AFTER INCORPORATION WHAT COMES NEXT? IMPORTANT POST-INCORPORATION PROCESSES YOU NEED TO KNOW
The formation of a company is made up of many stages, and one of them is the actual incorporation of the company, to give it an identity in the eyes of the law.
As much as these processes may seem like a whole lot, the whole thing does not just end there, in fact, these processes only serve as the foundation of the company.
There are other processes and procedures required for the smooth running of the company, and they are called post-incorporation processes.
In this article, we will answer the question ‘after incorporation, what comes next?’ Surely, there is more to it. Join us for the ride.
What are Post-Incorporation Processes?
The term ‘post’ when considered with another word means ‘after’. Sometimes we see words like post-secondary, post-production, etc. Therefore Post-incorporation simply means ‘after incorporation’.
Just as incorporation serves as a foundation for every company to be built on, in the same way, post-incorporation serves as a pillar to hold up the company. These pillars are necessary for the day-to-day affairs of the company to hold it up and keep it from crumbling.
That being said, post-incorporation processes are those processes that are required in order for a company to maintain its status or make modifications in compliance with legal requirements.
These processes are usually required by law to keep the Corporate Affairs Commission on notice of the current happenings of a company, any modifications or changes made to the structure of the company, and other vital information regarding the company as may be required by the CAC.
These processes are very important requirements for every company and they include:
1. Filing of Annual Returns:
Recall that earlier this year, the CAC made known its intention to strike out 100,000 company names for failure to file annual returns. Annual returns are documents containing the financial reports of a company or a corporate body that are filed with tax authorities to ascertain the amount of tax payable to the government for a specific tax year.
The filling of annual returns is a must for every company in Nigeria, and failure to carry out this duty exposes the company to possible de-registration from the official register of the CAC.
2. Notice of Change of Directors or Secretary:
Change they say, is the only constant in human existence, hence it is inevitable. Where the company changes its directors or its secretary as it is bound to do at some point, a proper communication of this change must be made to the CAC in the form of a notice to be filled, duly stamped and submitted to the Commission.
These notices must be filed no more than 14 days after the passing of the resolution changing the director or the secretary.
3. Notice of Change of Company Name:
During registration, an name is usually chosen by the promoters which will serve as the unique identity of the company.
However, the name of the company can be subsequently changed by the members and directors either voluntarily or upon the order of the Commission.
This involuntary change of name could be occasioned by the filing of complaints by affected persons to the CAC, especially where the name is so identical to the name of another existing company, as to mislead the public. It could also be occasioned the direction of the CAC if in its opinion, the name has an element of deceit or incompatibility with the national legal standard, or any other factor stated in the Act.
Where the name of a company is changed, due notice of this change must be filed at the Commission.
4. Notice of Alteration of Memorandum and Articles of Association:
The memorandum and articles of association are to the company, what the Nigerian constitution is to Nigeria. Both are public documents, which means that they are accessible to the public.
When a company is being incorporated, copies of the memorandum and articles of association are sent to the Commission. This will enable prospective investors and members of the public to acquire necessary information on the company before proceeding to have dealings with it.
It is important to put the Commission on notice of any change that may be made to these documents because they serve as eyes with which the Commission and the public can gain insight into the affairs of the company. This notice must be given no more than 15 days after the resolution to that effect has been passed.
5. Change in Registered Office Address:
During the incorporation of a company, a physical address is given which will be the proposed location where the business of the company will primarily be carried out. A company may have more than one address, but the principal office address is usually the one that is registered by the company at the CAC.
Where any change is being made to the registered office address, it is important that due notice be filed at the CAC in a timely manner.
6. Notice of Increase or Reduction of Share Capital:
The amount share capital a company is allowed to have is regulated by law. According to the Companies and Allied Matters Act 2020, the minimum share capital is NGN100,000 for private companies and NGN2,000,000 for public companies.
The notice of increase in share capital must be filed within 15 days of the passing of the resolution to that effect. This increase will not be effective if a declaration that not less than 25% of the increased share capital has been issued is not made within 6 months of filing the notice of increase.
A reduction of share capital is more difficult than an increase and will not be effective unless it has been authorized by the articles of association and it is being done upon the approval of the Federal High Court.
Importance of Post-Incorporation Processes
Apart from ensuring compliance with legal requirements, these processes also serve other purposes, and they include:
- They help a company to maintain a good standing in the eyes of the law through legal compliance.
- They help the Corporate Affairs Commission to understand the current state of affairs of a company.
- It facilitates the smooth running of the company without legal risks or fear of legal penalties.
Conclusion
Post-incorporation processes are usually carried out to put the CAC on notice of current modifications made to the affairs of a company, or as a form of compliance with legal requirements.
It is advisable to get assistance from accredited agents of the CAC or professionals in your post incorporation processes, to avoid errors or mistakes.
What these agents and professionals do basically, is to guide you through the process, to make it easier, faster and error-free. In-Charge Solutions Limited is an accredited agent of the CAC that offers professional business assistance and other business services.
Feel free to Contact us today for assistance and guidance through the post-incorporation processes of your company as required by law.