Recently, Facebook and Instagram have been littered with CAC adverts. Almost everybody in Nigeria is now doing CAC registration or selling courses. But before you proceed with that registration, consider these 5 costly CAC registration mistakes you must try to avoid before proceeding with any registration.
CAC (Corporate Affairs Commission) is a Federal Government Agency saddled with the responsibility of regulating the formation, operation and certification of businesses in Nigeria
The registration of companies with CAC is usually carried out by CAC-licensed agents who have adequate knowledge and skills. These agents could be Lawyers, Chartered Accountants and Chartered Secretaries.
The Rise of CAC Registration Errors
Recently, there has been a high influx of people who are not within this category of persons but in some way have been given access to these agent accounts to carry out registration.
While this has been another source of revenue for agents who share their accounts, the problem is that these people who have access to these accounts lack adequate knowledge and skill.
This has had so many errors on the CAC database. The most interesting part of it is that even if CAC approves a particular registration, it does not mean it is free from error.
These errors sometimes vary depending on the type of error. In most cases, the cost of correcting these errors is higher than doing a fresh registration.
I have identified most of these errors, and this article will guide you to avoid them
CAC Registration Mistakes
Before you collect that next big gig to register a business, company or NGO, ensure to avoid these CAC registration mistakes.
1. Choosing the Wrong Business Structure
Not every activity of a business can be registered under a Business Name. Some businesses will generally require a company registration due to the nature of their activities.
Before you collect any CAC registration gig, ensure to understand the nature of the client’s business and suggest to him/her to go for a company when it is obvious that the registration doesn’t fit for a Business Name.
In some cases, CAC might approve the name, accept payment for final registration, and then query the registration later and ask you to upgrade to a company.
This can be avoided; cost, time, and money could also be saved if you understand what you are meant to do from the beginning and act fast.
2. Using Restricted Words in Business/Company Names
CAC doesn’t just approve any name submitted to them just because it has not been used before by someone else.
There are some restricted words that the commission will never allow or may allow if certain conditions are met
Words like penny, wealth, money, cash, bank, and penny are restricted. In the same way, any name starting with any state in Nigeria is not allowed. E.g Lagos Innovation Technologies will not be allowed.
However, words ending with a State in Nigeria can be allowed, E.g Innovation Technologies Lagos will be accepted and vice versa.
Some words are only fit for company registration and will not be allowed under Business Name or Company.
Words like Pay can not be used in a company that is not into Fintech and whose share capital is not by the share capital of the designated companies
Understanding how these words play will help you go a long way and foster a seamless CAC registration.
3. Using The Wrong Share Capital
Different companies have different share capital. Not all companies have the same category of registration, same share and the same cost of registration.
Security companies are to be registered with a share capital of 10 million, Travels and tours with 30 million shares and finance companies with 20 million shares.
The higher the share capital, the higher the cost of Registration. Again, companies with foreign participation (Where either the director or the shareholder is a foreigner) must register with a share capital of 100 million.
The cost of registration for a 1 million share company with Legacy Benjamin Consult is currently ₦60,000
In some cases, a company can have activities that fit for a 1 million share company but may also include activities that require a 20 million share capital.
When this occurs, the company must register with a 20 million share capital or remove the clause entirely from its objects.
When the wrong share capital is used in the process of registration, CAC might query the registration and ask that you remove the clause or upgrade the share capital.
4. Using The Wrong Business Commencement Date
One of the most common CAC registration mistakes most consultants make is backdating the business commencement date on the CAC registration form.
The business commencement date is not the date the business started operation, but the date you are making the registration. If you backdate the date, you may end up paying CAC ₦150 per day starting from the date backdated to the current date.
Again, all CAC submitted registrations that are pending approval are expected to be approved within 30 days from the date of payment.
This ensures that you attend to queries promptly within the shortest possible period. If you fail to attend to queries within and the registration is not approved after making payment, you will be paying ₦150 to CAC after 30 days until the date of approval.
5. Wrong Input of Data
Most so-called CAC registration experts do not understand the right information required and how to go about filling it out on the CAC registration page.
From the creative generation of company objectives to the input of Witness, Directors, Shareholders and PSC information. Errors made in any of these areas, the cost of correcting them could be very expensive.
Again, discrepancies in date of birth, names, phone numbers, emails and even business address are likely to happen.
I have seen agents use long business activities and addresses when registering a business name, making everything too long and overwhelming on the certificate.
When doing a Business Name registration, ensure to avoid using too many stop words (for example, “and”) in the objectives of the business so you don’t end up with too many of them.
Lastly, uploading wrong IDs or blurry IDs could also impede your registration success.
If you need the services of an experienced expert to handle your CAC registration in a way that avoids these unforeseen mistakes and errors, contact Legacy Benjamin Consult Via 08066108299
Having carried out a successful registration, post-incorporation compliance, like annual returns and other statutory obligations, should never be ignored
Conclusion:
In the end, while CAC registration has been on the rise lately, it has led people to jump to collect deals without due care and competence, while some businesses try to carry out the registrations themselves.
Consulting the services of an experienced CAC expert should never be in doubt if you want your company registered in the best possible way.
I hope with this guide, you will avoid these common errors in your next registration
