Classification and types of companies in Nigeria - Private, Public, NGO's and non-profits


Company Limited by Shares: A company where the liability of its members is limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them.

Company Limited by Guarantee: The liability of its members is limited by such amounts as the members may thereby undertake to contribute to the assets of the company in the event of its being wound up. It may not be incorporated with the objective of carrying on business for the purpose of making profits for distribution to its members. When a company is formed for the purpose of promoting the arts, science, religion, sports, culture, education, research, charity etc., and the income and property of the company are to be applied solely towards the promotion of its objects and no portion is to be paid directly or indirectly to its members except as permitted by the decree, the company shall not be registered as a company limited by shares but as a company limited by guarantee.

Unlimited Company: no limit on the liability of its members. All unlimited companies shall be registered with a share capital from the date of the Decree of 1990. If an existing company is not registered with a share capital then the memorandum must be altered so that is becomes an unlimited company having a share capital not below the minimum share capital permitted under section 99 of the decree. (Section 99, 1) If a memorandum states that the company is to be registered with shares and it is delivered after the commencement of the Decree, the amount stated in the memorandum to be registered shall not be less than the authorised minimum share capital and not less than 25 per cent of that capital shall be taken by subscribers of the memorandum.

Types of Companies in Nigeria

Private Company: A company that has been stated in its article of memorandum to be private. The transfer of its shares is restricted. The total number of members shall not exceed 50, excluding bona fide employees of the company. It shall not allow the public to buy shares or debentures or deposit money for fixed periods or payable at call whether or not interest bearing. If a company defaults on the provisions of section 22 of the decree, the company shall cease to be entitled to the privileges and exemptions conferred on private companies by or under the decree. The Decree shall then apply to the company as if it is not a private company.

Public Company: Any company that is not a private company shall be a public company and its memorandum shall state so. Every public company shall have capital except those limited by guarantee-those formed for promoting commerce, arts, science, religion, culture, education, research, charity etc. The total liability of a company limited by guarantee shall not be less than N10,000.

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