Tuesday, November 21, 2017

Business Registration and Online Presence Benefits for Micro, Small and Medium Enterprises (MSMEs)

Starting a business is always the fun part: Coming up with an idea, registration of business name,  building an online presence, and imagining all the things the business will become once it takes off. But without marketing knowledge, driving traffic and making sales can become an entrepreneur’s biggest hurdle on the road to success. Business Name (BN), popularly called Enterprise in Nigeria, is a form of legally recognized business organizations in Nigeria. Clearly, most Micro, Small and Medium Enterprises (MSMEs) come, and in fact can be conveniently organized, under the Business Name structure.

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It is no longer news that Nigeria woefully failed to achieve the Millennium Development Goals (MDGs) which ended in 2015, particularly Goal 1 which was to reduce extreme poverty. Thankfully, the United Nations in January, 2016 launched the Sustainable Development Goals (SDGs) which are a guide to the United Nations Development Programme (UNDP) policy and funding for the next 14 years. The SDGs, among other essentials, recognize a universal commitment to actions to end poverty. In Africa, the simplest way to end poverty is to encourage MSMEs to start, have access to finance and funding as well as sustained entrepreneurship mentorship and supports from both the Government and successful private sector players.

BN is ideally the best business structure for the MSMEs because of simplicity in its registration, commencement of operation and ease in management. The question is, “Why do you need to register your BN or MSME?”

First, an entrepreneur needs to register his/her enterprise to comply with the requirement of law, that Business Names should be registered, with the exception of very few circumstances. In other words, Nigerian law makes it compulsory for Business Names to be registered. The particular Nigerian law here is the Companies and Allied Matters Act (CAMA), Chapter C20 2004. Under the CAMA, every person or firm carrying on a business under a Business Name (apart from those exempted), must register the Business Name within twenty-eight days after starting the business. This is the combined meaning of sections 573 (1) and 574 (1) of the CAMA. The said sections are reproduced as follows:

573 (1) CAMA
Every individual, firm or corporation having a place of business in Nigeria and carrying on business under a business name shall be registered in the manner provided in this Part of this Act…

574 (1) CAMA
Every firm, individual or corporation required under this Act to be registered shall, within twenty-eight days after the firm, individual or corporation commences the business in respect of which registration is required or within three months of the coming into operation of this Act furnish to the Registrar at the register office for the State in which the principal place of the firm, company or individual is situated, a statement in writing in the prescribed form…

The simple effect of the above sections of the CAMA is that any person or entity having a place of business in Nigeria under a Business Name, e.g. Travel and Hospitality, must register that brand name with the Corporate Affairs Commission within twenty-eight days of starting the business.

However, there are instances when registration of Business Name is not compulsory. The instances, which are contained in section 573 (1) (a), (b), (c) and (2) (a), (b), (c) of CAMA, are:

In the case of an INDIVIDUAL, if he/she uses his full name, initial and surname(s) without any addition.
In the case of a FIRM/PARTNERSHIP, if it uses the full name, initial and surname(s) of the partners without any addition.
In the case of a COMPANY/CORPORATION, the company or corporation uses its corporate name without any addition.
Where the addition merely shows that the business is carried on in succession to a former owner of the business, the additional element need not be registered.
If two or more INDIVIDUAL PARTNERS have the same surname and there is an addition of an “S” at the end of the surname, which shows plurality.
If the business is carried on by a RECEIVER/MANAGER appointed by any court.
One important benefit of registering one’s BN or MSME (Micro, Small and Medium Enterprise) is that upon registration, a certificate of registration of the Business Name is issued, and that name becomes a corporate name.

On the other hand, if an individual or firm carries on business under a Business Name of which registration is required under the CAMA and fails to register it, that individual or every partner in the firm becomes guilty of an offence and liable on conviction to a fine of N50 for every day during which the default continues.

The effect of not registering a Business Name which the CAMA makes compulsory to be registered is that the structure of the BN or MSME is illegal. In commercial litigation, an enterprise founded on illegality cannot take benefit of any contract it enters into in its illegal name. The Supreme Court of Nigeria has had the opportunity to emphasise on the effect of illegality. In the case of Ajayi v. Total Nigeria Plc (2013) LPELR-20898, p. 15, paras. D-F, Mohammed, JSC (as he then was) noted:

“The law is indeed well settled as argued by the Appellant and duly supported by the cases of Okoyi v. Santilli (supra) and Sodipo v. Lemninkainen (supra) cited and relied upon by him, that where a court of law in the course of a matter finds an illegality punishable under the law, even if not triable in that Court but in another Tribunal without prejudice to it referring the matter to that Tribunal, must take cognizance of the illegality. In other words, the law is trite that once a transaction is illegal, it is void and all things emanating from that transaction is a nullity.”

Also, in the case of Corporate Ideal Insurance Ltd. v. Ajaokuta Steel Co. Ltd. (2014) LPELR-22255, p. 39, paras. B-C, Fabiyi, JSC speaking for the Supreme Court of Nigeria, stated as follows:

“On the whole, the non-compliance of the parties herein with the provisions of Sections 50(1) and 93(2) of the Insurance Act 1997 rendered their contract of Insurance illegal and unenforceable by either party. The Court cannot close its eyes to illegality as it is the duty of every Court to refuse to enforce a transaction or contract.”

Therefore individuals or partners can enter into transactions or contracts in their registered BNs, and will derive every necessary legal benefit.

Second, a registered BN enjoys a corporate recognition and distinctiveness, in that no other name that is identical with or similar to the already registered BN will be subsequently registered by the Corporate Affairs Commission. Also a registered BN takes priority over an unregistered similar BN, which in effect renders the unregistered BN unrecognizable in law.

Consequently, any person or firm that trades under a registered BN or any name that is similar to the registered BN that is calculated to deceive persons who know of and intend to have business dealings with the registered BN will be liable for the tort of passing off. Such a person or firm will be restrained by court of law from carrying on business under the registered BN. This was the situation in the case of Niger Chemists Ltd. v. Nigeria Chemists (1961) All N.L.R. 171. Here the plaintiffs had carried on business as chemists in the registered name “Niger Chemists Ltd.” for several years in Onitsha and other towns in the then Eastern Nigeria. The defendants later started the same line of business under the name “Nigeria Chemists.” The plaintiffs sued the defendants for actionable passing off, and sought for an order of court stopping the defendants from carrying on business in the name “Nigeria Chemists”. The court agreed with the plaintiffs and ordered the defendants to stop carrying on business under the name “Nigeria Chemists.”

It is to be noted that an unregistered BN cannot take priority over a registered BN. This may be illustrated by considering Aisha Nkem and Kemi Briggs, two female entrepreneurs who had separately come up with the brand names, “Naija Queens Fashion & Beauty Palace” and “9ja Queens Fashion & Beauty Palace”, respectively. Though Aisha Nkem first started business under the unregistered name “Naija Queens Fashion & Beauty Palace”, but Kemi Briggs who had learnt of the successes and rising goodwill of “Naija Queens Fashion & Beauty Palace” quietly proceeded to the Corporate Affairs Commission and got her name “9ja Queens Fashion & Beauty Palace” registered. The simple effect of the registration of “9ja Queens Fashion & Beauty Palace” is that it takes priority over Aisha Nkem’s unregistered “Naija Queens Fashion & Beauty Palace”, and Aisha Nkem will not succeed if she goes to court to stop Kemi Briggs from carrying on business under her registered “9ja Queens Fashion & Beauty Palace.”

Similarly, a registered BN enjoys the protection contained in section 8 of the Trade Marks Act. It states as follows:

The registration of a trade mark shall not interfere with-
(a) any bona fide use by a person of his own name or the name of his place of business, or of the name, or the name of the place of business, of any of his predecessors in business.

WordPress Shopping Cart Obviously, it is only a registered BN (except the categories not under the mandatory list) that the registration of a particular trade mark name will not interfere with the use of its place of business in the event that the registered trade mark name is similar with the name of the place of business.

Though a registered BN does not have what is known in legal jargon as juristic personality, i.e. the right to sue and be sued in its corporate name, like the incorporated company, the rules of practice and procedure relating to commercial litigation with respect to registered BNs have become more liberal. The various Rules of the High Court and the Magistrates’ Court now allow two or more persons who carry on a business as partners to sue or to be sued in the name of the firm. Also a person carrying on a business under a BN whether registered or unregistered may be sued in such name as if it were a firm. The Supreme Court of Nigeria and the Court of Appeal of Nigeria have restated these flexible rules of procedure and practice in the cases of Iyke Medical Merchandise v. Pfizer Inc. (2001) LPELR-1579 and F.O. Loy v. Registered Trustees of New Covenant Church (2017) LPELR-42183, respectively.

However, if a wrong is done against an unregistered BN, the unregistered BN cannot successfully sue to redress the wrong in its unregistered name because it will not be allowed to benefit from its illegality, i.e. having not been registered as required under the CAMA as stated above.

A third basic reason for formal registration of one’s BN is to enable one to have access to finance and loan facilities from formal lenders. Formal lenders, whether commercial banks or interventionist lenders such the Bank of Industries, before looking at the bankability of one’s venture will first want to know whether the business has been registered as required by law. So the registration of a BN is the basic eligibility requirement for business loans in Nigeria.

Unfortunately, in Nigeria most MSMEs can hardly access business loans because of their inability to provide the collaterals acceptable to formal lenders. Most formal lenders in Nigeria insist that borrowers should collateralize their loans with registered title document, i.e. certificate of occupancy.  Why formal lenders insist on registered title document as collateral is for easy of recovery of the loan sum and interest upon default by the borrower. Clearly, MSME start-ups can hardly afford this collateral of certificate of occupancy. Consequently, MSMEs become excluded from accessing business loans.

Today, the good news is that there are now guarantees by law for formal lenders to accept movable assets such as cars, shares, copyright, patents, salaries, earnings, profits, agricultural produce, etc. as collaterals. This was by the passing into law of the Secured Transactions in Movable Assets Act, 2017 by the National Assembly which came into effect on the 30th day of May, 2017. So the strength of this law, formal lenders can now accept movable assets as collaterals for business loans. Therefore, an MSME entrepreneur who has a viable movable asset can now approach any commercial bank in Nigeria or any other formal lender for business loans.

Fourth, the need to open and maintain a corporate bank account in the name of a business underscores why it has to be registered. Without certificate of Business Name registration no commercial bank will open a corporate account in the name of a business entity.  This is part of the requirements of Know Your Customer Banking Guidelines. Every business, especially an MSME start-up needs to have a running corporate bank account particularly a current account to enjoy overdrafts.

Firth, a registered BN becomes an identifiable source of an entrepreneur’s tax obligation. By section 1(a) of the Personal Income Tax Act (PITA), income taxes are imposed on individuals, communities and families, and are assessed based on the total income of such individuals, communities and families, in each applicable year. In a given period, if the financial books of a registered BN show no profit, the owner of the business is not to be taxed in that given period. Thus, with a registered BN one can avoid taxes. Tax avoidance is not unlawful.

Sixth, where the business involves foreign ownership or participation, the business must be registered before it can commence operations.  Section 19(1) of the Nigerian Investment Promotion Commission Act states that,

An enterprise in which foreign participation is permitted under section 17 of this Act, shall not commence business, except it is incorporated or registered under the Companies and Allied Matters Act.

Thus, for a foreigner or foreign business to participate in the Nigerian market where not exclusively reserved for Nigerians, the foreign business must be registered.

Seventh, for one to be prequalified to bid for contracts or procurements for any government agency or multi-national company in Nigeria, one is usually required to show evidence of one’s Business Name registration. In fact, certificate of Business Name registration or certificate of incorporation in the case of company is a basic prequalification document for most, if not all, public procurements. Generally, a business entity not registered as required under the CAMA cannot be prequalified to bid for public contracts or procurements in Nigeria

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Sunday, October 8, 2017

Federal High Court Squashed Law Graduates of Natio...

OlayinkaOyelamiPublishing Blog: Federal High Court Squashed Law Graduates of Natio...: A Federal High Court sitting in Port Harcourt Wednesday squashed a suit by law graduates of the National Open University of Nigeria, NO...

What are THE DIGITAL LITERATE LAW GRADUATES of NOUN looking for in NIGERIAN LAW SCHOOL that they've not already gotten from their learning at NOUN?.

Sometimes, i wonder what this generation of digital  compliant minds are looking for in Nigerian 12th century medieval modeled schools and Nigerian Law School for that matter in this 21st century tech age when your can access any information you need to advancement your life and humanity at the comfort of your home on your phone.

Why wasting valuable time and resources on obsolete and invalid schools that can not add value to your life? The legal service in this 21st century is in the world of internet-based global businesses, online document production, commoditized service, legal process outsourcing, and web based simulation practice.

The global legal markets has been liberalized with evolution of internet with new jobs for lawyers and new employers too...Why wasting time and resources for appearance in COURT where you can NEVER get JUSTICE. Read more... 

Sunday, August 13, 2017

The Rules Of Professional Conduct For Legal Practitioners, 2007

  1. Introduction
Many Lawyers and New Wigs find it difficult to acclimatize their brains with the code of conducts for legal practitioners; Rules of Professional Conduct for Legal Practitioners 2007. This challenges faced by our aspirants to the bar, to whom knowledge of professional ethics is of paramount important in the Bar Finals’ examination calls for this highlights of the rules for easy grasp.
  1. Highlights of the Rules of Professional Conduct
This highlights will cover the general responsibility of lawyers, role and duties of counsel to court, duty of counsel to other lawyers, duty of counsel to clients, improper attraction of business, remuneration and miscellaneous.

  1. General Responsibility of Lawyers
As a legal practitioner, you have a general responsibility not to engage in any conduct which is unbecoming of a lawyer,[1] not to admit unqualified persons into the profession,[2] nor aid the unauthorised practice of law.[3] Avoid intermediaries in your work[4] but you are free to partner with other legal practitioners.[5] If you are in judicial or public employment,[6] don’t engage in business[7] or any salaried employment.[8] Take note that; practicing fee is compulsory,[9] obtain your accredited seal and stamp,[10] attend Continuing Professional Development course,[11] you are entitle to practicing certificate[12] and notify NBA when you set-up a new office.[13]
  1. Duties of Counsel to Clients
As you relate with your client(s), you are to dedicate and devote to your client cause,[14] represent him within the bounds of law[15] and represent him competently.[16] Avoid conflict of interest[17] where there is agreement with you[18] or he entrust you with privilege information.[19] As a witness[20] do not withdraw from his employment[21] or call at his house.[22] In dealing with his property,[23] you have responsibility for litigation[24] and you must investigate facts and ensure proper production of witness.[25]
  1. Duties of Counsel to other Lawyers
As you relate with other lawyers, keep fellowship and precedence,[26] your acts should be fair and in good faith,[27] you can associate with them in single matter,[28] and observe the rules when your client change or debrief you.[29]
  1. Role and Duties of Counsel to Court
As you relate with the court, being an officer[30] you have a duty of good conduct,[31] candid and fair dealing,[32] not to publicise trials.[33] Beware of your closeness to judges,[,[34] respect tribunals,[35] act with decorum,[36] do the necessary in the best interest of your client but don’t stand bail for them,[37] and exert your best effort while handling the brief of an indigent client.[38]
  1. Improper Attraction of Business
As a professional tycoon; don’t solicit but fairly advertise,[39] use note-papers, envelopes and visit cards,[40] signs and note;[41] books and articles[42] are also allowed. You can publish your new address,[43] your willingness to associate with other lawyers in your locality.[44] Be robe in superior courts,[45] you can handle some press, radio and television legal interviews,[46] but don’t instigate litigation.[47]
  1. Remuneration
As a professional employee, you are entitle to remuneration,[48] you can accept general or special retainer,[49] arrange for contingent fee in civil matters,[50] but don’t agree to pay litigation expenses.[51] Your fee should be reasonable and commensurate,[52] avoid sharing your legal service fee,[53] and don’t accept gifts from your client’s opponents.[54]
  1. Miscellaneous
The provisions of the rules are enforceable against any person bearing the second word[55] as defined in the interpretation rule,[56] see the citation.[57]
  1. Conclusion
The above rules segmented and summarize will make one appreciate the rules of professional conduct at his fingertips. It’s the responsibility of lawyers or law students to appreciate the entire rules and applied them when the need arise.

In 1963, an American attorney named Reed Lawlor published a prescient article in the journal of the American Bar Association. “In a few years,” he wrote, “lawyers will rely more and more on computers to perform many tasks for them. They will not rely on computers simply to do their bookkeeping, filing or other clerical tasks. They will also use them in their research and in the analysis and prediction of judicial decisions. In the latter tasks, they will make use of modern logic and the mathematical theory of probability, at least indirectly.” Learn more about Virtual Law Practice 

Wednesday, April 5, 2017

Lawsuit Survival Guide: A Client’s Companion to Litigation

When you have a legal problem, you need legal information. Lawyers, of course, are prime sources of this information, but if you bought all the needed information at their rates — $150 to $450 an hour — you’d quickly empty your bank account. Fortunately, many lawyers will work with you to help you acquire a good working knowledge of the legal principles and procedures you need to deal with your problem at least partly on your own.

If you are hoping to represent yourself and use a lawyer only for advice, make sure the lawyer is open to that type of set-up. Likewise, if you’re going into business and will draft your own bylaws or business agreements, ask the lawyer if she’s open to reviewing your drafts and making comments. Virtual law practice is revolutionizing the way the public receives legal services and how legal professionals work with clients. Stephanie Kimbro’s practical guide teaches lawyers how to set up and run a virtual law firm. It provides case studies of individual

Further Resources

For more tips on choosing and working with a lawyer, see the eBook The Lawsuit Survival Guide: A Client’s Companion to Litigation, by Joseph Matthews (Nolo). 

Thursday, January 19, 2017

Building the 21st-Century Law Firm envisions how to start and manage a legal practice using the latest technology and tactics.

Clients don’t want to have to struggle to find the right lawyer or fight to work with the right lawyer. Get insights into Building the 21st-Century Law Firm envisions how to start and manage a legal practice using the latest technology and tactics. Click here Legal Services – OlayinkaOyelamiCorporation (OOCORP)

Saturday, January 14, 2017