Thursday, August 27, 2020 / 01:00PM /
DealHQ / Header Image Credit: DealHQ
What is a not for profit organization?
Simply, a not for profit organization (NFP) is one
that is set up to promote a charitable or other non – profit cause. It could be
a social, cultural, educational, religious or other cause underlined primarily
by impact.
What are the possible options for
registration of an NFP under Nigerian Law?
Under Nigerian laws, a Not for profit organization can
be registered as either of the following:
i.
Incorporated Trusteeship under Section 590 of CAMA: This involves the
selection of Trustees as legal representatives of a body or community of people
bound together by religion, custom, kinship or nationality or a body of people
established to achieve religious, educational, scientific, social, development,
cultural or charitable purpose. The Trustees are given the status of a legal
corporation and granted legal personality making them custodians of the rights,
duties and responsibilities of the body, community or association (which could
be a church, a social club or an educational institution). The trustees have
fiduciary powers and duties of trustees under common law. The name of the NFP
will typically read like “Incorporated Trustees of the Daily Progressive
Association”
ii.
Company Limited by Guarantee: Section 26 of CAMA
provides for the registration of a category of companies referred to as limited
by guarantee. This category of registration is suitable for a company set up to
promote science, beauty, religion culture, education, research or charity. The
income and property of such company can only be used towards the promotion of
its objects, it is restricted from utilizing any part of its income or property
for personal use of its members or stakeholders, it is also restricted from
distributing profit. Like a typical Company, the Limited by guarantee has its
affairs led by its Board of Directors whilst the Company is owned by its
shareholders whose liability are limited to the extent they have determined at
inception (this means that the shareholders are responsible for the future
debts or liabilities of the Company to the extent they pledged at the time of registration – this is usually quantified as a monetary limit )The name of the NFP will
typically read like “Excel Educational Resources LTD.GTE”.
Should I register my not for profit as
an Incorporated Trusteeship or as a Company Limited by Guarantee?
Either of the 2 processes will suffice. However
entities who intend to be involved in some form of business seem to
generally have a preference for being registered as a Company Limited by
Guarantee as this is a more familiar arrangement in the business world – the
company will be a legal entity, with a Board of Directors and can contract, sue
or be sued in its name. The Incorporated Trusteeship on the other hand has its
legal personality vested in its Trustees – it can only contract, sue and be
sued in the joint name of its trustees.
In the case of the Company Limited by guarantee there
is a requirement to procure the prior consent of the Attorney General of the
Federation, this makes the registration process slow and often cumbersome.
Where time is of the essence, an incorporated Trusteeship is often a preferred
choice.
Is a Not For Profit Organization
prohibited from doing business?
It is an erroneous assumption that a not for profit
must be an association or a social club that primarily does no business. An NFP
can do business provided that the intent is to utilize any profit generated
from its operations toward promoting its cause without distribution of such
profit to members or stakeholders.
What matters do I need to consider
before commencing registration?
Typically, the registration of an entity is undertaken
by the Promoter(s). The promoter is any one or more individuals that have
conceived the idea of setting up the organization. They will have to answer a
number of preliminary questions which will help determine the structure and
approach to registering the entity.
i. What are the objectives,
beliefs, mission, and purpose of the organization?
ii. How the organization will
be funded?
iii. What will the organization
be called? (it is advised that a minimum of 2 possible names be selected as
approval of names is usually subject to availability the name will only be
approved where it is not statutorily restricted or close enough to the name of
an existing entity such that it may confuse the public)
iv. Who will run the affairs
of the organization?
v. To what extent do the
promoters or the organization’s leaders desire to be liable for the actions of
the organization?
vi. Does the organization
intend to do business or distribute profit to its stakeholders?
What
documents are required for registering an Incorporated Trusteeship?
i.
Two
printed copies of the Constitution
ii.
Duly
signed copies of the Minutes of the Meeting appointing the Trustees and
authorizing the application
iii.
Production
of Iron Seal.
iv.
Identity
Cards and Passport Photographs of each Trustee.
v.
Duly
completed Form CAC/IT/1 (Application Form)
vi.
Duly
completed CAC1.1 (Registration Form)
What documents are required for registering a Company Limited by
Guarantee?
i.
Application
Letter
ii.
Memorandum
and Articles of Association
iii.
Letter
of Consent of Attorney General of the Federation (this can be procured by
submission of an application letter and approval by the AGF)
iv.
Payment
of Stamp Duty Fee to the Federal Board of Inland Revenue.
v.
Notice
of address of the registered office
vi.
Identity
Cards and Passport Photograph of the Directors.
vii.
Duly
Completed Form CAC 1.1 (Registration Form)
What is the process of registering an incorporated trusteeship?
Step
1:
Name Selection, Availability Check and Reservation:
The
promoters of the Incorporated Trustees would decide the name of the IT and
conduct an availability check on the CAC website. According to Section 32 of
CAMA the Commission will reserve the name for 60 days upon payment of the
prescribed fees.
Step
2: Collation
of Application documents and information
The
Promoters would ensure the Trustees of the proposed IT fill the application
documents and will collate the documents for submission to the Corporate
Affairs Commission.
Step
3:
Application and Submission to the CAC.
The
prescribed application fees are paid, and the application documents are
submitted to the CAC.
Step
4:
Publication of Notice of Intention to register
Where
the CAC is satisfied that the application requirements have been met, it shall
cause the application to be published in two daily newspapers. The purpose of
this publication is to invite for objections from the members of the public on
the registration of body.
Step
5:
Transmission of File and Issuance of Certificate
The files are transmitted to the office of the
Registrar General of the CAC for Consent and approval. Upon approval, CAC will
issue a Certificate of Incorporation.
What is the process of registering a
Company Limited by Guarantee?
Step 1: Name Selection,
Availability Check and Reservation:
The Promoters of the company will conduct an
availability check on the CAC website. The
Commission will reserve the name for 60 days upon payment of the prescribed
fees. Where the name is not available, the promoters of the IT will have to
select another name for the proposed company.
Step 2: Collation of
Application documents and Information
The promoters of the company will ensure that all
application documents are properly filled by the proposed Directors of the
Company and Company Secretary and collate them for submission to the CAC.
Step 3: Payment of Stamp
Duties
The payment of Stamp Duties is made to the Federal
Board of Internal Revenue Service.
Step 4: Approval and
Issuance of Certificate
The Corporate Affairs Commission transfers the filed
documents to the office of the AGF for approval. A Certificate of incorporation
is issued by the CAC upon the approval of the AGF.
For more information on how to get started, you can
reach out to the DealHQ Partners team via info@dealhqpartners.com
or call +234 9087107575
Related News
1. Non-profit,
Non-governmental Organisations Basic Regulations – Legal Alert
2.
DCSL to host
Virtual Summit on Business Continuity and Crisis Management
3.
DCSL to host
Board Effectiveness Masterclass on August 14, 2020
4.
Accion MFB
Konnect Series: Focus on the Implications Of Force Majeure and the Stamp Duties
5.
Maritime
Anti-Corruption Network (MACN) To Extend Collective Action Initiative To 2023
6.
SEC, NITDA
Collaborate on Data Protection
7.
GTI Finance
Academy to host Training on the Understanding of Financial Statements
8.
Promotion Of
Foreign Investments In Nigeria Through Investment Arbitration
9.
CAC’s Public
Notice on Inclusion of TIN on Certificate of Incorporation
10. FRC Guidance for
Reporting on Compliance with The Nigerian Code of Corporate Governance (NCCG)
2018
11.
Maritime
Anti-Corruption Network to Scale Up Collective Action in Nigeria with support
from Siemens
12. Experts discuss
the Future of Virtual Hearing in Arbitral Tribunal
13. Intercontinental
Apex Regulator’s Virtual Session
14. GTI Finance
Academy to Host a Certified Virtual Training Program on IFRS 13
15. Detail
Solicitors Holds Webinar On Great Expectations Workplace and Wealth
16. Federal High
Court Discharges Interim Order and Strikes Out Suit Against NIPC
17. COVID-19: Some
Considerations Relating to Corporate Governance
18. Contracts During
a Public Health Pandemic – Legal Alert
19. Directors Duties
in The Context Of COVID-19
Source: www.proshareng.com
