Companies and Allied Matters Act 2020(CAMA) : The Complete SMB Guide
"The significance of the Companies and Allied Matters Act (CAMA) to Micro-Small and Medium Enterprises (MSMEs) doing business in Nigeria cannot be gainsaid. This is because CAMA is the 'legal bible' embodying the regulatory guidelines for conducting business in the country. Simply put, the laws in CAMA shape the Nigerian business environment."
As a business owner, it is important to understand the impact/implications and key provisions of CAMA 2020—so as to best guide your business in legal matters.
That is what this guide is all about.
The first Companies Act was enacted in 1968. Despite its importance at that time, it was inadequate and severely limited the ease of doing business.
For example, the 1968 Act prohibited foreign companies not registered in Nigeria from suing and being sued in Nigerian courts.
In 1990, the 1968 Act was re-enacted to accommodate the Nigerian business environment better. A key achievement of CAMA 1990 was the establishment of the Corporate Affairs Commission (CAC), providing for the incorporation of companies and incidental matters, registration of business names, and the incorporation of trustees of certain communities, bodies, and associations.
However, the 1990 amendments, along with the insignificant one of 2004, did not entirely reflect the innovative and dynamic environment Nigeria commercial space was turning out to be. The consecutive rating of Nigeria 145th (out of 190 countries) in the World Bank's Ease of Doing Business (EoDB) index didn’t help either.
As regional business practices evolved and demand for more global business integration increased over the next three decades, the old CAMA was found hamstrung in providing an enabling environment. There was the need to amend the provisions of the old CAMA.
The 2020 Revision - CAMA 2020
Considered as Nigeria’s most remarkable business legislation to date, CAMA 2020 repealed the Companies and Allied Matters Act, 1990 and sought to liberate Nigeria’s business environment from outdated regulatory hurdles.
Apart from enabling laws that simplified the process of incorporating corporate entities and reduced administrative bottlenecks for MSMEs, the provisions of CAMA 2020 best aligned with international business practices and re-position the country to attract more foreign direct investments (FDI).
Key Provisions of CAMA 2020 (for MSMEs)
A significant provision of CAMA 2020 is the increase in the financial threshold for qualification as a small company. Under the old CAMA, a small company is one with an annual turnover of not more than ₦2 million and a net asset value not exceeding ₦1 million.
Under CAMA 2020, any company with an annual turnover of less than ₦120 million, and a net asset value of less than ₦60 million is small.
CAMA 2020 makes it possible for one person to form and incorporate a private company. However this is subject to section 20 (1), which deals with the capacity of an individual to form a company.
Before now, it was impossible to have sole membership of a company as the old CAMA mandated the availability of at least two members before a private company could be registered.
CAMA 2020 exempts a small company or any company having a single shareholder from mandatorily having its Statutory and Annual General Meetings in Nigeria.
Small companies or any company having a single shareholder are further exempted from the requirement to have their accounts audited by the end of a financial year.
Section 394 further made the appointment of a company secretary optional for a small company while retaining its mandatory nature for large public and private companies.
Another significant provision is the introduction of Limited Liability Partnerships (LLP) as a new corporate structure.
This means partnerships can now be registered as independent legal entities from the partners involved. The partners’ liabilities are limited to the partnership and no longer extend to their personal assets.
Section 40 (1) of CAMA 2020 introduces 'Statement of Companies', which an applicant or his agent can sign to confirm that the legal requirements have been complied with.
This eases the burden on business owners during registration to find a lawyer to sign a Declaration of Compliance or attest before a notary public as mandated in the old CAMA.
Under CAMA 2020, private companies can now determine whether or not to incorporate restrictive provisions on share transfer by their Articles.
This is a liberation from CAMA 2004, which made it compulsory for private companies to restrict the transfer of shares by their Articles of Association.
The Act also provides that subject to the Articles; a private company cannot sell assets having the value of over 50% of the company’s assets without the consent of all its shareholders.
In the same vein, a shareholder in a private company cannot sell their shares to a non-shareholder without first offering the shares to existing shareholders.
Incorporated in the Act also is the right of first refusal (ROFR) which prohibits a member or a group of members from selling more than 50% of their shares to a non-member unless the non-member has offered to buy the interests of other existing members on the same terms.
CAMA 2020 replaces “Authorised Share Capital” as required under the CAMA 1990 with a “Minimum Issued Share Capital” regarding the Memorandum of Association of a company. The Act further sets out the minimum amount for each type of company.
For a private company, the minimum issued share capital must not be less than N100,000.00 (Hundred Thousand Naira), and for a public company, it must not be less than N2,000,000,000.00 (Two Billion Naira).
CAMA 2020 attempts to align with technologies in business are applaudable. The Act permits private companies to hold general meetings virtually as far as the company’s Articles permit..
Notice of meetings sent by emails are considered valid, and all business operations conducted remotely are fully recognized by the Corporate Affairs Commission (CAC).
The Act endorses the electronic transfer of shares and recognizes the authentication of documents signed electronically by authorized officers of a company.
Included in CAMA 2020 are rescue and recovery provisions to aid insolvent companies from eventual fold-up and to assure investors.
The Act permits the directors of a company under administration or near liquidation to propose negotiated arrangements to the creditors towards satisfaction of the debt.
The Act also imposes a duty on the administrators of a company going under to try resuscitating the company where it is practical to do so.
This is an improvement from provisions of the old CAMA where administrators had no such mandate.
Now, what does this all mean for you as a small or medium business owner operating in Nigeria? Let's see that next.
Implications and Impact of the New CAMA for MSMEs
No doubt, the new CAMA significantly changed for the better of the business landscape for small and medium enterprises in Nigeria.
With the Act providing better conditions for foreign investors to invest in the Nigerian economy, MSMEs can take advantage of the resultant market opportunities.
The increased financial threshold for qualification as a small company opens up an opportunity for numerous businesses to take advantage of financial and regulatory privileges enjoyed by small companies.
One of these privileges is an exemption from Companies Income Tax (as aligned with the tax incentives provided under the Finance Act, 2020).
Sole membership of a company gives founders greater freedom to incorporate their limited liability company (LLC) alone before introducing partners or investors if they wish to do so.
The key exemptions equally grant small companies some operational and financial freedom during the early stages.
The provisions on the transfer of shares and sale of a private company’s assets protect small and medium business owners by preventing third parties’ acquisition of company shares with malicious intentions.
It equally offers existing shareholders the right to purchase or refuse company shares on sale before offering them to non-shareholders.
Given the many possible ways a small or medium business could fail, the Act’s provisions for insolvent companies would play a role in rescuing start-ups and MSMEs from dissolution.
Doing business in Nigeria today is easier than it was 31 years ago. Micro-small and medium enterprises are advised to incorporate their businesses under the provisions of CAMA 2020 as this allows more freedom in terms of business operations and embodies favourable conditions for MSMEs.
Take advantage of these provisions by regularising your documentation to align with the new Act. This would position your business to explore local and international market opportunities with ease.
With regards to LLP, this is a perfect corporate structure for ventures between individuals or corporate bodies that would not require equity capital raising. If the partnership intends to raise equity finance, it’s best to register the business venture as an LLC.
Finally, ensure your business compliance with all corporate legal requirements under the Act. Seek to understand the grey areas and likely pitfalls so as to avoid business practices that go against the provisions of the Act.
I'll love to know your thoughts on the CAMA 2020 and how it impacts your business. Have you ever had to refer to the act for any business-related reasons? Let me know in the comments.
A business or company is insolvent when its current assets are unable to meet its current liabilities, simply put:, a business can’t pay their debt. Section 572 CAMA 2020 sets out conditions in which a company would be deemed insolvent.. These conditions are as follows:
When a company’s state of affairs falls in any of these above situations, it is insolvent.
There are several sectoral laws which apply to restructuring an insolvent company. These laws include both domestic and international legislation.
The domestic legislations alongside the Companies and Allied Matters Act (2020), governing insolvency and restructuring in Nigeria as follows:
It is important to note that Nigeria has not enacted any international legislation such as the UNCITRAL Model Law on Cross-Border Insolvency. Nevertheless, judicial institutions such as the court can recognise insolvency procedures from other jurisdictions on the principle of comity of nations or direct access.
The Companies and Allied Matters Act, 2020 introduced business rescue options for insolvent companies or businesses. These options are discussed in details as highlighted below:
This business restructuring option is introduced under Section 17 of CAMA 2020. Here the insolvent company proposes a scheme to its unsecured creditors with the aim of restructuring the debt owed. The scheme often proposes to creditors of the insolvent company to accept all or part payment of what the company initially owed.
A CVA scheme may be proposed by either the directors of a company through a nominee or by an administrator or liquidator where the insolvent company is under administration or liquidation. Under a CVA scheme, the insolvent company is either left in control of its affairs or undergoing administration or liquidation.
The nominee, after giving notice of the scheme, is required to give his opinion to the court in a report on the feasibility of the scheme and whether meetings of the company and its creditors be held to consider this scheme.
Where the insolvent company is under administration or liquidation, the administrator or liquidator is not required to submit a report to the court. Except for the court orders, the nominee is required to call separate meetings of the members and the creditors, while the liquidator or administrator is required to convene the same where the insolvent company is under administration or liquidation. However, it is required that such nominee should be an Insolvency Practitioner qualified under the Act.
A formal business restructuring option is recommended for an insolvent company and it is aimed at rescuing the business so that the business can continue its operations. However, where this objective cannot be realised, the administrator can channel this restructuring procedure towards another objective.
The administration procedure may be channelled to achieving a better result for the company’s creditors than would have benefited the creditors if the company was liquidated initially without being under administration. Nevertheless, where this objective is also not realised, the administrator can channel this procedure to sell the assets of the company and make a distribution to one or more secured preferential creditors. A company may be placed under administration via any of these two means:
A company can be placed under administration by the court where an application for an administration order is made to the court by either the company, its directors, creditors or an officer of the court appointed to act as a receiver under the Act.
The court may grant such an order and appoint an administrator where it is satisfied that the company is or on the verge of insolvency or such an order would achieve the purpose of administration.
A company is placed under administration outside the court upon the appointment of an administrator by a holder of a qualifying floating charge. Where such an appointment is made, the holder of the floating charge is required to file a notice of appointment and any other document requested by the Corporate Affairs Commission.
A creditor dissatisfied with such an appointment may approach the court for a redress. However, the administrator appointed by whatever means must be a qualified Insolvency Practitioner under CAMA 2020. Nevertheless, once an administrator is appointed, the administrator is required to notify the company as well as the company’s creditors of such appointment.
After such notification is made, the company is required to provide the administrator with the statement of affairs of the company. The Administrator on receiving such documents would consider the affairs of the company and draw up a proposal for achieving administration. This proposal is to be circulated to the company as well as its creditors. However, such a proposal must not affect the right of a secured creditor to enforce his security without his consent.
Nevertheless, where the Administrator’s proposal aims at rescuing the company as a going concern, a CVA may be a favourable option due to the advantage of a moratorium. A moratorium is provided under an administration procedure. It suspends the rights of creditors of a company under administration to enforce debt recovery actions against the company.
This insolvency process is a court-appointed tool that enables secured creditors under a loan agreement with the insolvent company to enforce their security against an insolvent company. Here, one or more secured creditors can apply to the court to appoint a Receiver. A Receiver can be appointed outside the court where the debt instrument gives the creditor such rights. The appointed Receiver is expected to apply to the court for directions on how to proceed.
In receivership, the Receiver has the right to sell the assets of the insolvent company, or manage the affairs of the insolvent company until the debts owed to the creditors are recovered. However, it's not the responsibility of the Receiver doesn’t to rescue the company from financial distress. Rather, his/her primary responsibility is to recover the debts owed to the creditors appointing him.
While the receivership is operative, the management of the company remains in place but with limited authority. Where a company is undergoing members voluntary winding-up and a receiver is appointed, the powers of the directors and the liquidators of the insolvent company to deal with the concerned property would be suspended until recovery of debt. However, where the company is undergoing a creditor winding-up, the power of the liquidator over the concerned property would not be suspended unless ordered by the court.
Additionally, a moratorium prevents a secured creditor from appointing a Receiver where a company is under administration unless with the consent of the Administrator as the Administrator can direct such appointed Receiver vacate office immediately.
Receivership is wielded often by the creditor and it often leads to the dissolution of the company. An insolvent company after receivership can appoint a liquidator at the conclusion of the receivership to distribute the remaining assets of the company amongst any unsecured creditor.
This insolvency process is often instituted against a financially distressed company and it’s often aimed at dissolving the company. Before the enactment of CAMA 2020, the CAMA 1990, often encouraged creditors to wield this procedure as a tool to recover their debts rather than explore restructuring options.
In winding-up proceedings, the company ceases operations permanently, while its assets are sold to repay its creditors and its remaining assets are distributed among its members. Under CAMA 2020, two types of winding-up proceedings are recognised;
This winding-up process is often self-imposed and may occur in any of the following circumstances provided under Section 620 of the Act:
However, it’s important to note that a voluntary winding-up could be carried out by either the members of the company or the creditors of the company. A Members Voluntary winding-up can be distinguished from a Creditors Voluntary Winding-Up based on whether the business is solvent or not. In a Members Voluntary Winding-up, the directors must file a declaration of solvency. Where such a declaration cannot be made, it becomes a Creditors Voluntary Winding-Up.
The procedure for members voluntary winding-up are as follows:
What is the Procedure for Creditors Voluntary Winding-Up?
Creditors Winding-Up: This winding-up process is often initiated by the creditors of the company. Here a special resolution is passed by the company under the supervision of the creditors as a means of recovering its debts. This winding-up process occurs in the following steps:
Once the winding-up process is commenced the company would cease operations except for operations that are beneficial to the winding-up process. Such operations include the power to conduct business or transfer shares by a member of the company which shall be regarded as void unless with the approval of the liquidator.
However, the operations allowed during a winding-up is the distribution of the company’s assets to satisfy its liabilities unless the articles of the company provide that the property be distributed otherwise. Furthermore, it is important to note that a moratorium is put in place to stay any creditor’s action for winding-up order where a creditor’s voluntary winding-up has been ongoing for six months. However, where the asset sought to be enforced upon by the creditor, the moratorium would not apply under any of the following conditions
This is often done by the court on the application of any or one or more of the following persons:
The court may give an order for the company to be dissolved if any or all of the following circumstances exists:
Once the order for dissolution is given by the court, a compulsory winding-up commences and the following steps occur:
However, apart from business rescue options provided under CAMA 2020 for insolvent companies; the act as well as other domestic legislations provide corporate restructuring options for insolvent companies.
Corporate restructuring is the process in which a company re-organises or modifies its legal, operational, management, ownership or capital structures in order to work more efficiently. Companies on the verge of financial distress often employ restructuring options to prevent a declaration of insolvency. Corporate restructuring can either be internal or external.
This restructuring option is the modification of the operational or management of capital structures of the company internally. Here the goal is to prevent the alteration of the company’s corporate identity and seek solutions internally without resorting to third parties for assistance.
In exploring internal restructuring solutions, financial and legal advisors are often employed to lead negotiations with the company’s creditors to improve the capital structure by restructuring its debts and equity profile, thereby liquidating debt in the process. Internal Restructuring options include the following:
This internal restructuring option involves the company proposing an arrangement with its creditors to accept less than the debt originally owed as the final satisfaction of its debts. This arrangement often proposes a change in the rights and liabilities of the creditors. This process is recognised by CAMA and requires the sanction of the Federal High Court to be effective.
The first step is to make an application to the court for a court-ordered meeting. Where the application is granted, a court-ordered meeting is summoned and the scheme of arrangement is proposed for approval. Approval is obtained when 75% of persons holding the value of the company’s shares or a specific class of debt consent to the resolution sanctioning the scheme. The scheme would thereby be presented to the court for approval.
This internal restructuring option is often explored by a solvent company on the brink of financial distress. Here, the members of the company resolve that dissolving the company and selling is likely to yield better results rather than be dissolved permanently. The members also resolve that the company be wound up voluntarily; the assets of the company be sold and transferred to another company in consideration of an equity stake in the transferee’s company.
The consideration received is not restricted to an equity stake, it includes cash, debenture policies, etc , - distributed amongst members of the company according to their rights in liquidation. The consideration received could also be used to settle outstanding creditors. It should be pointed out that the company doesn’t cease to exist when this option is explored, rather after it is dissolved, it is resurrected in another company.
This internal restructuring option is an arrangement where certain groups of the company agree to acquire the interest (either debt or equity) of other groups. A buy-out can occur in the following forms:
This restructuring option often involves an arrangement with a third party. In an external restructuring, the company often loses its corporate identity and a company is implored to explore internal restructuring options initially before resorting to these options. The forms of external restructuring are as follows;
This external restructuring option often involves the integration of two companies into a single corporate entity and this is known as a Merger. An acquisition occurs when a company is purchased by another company. The distinction between a merger and acquisition is that in a merger a new company is formed while in an acquisition no new company is formed. Mergers and Acquisitions are often motivated by the acquisition of a large market share, acquisition of new technology and intellectual property, expansion into new markets or gaining human capital and talent. Mergers could occur in three forms;
The Federal Competition and Consumer Protection Commission is the regulatory body that governs mergers and acquisitions in Nigeria and it derives its powers and legal framework from the Federal Competition and Consumer Protection Act, 2019.
This is a forceful acquisition of a company by another to gain a controlling interest in the target company, which is often 70%. In takeovers, the acquiring company makes a bid for the target company, and where successful the acquiring company takes control of the company’s operations and assets.
This external restructuring option is often explored by ailing banks and financial institutions. Here the assets and liabilities of an ailing company are purchased by another company at an auction price. The ailing company is not often wound up rather it is dissolved by a judicial process. This restructuring option is often governed by the Federal High Court.
The framework of insolvency and restructuring introduced by CAMA 2020 has put Nigeria on the global map of stimulating growth and development in an ever-evolving digital economy. These innovations lay a foundation for accommodating anticipated legal frameworks such as the introduction of a framework for cross-border insolvency.
Here's everything you need to know to register and protect your trademark in Nigeria.
First, let's start with...
A trademark is a word, phrase, design, sign, or symbol that distinguishes your goods or brand from that of another. The look, spelling, or pronunciation of your trademark must be distinctive and easily identified with your business.
When you register a trademark, laws protect the articles (word, phrase, design, sign, or symbol) preventing others from using them, therefore, preventing incidences of piracy.
You can trademark anything aside from the above, be it a letter, numerical, signature, style, colour, device, ticket, or label, depending on your type of business. However, you cannot trademark:
The distinctiveness of your trademark is a crucial factor to consider during a trademark. A mark cannot be trademarked if it lacks any distinctive properties or if the language has become customary in the country of origin or is contrary to public order, according to the Paris Convention for the Protection of Industrial Property.
Take, for instance, Wakanow, a travel brand in Nigeria. “Waka” is customary pidgin for “come” or “go,” while “now” is a more commonplace word. On their own, they may not merit a trademark for a travel company, but “Wakanow” makes a valuable trademark due to its distinctiveness.
Before registering trademarks, it is essential to distinguish among the different trademarks to find out which is best suited to protect your brand. Failure to understand this could lead to serious mistakes causing lawsuits or, at worst, outright dismissal of your trademark registration.
I’ve grouped these trademarks into general and specific categories:
Whether general or specific, for a mark to stand as a protective article, it must be classified either as registered or trademarked (more on these later in this guide). This is where familiar symbols like ™, ®, and © come into play.
Let’s discuss these symbols next.
There are two major kinds of trademark symbols: the ™ (superscript TM) and the ® (R in circle).
™ stands for “Trademark.” It denotes that the mark attached to the symbol is to be trademarked, but makes no claim as to the registration status.
It's always a good idea to attach ™ to the word or other marks you intend to trademark while applying for registration. This may help to protect the mark until it is registered.
® shows that a trademark has been registered. Adding the ® to your trademarks protects them from becoming generic and gives you the right to prosecute for trademark infringements. In many jurisdictions, Nigeria included, it is illegal to make use of the ® without an actual registration.
Other types of trademark symbols are the copyright symbol ©, and the record producer/performer symbol ℗, both applying to the creative industry.
The ℠ (superscript SM: service mark) symbol carries the same meaning as ™ but is used for unregistered service marks. The ℠ is dominantly used in the United States, as other jurisdictions apply ™ to both goods and services.
Before running off to the trademark registry, you may want to have a pre-determined name, slogan, logo, or any other article for trademarking.
So, how do you go about crafting a mark that gets the "thumbs up"?
For one, you can outrightly hire the services of an accredited trademark lawyer to advise on valid business names or marks you can use. (More on trademark lawyers below).
Alternatively, you could craft your business marks yourself (name, logo, slogan, colour, etc.) and propose them for trademarking.
Here are five (5) points to guide you:
Already thinking of the perfect trademark for your business? Fantastic!
Now, let’s proceed to the major focus of this guide:
Trademark registration in Nigeria is governed by the following relevant laws:
Other laws containing trademark provisions are:
Trademarks are registered in Nigeria through the Trademarks, Patents and Design Registry — a registry under the Commercial Law Department of the Federal Ministry of Industry, Trade and Investment.
There are five (5) major steps involved in registering a trademark in Nigeria. These are:
Let’s dive into the details:
The first step required of you in registering your trademark is to conduct a preliminary search for the availability of your proposed mark. (You must have done your homework and decided on the article(s) you intend to trademark. I covered that in the first section of this guide.)
In Nigeria, you would require the services of an accredited trademark agent to examine the official records of the Trademarks Patents and Designs Registry through their online portal. This service attracts a fee (usually around ₦33,000 ($80) to ₦50,000 ($120) depending on the agent) because only accredited agents have access to search the records and they pay for conducting such searches.
But since you’re reading this guide, here are a few strategies you can use to perform simple trademark searches yourself before deciding on hiring a search agent:
Please note that these suggestions mostly apply to IT or internet-based businesses.
Now, if your self-searches do not yield results or self-search does not apply to your class of business, hiring an accredited agent is the best alternative.
This search is conducted by an accredited agent through the official records to ensure the proposed trademark does not infringe on existing trademarks or trademarks filed for registration. Usually, agents conduct searches through the registry’s online portal, but searches can also be done in person at the registry’s office in Abuja.
The search must be conducted at the appropriate trademark class, meaning if a single trademark is to be registered in multiple classes, the search must be conducted in each of the classes. (See trademark classification in section 4 of this guide.)
Once a completed search proves your proposed trademark doesn’t conflict with existing or filed trademarks, your agent will clear you and the application process can begin.
Also known as “filing,” this process starts with submitting your (searched) articles for trademarking at the registry and receiving an Acknowledgement Letter from the trademark registrar. The letter contains your application details and that of the mark to be registered. It is usually issued twenty-four (24) hours from submission.
It’s important to note that the letter issued here is only an acknowledgement of the application and NOT an acceptance of the trademark. The trademark can still be refused registration even after a successful search.
Trademark filing is usually done online by accredited agents via the online portal of the Trademarks, Patents and Designs Registry. Further payments are to be made at this stage for processing the application. These are called filing fees.
Once your trademark has been filed, buckle up for the moment of truth.
The acceptance or refusal of a filed mark depends on the discovery of infringement on existing trademark(s). Here, the registry decides on whether to accept or reject your filed mark.
Where the filed mark is cleared for registration, the registry will accept, register the trademark, and issue you an Acceptance Letter. But when the mark is found to conflict with existing trademarks or is a mark that cannot be registered, a Refusal Letter will be issued.
If you get a Refusal Letter, I suggest you plan a better mark and discuss it with a trademark lawyer before reapplying.
A trademark may be registered either plainly (black and white) or in colour. When a trademark is registered in colour, the protection afforded is limited to the colour(s) registered. A plain (black and white) registration protects the trademark at all times.
The entire decision process takes 4-6 weeks.
Once your trademark has been registered, it will be processed for publication in the Nigerian Trademark Journal. Publicized trademarks are also listed on the publication page of the Trademarks, Patents, and Designs Registry. The process usually takes thirty-two (32) weeks or more.
This publication contains full details about the trademark and its proprietor. Just think of it as a mini advertisement screaming, “Say hello to the newest trademark in town!”
Once your trademark is published, any person or organisation who considers the trademark a conflict with theirs (or any pre-existing trademark) has a two-month window to protest to the registry to stop such registration. They can do this by filing a "notice of opposition."
If such opposition comes up, the registry notifies and asks you to respond with a counter-statement. Your statement must defend your mark and explain why you are entitled to it.
The response window is one (1) month from receiving the notice. Failure to respond within this period is deemed an abandonment of the trademark application.
In a situation when you provide a counter-statement to the notice of opposition, the registry will make up a tribunal to resolve the conflict among the contending parties. If resolved in your favour, the Certificate of Trademark Registration will be issued to you.
However, if there are no oppositions after two (2) months of publication, you can apply for and get your trademark certificate.
Once you’ve made it to this stage of the registration process, you can very well pop a bottle of champagne.
A trademark certificate is a license that declares you the legal owner of a registered trademark. It gives you full rights to use the trademark to the excursion of any other entity and confers rights to prosecute for infringements.
Yeah, yeah, I know. Now, you’re thinking, “Ok, how much would these cost me?” Good question! We cover that in the next subsection.
The cost of registering a trademark includes all the fees paid at various stages of the process; specifically the search, filing, certification, and professional fees paid to a trademark lawyer or accredited agent handling the registration.
Considering that fees vary from agent to agent, the total cost of registering a trademark range from ₦105,000 ($250) to ₦290,000 ($700).
Another factor that influences the cost of registration is the number of trademark classes a mark is registered into. The average cost of registration applies to only one class (called First Class). However, if you wish to register your trademark in more classes, additional charges will apply per class. This range from ₦83,000 ($200) to ₦124,000 ($300) per class, again depending on your agent.
A third influential factor is whether the trademark is owned by a local or international organisation or by an individual. Foreign-owned trademarks attract higher fees compared to local-owned ones.
You are at liberty to process a trademark registration up to the Acceptance stage for a start, intending to complete the certification stage later.
I recommend engaging a single agent or lawyer to manage the entire registration process. This will allow you to bargain for better individual fees and maybe, if you're lucky, get discounts.
The duration for registering a trademark in Nigeria is usually 12 to 18 months when there are no oppositions. Certification may, however, take a longer period when there are oppositions to a registered trademark.
Here’s an estimated breakdown of the timeframe:
You will be required to provide the following for trademark registration:
The office of the trademark registry is at the Trademark, Patents and Design Registry, Commercial Law Department, Federal Ministry of Industry, Trade and Investment, Area 1, Garki, Abuja. There are no other branches of the registry nationwide.
Since you might need the help of accredited agents to commerce registration at the Registrar, many accredited agents offer full registration services at their offices scattered nationwide.
All you need to do is find and research selected accredited agents, run negotiations through each one and appoint the agent you think offers the best services at the best rates.
You can find accredited agents using the online portal of the Trademarks, Patents and Designs Registry, conducting a simple Google search, or speaking with legal practitioners in your network.
A registered trademark is valid for seven (7) years from registration and can be renewed after this period.
An application for the renewal of a trademark registration must be made three (3) months before the expiration of a current license. Each renewed trademark lasts for fourteen (14) years.
The requirements for renewing a trademark are:
Imagine the need arises for a close associate of yours or business partner to leverage your trademark for a specific period. Imagine that the use of your trademark for some time was a requirement for a partnership deal you’re working on. What do you do in this situation?
The law allows a trademark titleholder to assign such trademark to another person or entity for usage for a while.
To do this, either you (the assignor) or the other entity (the assignee) may apply at the trademark registry for the recording of such trademark rights or title in favour of the assignee for a specified period.
However, the assignee should apply for this recording themselves. This is because the holder of a trademark right may enforce such a right against any infringing third party.
To assign a trademark, you would need:
Simply registering a trademark doesn’t mean you can shove it under the bed for all eternity.
Sections 31, 38, and 56 of the Nigerian Trade Mark Act empower the registry or a court to cancel a registered trademark on grounds of non-use or applications challenging the validity of a trademark.
Below are the grounds for cancellation of a registered trademark:
This is why I cannot emphasize enough the importance of thoroughly researching and understanding your mark before creation or registration. I recommend you put your mark to use before and after registration to avoid trademark revocation for non-use.
Should you ever face trademark cancellation proceedings, it would be wise to engage the services of an intellectual property rights lawyer to handle your case.
A trademark lawyer (also known as accredited agents here in Nigeria) is a lawyer who has expertise in trademark laws, designs, and practice. Their role is to provide legal advice and assistance in fields relating to trademark laws and practice.
A trademark lawyer must be an authorized lawyer or an agent accredited by the Trademark, Patents and Design Registry.
Now, whether the appointment of a trademark lawyer is necessary is debatable.
In theory, any layperson to register a trademark can apply themselves without the help of a trademark lawyer. However, certain rules regarding trademark registration in Nigeria make it impossible to skip the services of a lawyer.
For example, only accredited agents may conduct trademark searches using the records of the Trademark Patents and Design Registry. Furthermore, the Power of Attorney appointing the trademark agent remains a required document for performing actions like trademark registration, renewal, and assignment.
As discussed earlier, it is entirely possible to conduct a trademark search yourself without the help of an agent. You would not get access to the registry’s record, though. Aside from that, you would require an agent to forge ahead with the registration.
So yes, using a lawyer gets the upper hand.
But, hey! There is a lot to benefit from appointing a trademark lawyer. Let’s see those quickly:
Now that we’ve seen why appointing a trademark lawyer is essential, we must measure the benefits of registering your trademark against the risk of not doing so.
The most obvious advantage of registering your trademark is, of course, protecting your business mark from infringement. But there's more. Here’s why trademark registration is a good idea:
Next, we explore the
It’s not uncommon for businesses to proceed using unregistered trademarks. Many big brands and startups in Nigeria operate with unregistered marks.
While it is entirely possible to start a business in Nigeria without registering your marks, the associated risks, potential roadblocks, and liabilities cannot be denied.
Here are reasons why you might want to avoid using unregistered trademarks:
This brings us to the next subsection.
A famous or well-known trademark is one that enjoys special treatment given its widespread recognition or reputation among the public.
Well-known (foreign) trademarks enjoy infringement protection in most countries, whether they are registered in that region or not. The holders of unregistered well-known trademarks in Nigeria can sue for trademark infringement of any form, even though holders of other unregistered marks cannot.
These protections are important for famous marks because they are a big target for pirates.
Therefore, an unregistered trademark can earn the full protection of a registered trademark if it attains the status of a well-known mark.
While I recommend registering your trademark from the onset of your business, the ultimate decision to register or not is yours. Use it wisely.
That said, we move to the various classes of trademarks in Nigeria. If you desire a trademark registration free of complications, this section is for you.
Trademark classifications differentiate groups of trademarked goods and services with similar nomenclature from another group.
To ensure international uniformity in the classification of trademarks worldwide, the Nice Classification (NCL) was drawn up from the 1957 Nice Agreement to establish a classification of goods and services to register trademarks.
45 different trademark classes were created as a result, with Goods listed from classes 1 to 34 and Services completing classes 35 to 45.
A new edition of the Nice Classification is published annually since 2013. Below, I summarize the 45 classes of Trademark according to the 2021 (11th) edition of the NCL:
You can register your trademark under one or more of the classes listed above. Registration into any class attracts a fee, as earlier explained. Registration into multiple classes would attract extra costs per class. (See cost estimates in section 2.2 above.)
I recommend you thoroughly discuss with an accredited agent to understand the class(es) your trademark(s) fall into before registration. Once a trademark is registered in a class, it cannot be undone.
"Diligent research" is the watchword when it comes to trademarking in Nigeria. Use it at each stage of your process: from crafting the letters that would eventually represent your brand to doubling checking your marks even after publication.
Beyond registration, look at ways you can monetize your trademark. It is an asset after all and can be worth a lot of money in the future. Engage an intellectual property lawyer to help with this.
Yes, registering a trademark in Nigeria is tedious. Nurturing it after that is no fun, either. But the potential rewards it generates can pay off for a lifetime.
What are your thoughts on or experiences with trademark registration in Nigeria? I would love to know in the comments. Also, if you need clarification regarding any aspect of trademarking in Nigeria, drop your inquiries; I’d be happy to assist.