DOING BUSINESS IN NIGERIA: THE MOST IMPORTANT DOCUMENTS IN COMPANY FORMATION.
In Nigeria, two legal documents, the memorandum of association, and the articles of association, are required for the incorporation of a business, as mandated by the Companies and Allied Matters Act (CAMA) 2004.
Of a truth, the most important document for a company is the Memorandum of Association of the company. And, the Articles of Association is the second most important document.
The memorandum defines the scope, powers and objects of a company. It set out the rules and regulations by which the external affairs of the company are governed while the article deals with the internal affairs of the company.
Section 27 of CAMA provides that the memorandum must contain the business’ name, its address, nature of the business, restriction(s) on powers of the company, indicating whether the company is a private or public company, and the liability of its members.
An interesting point to note is perhaps the important use of the memorandum as a legal document; any transactions deemed to be outside the objectives stated in it are not legally enforceable.
The article is a functional document that states the purpose of the company, duties and responsibility of members. It lays out how tasks are to be accomplished within the organization, including the process for appointing directors and how financial records will be handled.
The article factors the peculiarities particular to a company because each company is empowered under Section 34 of CAMA to adopt the prototype article therein. Thus, Company A and Company B (different companies) can insert diverse clauses in their article to suit their business purposes respectively.
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