is that it is well-suited for companies that plan to go public or be acquired by a larger company. This is because the stock structure of a C-Corporation is more flexible than that of an LLC, and it is easier to transfer ownership of a C-Corporation through the sale of stock.

However, there are also some disadvantages to forming a Delaware C-Corporation. One of the biggest drawbacks is the potential for double taxation. C-Corporations are subject to corporate income tax on their profits, and then shareholders are subject to individual income tax on any dividends that they receive. Additionally, C-Corporations have more extensive recordkeeping and reporting requirements than other types of legal entities.

On the other hand, the Delaware LLC is another popular option for entrepreneurs, particularly for those who are looking for a more flexible legal structure. According to data from the Small Business Administration, LLCs accounted for 57% of all new business formations in the United States in 2019. One of the key advantages of an LLC is that it offers pass-through taxation, which means that the business’s profits are only taxed once, at the individual level.

Another advantage of an LLC is that it offers more flexibility in terms of management and ownership structure. In an LLC, the owners are referred to as members, and they can choose to manage the business themselves or hire professional managers to do so. Additionally, LLCs do not have as many recordkeeping and reporting requirements as C-Corporations.

However, there are also some disadvantages to forming a Delaware LLC. One of the biggest drawbacks is that LLCs do not offer the same level of limited liability protection as C-Corporations. While the LLC does protect the personal assets of the members from business debts and obligations, they can still be held personally liable for their own actions or negligence.

In order to determine the best legal structure for a new business, entrepreneurs should carefully consider their specific goals and needs. For example, a tech startup that plans to raise venture capital and eventually go public may be better suited for a Delaware C-Corporation, while a small business that values flexibility and pass-through taxation may be better off forming an LLC.

In addition to considering the advantages and disadvantages of each legal structure, entrepreneurs should also take into account the costs of forming and maintaining the entity, as well as any legal and regulatory requirements that may apply.

Overall, the choice between a Delaware C-Corporation and an LLC will depend on the specific needs and goals of the business. While each structure has its own advantages and disadvantages, the right choice can provide the foundation for long-term success and growth.

Regville Associates offers end-to-end legal, tax and secretarial service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

IS YOUR NIGERIAN COMPANY READY FOR A HOLDING COMPANY STRUCTURE? TIPS TO CONSIDER FOR EXPANSION, RISK MANAGEMENT, AND TAX PLANNING

A holding company is a type of business structure that owns other companies’ outstanding stock. It is a popular structure for many Nigerian businesses looking to expand their operations and consolidate their holdings. However, determining whether your company is ripe for a holding company structure can be a daunting task. In this article, we will explore some tips to help you determine whether your company is ripe for a holding company in Nigeria, backed by statistics, examples, and laws.

1. DIVERSIFICATION OF BUSINESS OPERATIONS: If your company has multiple business operations, it may be time to consider a holding company structure. A holding company can hold multiple subsidiaries, each with their unique operations, while the holding company oversees the management and governance of these subsidiaries. According to the Nigerian Bureau of Statistics, the top five sectors that contributed to the country’s Gross Domestic Product (GDP) in the second quarter of 2021 were Agriculture, Trade, Information and Communication, Manufacturing, and Oil and Gas. Companies that operate in multiple sectors and want to streamline their management can benefit from a holding company structure.

2. EXPANSION PLANS: If your company is planning to expand its operations to other locations or countries, a holding company structure can be beneficial. A holding company can hold subsidiaries that operate in different locations, making it easier to manage operations in various countries or regions. According to the National Bureau of Statistics, in 2020, Nigeria’s export trade was dominated by crude oil, accounting for 73.27% of total exports. Companies looking to expand into the export market can benefit from a holding company structure.

3. LIMITED LIABILITY PROTECTION: A holding company structure can provide limited liability protection for its subsidiaries. This means that the holding company’s assets are separate from the subsidiary’s assets, protecting the holding company’s assets from any liabilities or debts incurred by its subsidiaries. This protection can be crucial for companies operating in high-risk sectors, such as the oil and gas industry or construction sector. The Companies and Allied Matters Act (CAMA) 2020 governs holding companies in Nigeria, and it provides provisions for limited liability protection for holding companies and their subsidiaries.

4. TAX PLANNING: A holding company structure can also provide tax planning benefits. Holding companies can take advantage of tax incentives, such as tax holidays, and can also reduce their tax liability by consolidating tax returns for their subsidiaries. This tax planning can be crucial for companies that operate in sectors with high tax rates, such as the telecommunications industry.

5. SIMPLIFIED CORPORATE GOVERNANCE: Holding companies can simplify corporate governance by consolidating the management and decision-making processes for their subsidiaries. This consolidation can reduce bureaucratic processes and improve decision-making efficiency. For example, Dangote Industries Limited, a Nigerian multinational conglomerate, has a holding company structure that oversees the operations of its subsidiaries, including Dangote Cement, Dangote Sugar Refinery, and Dangote Flour Mills.

In conclusion, determining whether your company is ripe for a holding company structure in Nigeria requires a thorough evaluation of your company’s operations, expansion plans, risk management, and tax planning. By considering these tips, your company can take advantage of the benefits of a holding company structure, such as diversification of operations, limited liability protection, tax planning, and simplified corporate governance. With the recent passage of the CAMA 2020, Nigerian businesses can now enjoy more flexibility and options in structuring their businesses.

Regville Associates offers end-to-end legal, tax and compliance service for companies. We assist Companies in becoming and staying regulatory compliant.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

FIVE (5) CATEGORIES OF PERSONS THAT CAN’T ACT AS A DIRECTOR IN NIGERIA

In Nigeria, there are certain individuals who are prohibited from serving as a director of a company. The Companies and Allied Matters Act (CAMA) outlines these disqualifications and restrictions.

1. INSOLVENT INDIVIDUALS: An individual who is declared bankrupt or is under a debt management plan is disqualified from being a director.

2. CONVICTED FELONS: Convicted felons: Individuals who have been convicted of an offense involving dishonesty or fraud are not eligible to serve as a director.

3. MINORS: Individuals who are below the age of 18 years are not eligible to serve as a director.

4. UNFIT INDIVIDUALS: Individuals who have been found to be of unsound mind or who are under a legal disability are prohibited from being a director.

5. DISQUALIFIED DIRECTORS: Individuals who have been disqualified from serving as a director by a court order or regulatory authority are not eligible to serve in this capacity.

It is important to note that the disqualifications outlined above apply to both executive and non-executive directors. Additionally, if a director is found to have acted in contravention of these restrictions, they may be held liable for their actions and face sanctions, including fines and imprisonment.

In conclusion, being a director of a company in Nigeria comes with its own set of responsibilities and obligations. It is important for individuals to ensure that they are eligible and qualified to serve in this capacity before accepting a directorship appointment.

For Company Formation and Restructuring, feel free to contact us

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

PARTNERSHIP FIRM IN NIGERIA: THE TYPES AND FEATURES

INTRODUCTION: In Nigeria, partnerships are governed by the Companies and Allied Matters Act (CAMA) 2020. Partnerships in Nigeria can be classified into three types: general partnerships, limited partnerships, and limited liability partnerships.

GENERAL PARTNERSHIPS (GPs), are formed by two or more individuals who share the profits and liabilities of the partnership. The partners are jointly and severally liable for all the debts and obligations of the partnership, and each partner has the right to take part in the management and administration of the partnership.

LIMITED PARTNERSHIPS (LPs), on the other hand, consist of one or more general partners and one or more limited partners. The general partners are liable for all the debts and obligations of the partnership. In contrast, the liability of the limited partners is limited to the amount of capital they have contributed to the partnership. Limited partners do not have the right to participate in the partnership’s management and administration.

LIMITED LIABILITY PARTNERSHIPS (LLPs) are similar to limited partnerships, but the liability of all partners is limited to their capital contributions. This type of partnership is suitable for professional firms such as law firms, accounting firms, and consulting firms. An LLP may acquire, own, hold and dispose of property, as well as bring and defend actions in its own name. A partner in an LLP could be a Company. Each LLP must have a minimum of two authorized partners, at least one of whom must be a Nigerian national. LLPs are managed by a membership agreement or a partnership agreement and do not have any share capital.

To register a partnership in Nigeria, the appropriate forms and fees must be submitted to the Corporate Affairs Commission (CAC). Additionally, the partnership must have at least two partners and must be registered with the CAC.

It is strongly recommended that partners enter into a partnership agreement to govern the relationship between themselves and the partnership. It is also worth noting that Partnership is not taxed as an entity, but the partners are taxed on their own income.

In conclusion, understanding the nuances of the different types of partnerships and the registration process is crucial in ensuring the smooth running of the partnership business in Nigeria. It is advisable to seek legal advice before entering into a partnership agreement or registering a partnership with the CAC.

For more guidance and registration of Partnership in Nigeria, feel free to contact us

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667