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.
B. 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:
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”
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”.
C. Should I register my not for profit as an Incorporated Trusteeship or as a Company Limited
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.
E. What matters do I need to consider before commencing registration?
- What are the objectives, beliefs, mission, and purpose of the organization?
- How the organization will be funded?
- Who will run the affairs of the organization?
- To what extent do the promoters or the organization’s leaders desire to be liable for the actions of the organization?
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)
Does the organization intend to do business or distribute profit to its stakeholders?
F. What documents are required for registering an Incorporated Trusteeship?
- Two printed copies of the Constitution
- Duly signed copies of the Minutes of the Meeting appointing the Trustees and authorizing the application.
- Production of Iron Seal.
- Identity Cards and Passport Photographs of each Trustee.
- Duly completed Form CAC/IT/1 (Application Form) (https://www.cac.gov.ng/wp-content/uploads/2019/12/cac_it_form_001-1.pdf)
- Duly completed CAC1.1 (Registration Form) (https://www.cac.gov.ng/wp-content/uploads/2019/12/CACform1.1.pdf)
G. What documents are required for registering a Company Limited by Guarantee?
- Application Letter
- Memorandum and Articles of Association
- Letter of Consent of Attorney General of the Federation (this can be procured by submission of an application letter and approval by the AGF)
- Payment of Stamp Duty Fee to the Federal Board of Inland Revenue.
- Notice of address of the registered office.
- Identity Cards and Passport Photograph of the Directors.
- Duly Completed Form CAC 1.1 (Registration Form)
H. What is the process of registering an incorporated trusteeship?