In Nigeria, you can register your Business as a limited liability company or a business name.
What is A business name, a business name is a name or style under which someone trades, it can be as enterprise or ventures. You will note the differences between business names and limited company
Whether your business name choice ends with Enterprise/Ventures they are the same.
An example of business name ending with enterprise/ventures are: Kingsway enterprise,Main-man Global Concept, Ayata Ventures etc.
Highlights of Difference between Ltd and Business Name
- Nature of business you can register as Business name are: import and export,sales of goods,manufacturing of furniture,wood-making,sales of hairs,real estate agency,marketing,logistics,transportation etc.
it is worthy to note that all these nature of business can be registered equally as a limited liability company.
What is A limited liability company? A company can be limited by shares, limited by guarantee or limited partnership.A company is said to be a limited liability company, when the company’s liability is limited by the number of shares it issues and which the members have fully subscribed to.
DIFFERENCES BETWEEN LIMITED COMPANY AND BUSINESS NAME
Like noted above A company can be limited by shares ,guarantee,or limited partnership.
A company limited by shares has categories of shareholders, and classes of shares,there are ordinary shares and preference shares.
upon incorporation the shares must have been fully subscribed to by members of the company.
2. A company said to be limited by shares, A company must have a share capital,a share capital is the unit of shares a company possess,and carries on business with and issues to her members ,who in return fully subscribes to it with money or other consideration relinquished to the company in exchange of the unit of shares.
in this case, in the formation of the company,the company promoter has to bring in share holders, who will subscribe to the shares of the company.
3.company secretary: in the set up of the company, (public limited companies not private)it is also required that a secretary be part of the formation of a limited liabilty company,these two features that is a share capital requirement and the requirement of share holders, and company secretary are not necessary feature in the registration of a business name.
4. Also,a business name need not to file/pay stamp duties fee before registration,this is however an integral stage in the registration of a limited liability company in Nigeria.
5.Another distinction between the two, is that in minimum number of company proprietor: with the new rules,the minimum number of persons who can be proprietors in terms of management of a limited liability company is now one person, one man alone can now register a limited liability company in Nigeria as a person with special control,but there must be a a witness or deponent unlike in business name registration.
6. legal personality,a limited liability company is distinct and separate from the directors and share holders,it is a juristic person,meaning it can sue or be sued in its name,it can acquire assets in its name unlike a business name. for a limited liability,
as round up it is worthy to note that there is incidence of share holding in limited liability company unlike a business name. A share holder,is required,the share holders are expected to fully subscribe to all the shares of the company,for example,if the shares of the company is one million,the share holder must fully subscribe to that amount,although there could be allotment of shares.
7. facility/loan sourcing,a limited liability company has higher chances of getting a bigger facility from the finance institutions than a business name,because most times the finance institution takes the shares of the company as collateral/equity in the company,so long the company is a legal person.the company as a limited liability can also secure a loan through a deed of debenture(borrowing credit).these features are not found in business names
in Nigeria a well written business plan and a good account statement can pave way for bigger funding or facility from financial institution.
8.Also A limited liability can have subsidiaries : A limited liabilty company unlike business names can have subsidiaries local and abroad.
A limited liability company has a distinct and separate personality with the directors and share holders,although the person with the highest share holding is seen in practical reality as the owner of the company, the rule in Foss vs harbuttle the company is distinct and separate from the shareholders.
in conclusion a limited company can buy/sell assets in its name,as well as transfer rights, assets,shares to some other person(s) or companies as well.
9. Allotment of Shares– the highest share holder of a limited liability company,can allot shares to his heirs/children,and also bring them into the management of the company as minor share holders and directors,
10.Perpetual succession:the company as a limited liability company therefore enjoys perpetual succession,unlike a business name.
11.Global Recognition and Branding-A limited liability company has more global recognition,generally speaking ,limited liability company is the ideal company.
A COMPANY LIMITED BY GUARANTEE:
most companies are set up with a clear distict object ,not majorly meant for purpose of profit making, that is a company set up with object of advancing health care, sports and education , they are purposefully meant to achieve these objects without having profit as its core objective
such a company is limited by guarantee ,
A LIMITED LIABILITY PARTNERSHIP:
A company where partners pull resources together in percentage, every partner knows his/her obligation, duty and commitment.
the partners are distinct and separate from the company legal personality.
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