CAC GUIDELINES FOR NAME RESERVATION FOR LIMITED LIABILITY COMPANIES
When registration a business or company in Nigeria, one of the first step is to search the availability of the intended name or company. This process is call “NAME RESERVATION”
In this blog, we explained the Corporate Affairs Commission (CAC) Name Reservation Guidelines for Limited Liability Companies Registration in Nigeria.
INTRODUCTION
The Corporate Affairs Commission (CAC) was established by the Companies and Allied Matters Act 1990, (CAMA) AND Cap C20 LFN 2004. The Commission is the Agency of Government charged with the responsibility of the Registration of Companies, Business names and Incorporated Trustees.
A company name is a distinctive characterization by words which a company is known and distinguished from others.
Under section 27(1) of Companies and Allied Matters Act (hereinafter referred to as “the Act”), the memorandum of every company shall state, inter alia, the name of the company.
The principal sections governing reservation of names for limited liability companies otherwise known as availability are sections 29 and 30 of the Act.
Read: Business / Company Registration in Nigeria Requirements
PROHIBITED NAMES by Corporate Affairs Commission (CAC)
These are names that are, (except otherwise provided), absolutely disallowed. They include;
(a) Names that are identical to the name of an existing registered company, or nearly resemble that name as to be calculated to deceive; except where the registered company is in the course of being dissolved or wound up and has consented in the manner acceptable by Commission.
(b) The use of “Chamber of Commerce” is prohibited unless the company is limited by guarantee.
(c) Names that are capable of misleading as to the nature of its activities i.e. offensive, undesirable or contrary to public policy; such words include “gambling”, “prostitution”, and the like are all prohibited.
“Promiscuous Directory Limited”, “Phonographic Film Production Limited”, and “Occultism Clique Nig. Limited” Pick Pocket Ventures Limited. The list is in-exhaustive.
These names are offensive, contrary to public policy and therefore not registrable.
(d) Names that are vague, deceptive or misleading, example of such names are “S.S.S Security Services Limited” NNPC Oil and gas Limited” “NDDC Nigeria Limited “Corporate Affairs Centre Limited” National Assembly Enterprise” Fake Drug Prevention Investments Limited”.
These are misleading names that tend to suggest a relationship between the companies and government or government agencies.
(e) Names that are similar to or tend to violate any existing trade mark or business name registered in Nigeria unless consent of the owner has been sought and obtained,
Note: while in the case of business names and Trademarks, the owner of the right can consent to the use of a similar or identical name; in the case of a Company, before such consent is accepted, it must be shown that the consenting company is in the course of being dissolved, so that after the dissolution, there will be no two companies on the companies register with the same name (see section 30(1) paragraph (a) and (d).
Note: The Commission can also consent to the use of a registered business name as a limited liability company upon the application of the business name owner(s).
The practice whereby a company grants consent to co-exist with another company sharing identical or similar name has no basis in law.
Read: Business/ Company Registration Service in Nigeria
RESTRICTED NAMES/WORDS by Corporate Affairs Commission (CAC)
These are names or words that are not absolutely prohibited but are subject to prior consent of the Commission and evidence of same should be attached to the application for availability. These words are:
(a) “Federal” “National” “State” “Local Government”, or “Municipal”, or any word which suggest patronage of or relationship with government or any agency or department of government.
(b) Contains the words “Building Society” or “”Co-operative”
(c) Contains the words “Group” or “Holding”
(d) Contains the words “Certified”, “Amalgamated”, “Conglomerate”, “Consortium”, “Niger Delta”, “South”, “Middle Belt” and any other
region of the Federation.
THE USE OF THE WORD “NIGERIA”:
The word “NIGERIA” or NIGERIAN “is neither a restricted nor a prohibited name under the provisions of CAMA. A literal interpretation of the name suggests that it is indigenous to Nigeria and does not therefore suggest Government patronage. The consent of the Commission need not be sought, if the word does not come as a prefix e.g. ABC (Nigeria) Limited.
WORDS/NAMES USED IN COMPANY LIMITED BY GUARANTEE
Section 26 of the Act provides that, where a company is to be formed for promoting commerce, art, science, religion, sports, culture, education, research, charity, or other similar objects, and the income and property of the company are to be applied solely for the promotion of its objects and no portion thereof is to be paid directly or indirectly to the members of the company except as permitted by the Act, the company shall not be registered as a company limited by shares but may be registered as a company limited by
guarantee. Thus schools, institutes, educational/research centres, foundations and other bodies may be registered under this section provided their objects fall within the scope of the above provisions.
It should be noted however that the word centre, school and institute may also be registered as a company limited by shares depending on the context they are used. E.g. Centre de optical limited, ABC Business centre limited, citadel international school limited, citadel institute of management studies limited, etc.
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RESEARCH CENTRE /INSTITUTE
While there is no dispute that schools, colleges, polytechnics, Universities may be registered as companies limited by shares, there has been an unending controversy on whether research institute/centres could be registered as a company limited by shares. There is no law prohibiting the registration of research institute/centre as a company limited by shares. This position is further strengthened by the fact that polytechnics and universities are also centres of learning and research.
THE GENERIC WORDS/NAMES AND THE TWO WORDS RULE
Generic names or words are those names or words that are general in nature and do not specify any business or profession. In other words they do not give a distinctive meaning in themselves; neither do they make a radical difference as compared to specific words. Example of such names includes: ABC services limited, ABC Enterprises Limited, ABC Investment Limited.
THE TWO WORDS RULE:
This rule applies where there exists in the companies register a generic name or a name is followed by generic word(s) then similar name can only be approved if it is accompanied by two distinguishing words. Thus the existence of any of the above generic name can bar the others from being registered. To register “ABC” in the face of any of the above names, two distinguishing words must be employed. For example:-
ABC Global Concept Limited, ABC Integrated Business Limited
ABC Worldwide Ventures Limited, ABC Dynamic options Limited
ABC Intercontinental Concern Limited
EXCEPTION TO THE TWO WORDS RULE:-
It should be noted that, there are certain names that the presence of two words do not make a difference. These are names that suggest the same nature of Business. It is common with those specific names as hospital, properties, school, etc.
- Binta Farm Ltd (Existing) with Binta Agro Allied Ltd (Application)
- Abc Hospital Ltd (Existing) with Abc International Clinics Ltd (Application)
- Olumawo Nursery And Primary School Ltd (Existing) with Olumawo Kindergarten School Ltd (Application)
- Babamba Property Develop Ltd (Existing) with Babamba Real Estate Development Ltd (Application)
EXPLANATORY NOTES:
The presence of the word “company” or “Nigeria” or both in a name does not make a difference and as such does not count as words in a name. The reason is that every company registered whether with the word “company” or not is a company and every company registered in Nigeria whether it contains “Nigeria” or not is a Nigerian company. Example” Dangote Limited (existing) Dangote Company Nigeria Limited cannot be registered; as the rules do not take in to reckoning the words “Nigeria” and “company”
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USE OF “STATE” OR “LOCAL GOVERNMENT
Where the name of a State or Local Government is used without the addition of the word “State” or “Local Government” the current practice is to require consent as a condition precedent. This practice being without legal basis should be discountenanced. Examples: Sokoto Shoes where the proposed name is followed by the word “State” or Local Government” or “Area Council” or “Municipal consent of the State or Local Government concerned is a Condition Precedent.
Examples: Sokoto State shoes & Leather processing Limited, Bwari Area Council Cereal Processing Company Limited, Tafawa Balewa Local Government Farms Limited.