A Cabotage company in Nigeria when established can be quite yielding in profits. However, it requires proper guidance to navigate through its legal and regulatory landscape.
Legal Structure and Regulatory Requirements
This comprehensive guide will give you a good understanding of the legal structure and regulatory requirements for starting a cabotage company in Nigeria.
We will cover the following subtopics:
1. Company Formation and Registration
2. Protection of Trademarks
3. Special Control Unit Against Money Laundering (SCUML) Registration
4. Contracts for Your Cabotage Company
Services Offered by a Cabotage Company
Some of the services that the cabotage company provides are cargo shipping which is transportation of goods and freight by sea between ports, ferry or cruise services, managing the movement of cargo, handling of vessel operations, loading and unloading cargo, and managing port facilities within the company.
These services help transportation of goods via the water ways easy and stress-free.
Company Formation and Registration Requirements
Registration is a legal requirement for any business in Nigeria. Why is this so? It is illegal to operate a business without registration with the Corporate Affairs Commission (CAC).
The Corporate Affairs Commission (CAC) is the governmental body that handles registrations for all businesses and Non-Governmental Organizations in Nigeria. For the business option, there are 3 company options; Limited Liability Company, Unlimited Company, and the Company Limited by Guarantee (Ltd/Gte) with the Limited Liability Company being the most popular and the preferred choice for businesses because it is profit oriented just like the cabotage company.
Also Read: Understanding The Types Of Companies In Nigeria To Make The Best Choice in Business
In this article, the Limited Liability Company which is the preferred choice for profit oriented businesses will be our focus in this article.
The cabotage company must first meet the following requirements to be registered as a company.
- Shareholders
– Minimum Number: At least one shareholder is required.
– Who Can Be a Shareholder: Shareholders can be individuals or corporate entities. Nigerian citizens and residents can be shareholders.
Foreigners can also be shareholders, but they must comply with the Nigerian Investment Promotion Commission (NIPC) regulations and might need to obtain a business and residence permit.
2. Directors:
A minimum of one director is required for a private limited company. However, having at least two directors is recommended for better management and compliance.
– Who can be a Director: According to Companies and Allied Matters Act (CAMA) which is the law governing company operations in Nigeria, a person qualified to be a director of the company must:
– Be above 18 years but not older than 70 years.
– Be a person of sound mind (not a mentally unstable person)
– Must not be a person declared by the bank to be a debtor.
– Not be disqualified by a High Court from being a director.
– Directors should possess relevant experience and qualifications to manage the company effectively.
3. Authorized Share Capital
The minimum authorized share capital for a Cabotage company in Nigeria is 25 million naira.
This ensures the company has sufficient capital to operate within the regulatory framework.
For better clarification, a share capital is not the total amount of capital used to start the business. Just like cash at hand, machineries and human resources are some of the types of capital required to start the business, this 25 million minimum share capital is also one of the types of capital needed to start a business.
As a way of raising funds for the company, the share capital must be completely allocated to all the shareholders at the point of registration.
4. Company Name
Search and reserve a unique company name with the Corporate Affairs Commission (CAC).
To search and reserve a name means to search and ask for approval from the CAC to use your desired company name as the official and legal name of the company. After following the due process, the CAC then informs you on whether the name is available or not.
5. Registered Office Address:
You must provide a physical address for the company’s operations in Nigeria.
6. Memorandum and Articles of Association (MEMART): Drafted documents outlining the company’s objectives, regulations, and operational guidelines.
7. Provide particulars of the following:
- The directors;
- The shareholders and;
- The company Secretary: The company secretary is responsible for administrative tasks such as keeping and filing documents on behalf of the company. However, this requirement is mainly optional.
8. Filing Fees: Pay the required CAC filing and stamp duty fees and submit proof of payment.
9. Identification Details Needed:
1. For Directors and Shareholders:
– Full name
– Date of birth
– Gender
– Phone number
– Email address
– Residential address
– Means of identification (International Passport, National ID, Voter’s Card, or Driver’s License)
2. Company Secretary (if applicable):
– Name and address
– RC number (if a corporate entity)
– Means of identification
Please note that only one person can register a company and act as both director and shareholder where there are no foreigners involved in the creation of the company.
Where foreigners will be involved, a minimum of two directors will be required. Where the shareholders are individual foreigners, a minimum of two persons are required to be shareholders for the company.
Importance of SCUML Registration
Every cabotage Company is required to register with the Special Control Unit Against Money Laundering because it helps the company to comply with the Special Control Unit Against Money Laundering which is overseen by the Economic and Financial Crimes Commission (EFCC).
The reason for getting the SCUML certificate is because it is mandatory for all non designated financial institutions to register for a SCUML certificate and the cabotage company is one of it.
Another important reason is that registration protects your business account from being targeted for money laundering.
Also, it is a requirement for opening a corporate bank account for the cabotage company.
The requirements for SCUML registration include:
– Certificate of Incorporation
– Memorandum and Articles of Association
– Form CAC 1.1 (or CAC 2 and CAC 7 for older registrations)
– Tax Identification Number (TIN)
– BVN, bank name, and account number
INTELLECTUAL PROPERTY PROTECTION
Intellectual properties are properties created from your mind and which the law helps to protect like a special shield from those who may want to copy it.
In Nigeria, there are three main types: patents, copyrights, and trademarks. However for your business, trademarks are the most important.
A trademark is a unique sign that shows your company’s products or services are different from others. It could be a name, logo, or symbol.
For instance, some products are known by their trade names such as like Coca-Cola or Apple or Mercedes or Toyota.
In fact, their names and logos are usually almost immediately recognizable.
A Certificate of Registration is what is usually given after successful registration to prove that the trademark belongs to you.
Patents protect inventions while Copyrights protect literary and artistic works.
Requirements for Trademark Registration
When you register your trademark, you have the legal right to take legal action against anyone who wants to steal away your trademark.
The requirements for registering your trademark include:
– Any of the marks which you intend to register (name, logo, image, or symbol) or a combination of these.
– A description of the services of the cabotage company covered by the trademark
– Name of the owner of the company
– Contact details of the owner of the cabotage company
– Power of Attorney appointing an agent to do the registration (an accredited agent/lawyer may help to prepare the power of attorney)
After registration, the cabotage company gets a trademark certificate which is valid for 7 years and can be renewed.
Also Read: What Every Business Owner in Nigeria Should Know About Intellectual Property Rights
CONTRACTS FOR YOUR CABOTAGE COMPANY
Since the company will be involved in numerous contracts as a commercial company, it is important for the cabotage company to have contract documents readily available for its operations.
An important key note regarding contracts is that it must be legally valid.
For a contract to be valid, it must include certain necessary details.
These necessary details are included to protect your business from potential legal issues and prevent losses.
Some of the documents required include the following:
- Terms and Conditions for Booking Shipment
Clearly defined terms and conditions for booking shipments are crucial to manage customer expectations and protect your business from potential disputes.
This contract should detail the booking process, payment terms, cancellation policies, liability limitations, and customer responsibilities.
It includes clauses on pricing, changes and cancellations, refunds, shipping insurance, and disclaimers about third-party service providers.
It also ensures customers acknowledge and accept these terms before confirming their bookings.
- Employee contract of employment
This is a document that tells employees that are newly employed into the cabotage company, what their individual job description is, the salary, the rules to be followed while working with the company and the rules for leaving or resigning from the company.
- Company policies and employees handbook
Every company must have their rules and regulations that the company and every staff of the cabotage company must follow.
The document usually includes the company’s work rules, the code of conduct, safety guidelines, and procedures for conflict resolution.
These rules and regulations provide a structured work environment for the staff thereby contributing to a harmonious workplace, boosting employee morale and their overall productivity.
- Website Terms of Use
Cabotage companies definitely involve taking bookings for cargo transportation on sea.
Where the company accepts these bookings via a website or application, it is necessary for the company to have well drafted website terms of use.
They explain what your customers can and can’t do when they visit the site.
They cover things like their rights, the website’s rights, and how disputes arising from missed cargo shipments or ship wrecks can be resolved.
- Privacy Policy
A Privacy Policy is like a set of rules that explain how your customer’s information is handled when they use your company’s website or applications.
The documents usually includes details about how your customer’s information are collected, used, the security measures put in place and the procedures for getting access to the information or deleting the information.
You need these agreements to keep your customers rest assured that their personal information is safe with you and this brings about trust and integrity for the company.
- Refund Policy
A Refund Policy is a set of rules that say when and how your customers can get their money back if they’re not happy with a purchase.
It usually includes details like the conditions for refund, time frame for the refund, their eligibility criteria and any other special requirement for a refund.
It is needed to create a fair win for both you and your customers when the need for a refund arises.
- Independent Contract Agreement
An Independent Contractor Agreement is like a special job contract.
It’s for when the company hires people such as freelancers or temporary staffs to do a specific job.
You agree on things like what they’ll do, how much they’ll be paid, and when it should be done.
It’s important because it shows that they’re not a full-time employee, so they might have different rights and responsibilities.
- Service Level Agreement
A Service Level Agreement, or SLA, is a bit like a promise between a company and its customers.
It usually includes the services rendered, the response time, performance metrics and procedures for dispute resolution.
It’s like a deal to make sure your customers are happy with the service they’re getting.
- Lease/Tenancy Agreement
The physical location of your company whether rented or leased, needs a well drafted tenancy or lease agreement
Having this agreement ensures legal compliance and secures operational space.
It also clarifies the responsibilities for both your company and the owner of the property.
Buying your own property? Ensure to follow the due process to avoid getting scammed, you can watch this video here for more.
Also Read: 7 New Strategies For Lagos Landlords To Avoid Hassles in Real Estate Transactions
CONCLUSION
From this comprehensive guide, you can agree with me that the setting up of a cabotage company in Nigeria requires careful planning and compliance to legal and regulatory requirements.
This makes seeking legal help an important step to getting the legal foundation of your business right.
We offer our services to sophisticated entrepreneurs who are particular about getting it right in the legal foundation of their business right from the get go.
If you need our team to work with you to set up a cabotage company, you can click HERE to get started.
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