.Business name registration takes weeks, months, say lawyers
.Directors wrongly removed, firms fined without valid reasons
.CAC denies, says registration still takes 24 hours
In March 2015, the Corporate Affairs Commission (CAC) launched an online portal and subsequently introduced a 24-hour business registration policy.
The policy brought about speedy company registrations and quick resolution of queries. Registration of business names, limited liability companies and incorporated trustees happened within 24 or 48 hours. Removal or inclusion of directors was not an issue as it would be concluded within 48 hours.
“For us, a customer is a king and must be treated with royalty,” Mahmud Bello, the then registrar-general of the CAC, said at a customer forum in Kano in 2017.
Fast-forward to 2024, more than 10 CAC applicants and customers who spoke with BusinessDay said the situation is no longer the same.
Integrity Organisation Limited, a limited liability company, planned to remove one of its directors. In April 2024, it applied for the director’s removal through the CAC’s registrar-general, making the necessary payments and submitting the required documents.
The company got an email response from the CAC, assuring that the issue would be resolved. However, the issue has not been resolved seven months after – amid complaints by the company. Hence the CAC has also not removed the director as requested by the company, BusinessDay learnt.
Emmanuel Okeke, a law lecturer and human rights activist, applied to the CAC to increase a company’s share capital. The company has three directors, with one having 800,000 shares and two others possessing N100, 000 shares each.
Okeke wrote to the CAC requesting to increase the company’s share capital and include a new director.
“A CAC official started prompting me to pay a penalty for the share capital that was not allotted. The penalty, jokingly, was above N500,000. I asked the official to identify the shares that were not allotted.
“I wrote emails and explained that all shares were allotted, but the CAC kept on asking me to pay a penalty. At a point, they came back to me, reducing the shares of the majority shareholder from 800,000 to 720,000. By Implication, 80,000 shares were not allotted. I scanned all the required documents and sent them to the CAC, but they still kept on asking for a penalty.”
He further said that, on a different occasion, he applied to convert a business name to a company but a query came from the CAC asking him to remove the names and details of the trustees.
“In a company, there are no provisions for trustees. I checked several times to ensure that there were no errors somewhere, but they kept querying me and asking for the removal of trustees of a company. It took several weeks to resolve this,” he said.
Samuel Oyigbo, a lawyer, reminisced about the time when a company’s registration would be perfected in 24 or 48 hours.
“I wanted to change directors of a company. We made an application and uploaded the required documents, yet the names of the new directors were not online. When they finally uploaded the names, they left some,” he said.
He noted that there are still some manual aspects of the registration process despite the CAC’s claim of deploying the digital process to onboard businesses.
Same for Small Businesses
The CAC initially said that individuals could register businesses without requiring the services of lawyers.
However, Edem Ekanem, a Lagos-based small business operator, said he tried to register a business name but it did not work.
“First of all, I did not get responses from the CAC for over a week, so I had to resort to paying for the services of a lawyer,” he claimed.
An Abuja-based lawyer, who preferred anonymity, said he tried to register his own company in June 2024 but it took him nearly two months to complete the process.
“I strongly recommend training for the CAC staff who are handling registration-related issues. Some of the queries they send to applicants are funny. I don’t know whether they are overworked or not, but there is a need for any CAC staff member attending to customers to be patient and read through complaints to be able to understand the context in any issue,” he said.
Effect on Ease of Doing Business
In the 2020 World Bank’s Doing Business, which has now been rested, Nigeria ranked 105 on ‘Starting a Business’- out of 190 economies. This means Nigeria was better than only 85 countries in terms of starting a business.
Analysts who spoke with BusinessDay said delays in registration not only discourages new businesses but also affects Nigeria’s ease of doing business ratings.
“First, it is not a good sign if businesses are not sure of getting registered within 24 hours. It discourages new business formation and also creates legal hurdles which can hurt investments,” said Ike Ibeabuchi, an emerging markets expert.
Muhammed Sule, a Lagos-based business man, attributed the CAC challenge to its portal.
“Everything is being slowed down by the CAC portal, and it takes us back now to the manual era,” he said.
“When people complain, they don’t do so because they don’t like the CAC or any government agency. They do so because they want something to work for them. And if a simple thing like business registration can’t work, job creation and economic growth will suffer.”
CAC Dismisses Complaints
However, the CAC has dismissed these complaints, saying it is “not the true position of things.”
Dominic Inyang, CAC’s head of public affairs, told BusinessDay that the commission still conducts business registrations in 24 hours.
“When some people don’t do things the proper way, they look for a way to tarnish the image of the commission. I can tell you without mincing words that the commission’s portal is working optimally. There could be hitches at one time or the other, but that does not mean it is a broken down situation. People just want to create news where there is none,” he said.
He explained that registrations are done within 24 hours as long as applicants comply with all directives.
“If your application is queried, until you comply with the query, your application will not be approved. A lot of customers do not take time to study the CAC application requirements, so I can tell you the story is not true. Individuals can still register without lawyers,” he noted.
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