The Companies and Allied Matters Act (CAMA) 2020 is the principal law which relates to companies, incorporated trusteeships, business names, partnerships, and others alike. It deals with matters such as formation, membership, documentation, company filings, wounding up, etc.
Chapter 1 of the CAMA 2020 provides for formation of a company.
Incorporation is defined as –
“1. The formation of a legal corporation. …”[1]
Business names and partnerships are not incorporated, they have their own gains as well.
The gains of incorporation are as follows –
1. Acquisition of legal personality. With this follows:
i. Ability to acquire property or to dispense its property (land).
ii. Attainment of distinct legal status separate from its members.
iii. It may outlive its members.
iv. Ability to enter contracts.
v. As a legal person, it can apply to register a business name, trade mark, etc.
vi. It may be liable to pay tax.
vii. Ability to apply for loans, grants, assistance as a corporate entity.
viii. Ability to own a bank account in its name, with the money in the account as property of the corporation.
ix. Acquisition of a legal identity which cannot be infringed upon. For example, its name or identical name cannot be registered again at Corporate Affairs Commission (CAC) while it is in existence.
2. Ability to carry out its objectives such as business activities legally.
3. Ability to acquire assets or wealth, liabilities or debts of its own.
However, there are instances when the directors or members of a company are made to pay the debt or to contribute to the settling of a company’s debt.
4. It becomes a device for wealth acquisition and holding.
5. Acquisition of legal domicile.
6. Possession of legal documentation, such as constitution, memorandum and articles of association, certificate of incorporation, etc.
7. It enjoys protection of the law.
8. It can sue and be sued in its legal name.
This is very important in legal practice. A wrong suffix to a supposed company name could mar a matter or set it off on wrong footing.
9. It becomes part of public records.
Of course, there should be more gains of incorporation out there, the list above helps you to decide whether or not to incorporate that organization or entity.
Thank you.
Stephanie Orji lawyers at Heptagon & Associates, a full service law firm in Abuja, Nigeria.
17-January-2025.
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[1] Black’s Law Dictionary Ninth Edition, Thomson Reuters, 2009, page 834