A charitable organization or non-governmental organisation (“NGO”) can be registered in Nigeria as either a Company Limited by Guarantee (“Ltd/Gte”) or an Incorporated Trustee (“IT”) depending on the intentions of its promoters and the intended scope of operations. The registration of business entities and NGOs is governed by the Companies and Allied Matters Act 2020 (“CAMA”) and the Companies Regulations 2021, which set out their incorporation requirements, operation guidelines, mandatory returns and other compliance obligations as well as their winding up procedures.
In this article, we highlight the differences between both business structures as well as the requirements, costs and timeline for incorporating a charitable organization in Nigeria.
1. What categories of organizations can apply to be an IT or Ltd/Gte?
Regulation 27 of the Companies Regulations 2021 provides that promoters of organisations seeking to pursue the following objects or activities can apply to be an IT:
a) Religious activities
b) Educational programmes
c) Literary activities
d) Scientific pursuits
e) Social activities
f) Developmental projects
g) Cultural promotions
h) Sporting and gaming activities
i) Charitable deeds
j) Others related objects.
Please note that promoters of organisations seeking the above objects or goals can also apply to be registered as a Ltd/Gte. Section 26 (1) of CAMA provides that where a company is to be formed for the promotion of commerce, art, science, religion, sports, culture, education, research, charity or similar objects, and the income and property of the company are to be applied solely towards the promotion of its objects and no portion thereof is to be paid or transferred directly or indirectly to the members of the company, the company shall be registered as a company limited by guarantee.
2. What are the differences between an Ltd/Gte and an IT?
Below is a table detailing the differences between a company limited by guarantee (Ltd/Gte) and an incorporated trustee (IT), namely:
| S/N | Company Limited by Guarantee | Incorporated Trustee |
| 1. | A Ltd/Gte company is allowed to do minimal business. However, the income and property of the company shall be applied solely towards the promotion of the objects of the Ltd/Gte and no portion of the profits shall be paid or transferred to the members of the company. | An IT is not allowed to do any form of business but to rely solely on donations as its primary source of funds. |
| 2. | A Ltd/Gte has shareholders and Directors just like other form of limited liability companies (LLC). | An IT has Trustees (or Board of Trustees) which comprises of the Chairman, Secretary and members of the association. Two or more persons appointed by any group of persons bound by custom, religion or association, if authorized by the members of their group, can apply to the Corporate Affairs Commission (“CAC”) for registration as IT. |
| 3. | The consent of the Attorney General of the Federation (“AGF”) is required before the incorporation can be approved by the CAC. However, where the AGF makes no decision within 30 days, the promoters can place an advertisement in three national daily newspapers inviting objections, if any, to the incorporation of the company. Upon the expiration of 28 days and no objection is received, CAC shall approve the registration without the AGF’s consent. | The consent of the Attorney-General of the Federation is not required for the incorporation of an IT. |
| 4. | The directors of a Ltd/Gte company can be paid sitting allowances and directors fees though payment of directors’ fees is discretional, and the director fees (if any) must be paid out of the company’s fund. | Trustees cannot be paid sitting allowances or remuneration. They are however entitled to be reimbursed for costs incurred in the discharge of their duties. However, employees (including management staff) of an IT company can be placed on monthly salary. |
| 5. | A Ltd/Gte company is required to file annual returns with the CAC just like private limited liability company (LLC). | ITs are mandated to file audited statement of account or statement of affairs during annual returns filing period. They are also required to file biannual statements with thee CAC. |
3. Who can or cannot be appointed a Trustee of an IT?
Every adult person can be appointed a Trustee of an IT Company. However, according to Section 826 (1) of CAMA, the following persons are not qualified to be appointed or act as a Trustee:
a. An infant;
b. A person of unsound mind having been so found by a court;
c. An undischarged bankrupt; and
d. a person who has been convicted of an offence involving fraud or dishonesty within five years of the proposed appointment.
4. What are the requirements for registering a charitable organization in Nigeria?
The requirements for incorporating a charitable organization are as follows:
- Three (3) proposed names for the charitable organization;
- Proposed registered office address and email address of the IT;
- Details of trustees stating the Chairman and Secretary of the charitable organization. The details should include full name, full house address, email address, phone number, date of birth, passport photograph and ID (NIN, International Passport or Drivers Licence) of each Trustee;
- Minutes of Meeting of the charitable organization (for ITs);
- Constitution of the Association (for ITs): This should include the name of the association; aims and objectives of the association; appointment, powers, duties, tenure of office and replacement of the trustees; meetings of the association; use and custody of the common seal (if any), source of funds, keeping of accounts and auditing of such accounts.
- Newspaper publication in two daily newspapers circulating in the area where the association is to be situated, of which at least one of the newspapers must be a national newspaper (for ITs). Please note that a compulsory period of 28 days from the date of a newspaper publication must elapse before an application for registration can be submitted for approval.
- Trustees Declaration (for ITs)
- Consent of the Attorney General of the Federation (for Ltd/Gte): Please note that where the AGF makes no decision within 30 days, the promoters can place an advertisement in three national daily newspapers inviting objections, if any, to the incorporation of the company. If upon the expiration of 28 days from the date of the newspaper publications and no objection is received, CAC may approve the registration without the AGF’s consent. Where the Attorney-General of the Federation decides outside the stipulated 30-day period, the CAC shall not be bound by the AGF’s decision.
5. What are the associated costs for registering an IT or Ltd/Gte Company?
The estimated costs of incorporating a body of trustees or a Ltd/Gte, excluding professional fees, are as follows:
| S/N | Particulars | Amount(N) |
| 1. | Name Search | 5000 |
| 2. | CAC Filing fee for Ltd/Gte | 20,000 |
| 3. | CAC Filing fee for IT | 35,000 |
| 4. | Newspaper Publication | 20,000 – 30,000 |
| 5. | Trustees Declaration for IT | Based on assessment at a State High Court |
Please note that the above does not include professional fees for processing the registration.
6. What is the estimated timeline for completion?
The average timeline for completion of incorporation of Ltd/Gte is 9 weeks while the average timeline for completion of IT incorporation is 7 weeks.
7. Are charitable organizations required to file annual returns?
The Trustees of an IT must file annual returns not earlier than 30th June or later than 31st December each year, except the year in which the IT was incorporated. The annual return must be accompanied by the audited statement of account of the IT.
An Ltd/Gte shall file annual returns in the same manner as private limited liability companies under CAMA. To learn more about Annual Returns filing, see our article on Why Every Company Must File Annual Returns In Nigeria
Please see our previous article on STEP BY STEP ON HOW TO REGISTER A COMPANY IN NIGERIA
