Client: Good day Barrister please can you help me upgrade my business from enterprise to a limited liability company?

Me: of course, I can do that but why do you want to upgrade your business?

Client: there is this contract I am pursuing they only want a registered Ltd liability company and not a business name

Me: When was your business registered?

Client: 2012.

Me: Hmmm! okay, have you filed your annual returns up to date?

Client: Annual returns? What is that?

Let me just stop there for now.

This was my conversation with a prospective client yesterday and I thought to share with you what I shared with him after he asked what the annual return was.

Let me start by saying that whatever is worth doing is what doing well.

Why settle for a business name registration when what you actually want is an Ltd company registration anyhow you look at it the benefits far outweigh that of a business name.

Don't get me wrong, I'm not saying you can't register a business name and do excellently well I'm just saying that if you actually want a company with directors and shareholdings clearly stated in its memorandum and articles of association why not just start with a company registration already however small?

A business upgrade is not automatic, you would have to pay and apply for the registrar general's consent to upgrade, a consent code will then be given to proceed.

You have to also file your annual returns up to date. So for a business registered in 2012, you start paying annual returns from 2013 to 2018.

That's 5 years' annual returns and you have to pay this before you can even apply for the consent.

After filing the annual returns and obtaining the consent code which takes about a week, you would then need to start the step-by-step process for registering a company and pay all the necessary fees for registering a new company.

The effect of a business upgrade is that you get to maintain two business structures, a business name and a company using the same name but with the company ending with Ltd.

So you see that if your reason for opting for a business name is to cut costs you would end up spending more money when you do an upgrade.

Also, you incur double cost both with the CAC and other regulatory bodies such as the FIRS and IRS.

Rather than do an upgrade you can apply for a cessation of the business name and then do a fresh company registration even at that you still need to file your annual returns up to date.

If you still decide to go ahead with the business upgrade it's absolutely fine, at least you have been properly guided.

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