According to Section 44 of the Companies and Allied Matters Act, 2020, a company is not permitted to carry out business activities not included in the object clause of the Memorandum and Articles of Association (MEMART) of such company. The MEMART of a company are important documents of any company. On the one hand, the Memorandum of association provides details of the company such as; the registered address of a company, details of share subscribers of the company, nature of business activities permitted to be carried out by the company, while the Articles of Association provides a set of rules which govern how the company is run.
There are various circumstances which may give rise to the need for a change in business activity of a company such as;
a. A company wishes to expand its business
b. A company wishes to start an entirely different business
c. A company acquires or takes over another company with different business activity
d. A business activity is prohibited by the authorities, e.t.c
Under such circumstances, there are procedures for effecting the needed changes.
HOW TO CHANGE THE BUSINESS ACTIVITY OF A COMPANY.
In Nigeria, you can change the business activities of your company through the following steps;
1. ENSURE THE COMPANY’S ANNUAL RETURNS HAS BEEN FILED AND IS UP TO DATE.
As a rule of thumb, post incorporation filings such as; effecting a change of the business activity of a company, would not be attended to by the Corporate Affairs Commission if a company’s annual returns aren’t up to date.
2. A BOARD RESOLUTION MUST BE PASSED
As required by law, a board meeting must be convened in which a resolution of board members authorizing alteration of the objects of the Memorandum of association of the company is approved and passed.
3. PAY STAMP DUTIES WITH THE FEDERAL INLAND REVENUE SERVICE (FIRS)
Stamp duty is assessed and paid with the FIRS.
4. PAY FILING FEES WITH THE CORPORATE AFFAIRS COMMISSION
5. FILE THE APPLICATION WITH THE CORPORATE AFFAIRS COMMISSION.
The application must be accompanies with;
a. Copy of board resolution
b. Altered Memorandum of Association
c. Evidence of payment of stamp duties
d. Evidence of payment of filing fees.
6. RECEIVE ACKNOWLEDGEMENT LETTER FROM THE REGISTRAR GENERAL ACKNOWLEDGING ALTERATION OF THE MEMORANDUM OF ASSOCIATION AND CERTIFIED COPY OF ALTERED MEMORANDUM OF ASSOCIATION OF THE COMPANY.
A company may commence new business activities after receiving an acknowledgement from the Registrar-General.
Companies who carry out business activities outside the scope of activities contained in its MEMART face risk of huge legal penalties when fished out. It is therefore important that members of a company ensure that they act strictly within the scope of the law.
Do you need further clarification or help with effecting changes on the business activities of your company? You may reach out to us HERE. We look forward to hearing from you.