BUSINESS REGISTRATION AND INCORPORATION

A business (sole proprietorship) is a trading tittle for the business owner/proprietor. A business may have more than one proprietors. The day to day running and management of the business affairs the sole responsibility of the proprietor(s). The proprietor gets to enjoy all profits as well as settle business liabilities by using personal owned assets.

Incorporation however, is the process by which a new or existing business registers as a company. A business cannot be registered as a company unless it has been incorporated and registered at the Companies Registry under the Companies Act, 2015.

The effect of incorporation is that it differentiates between the shareholders and the business. Hence the corporation becomes a legal person who can own property, sue or be sued, enter into contracts and others.

The general types of companies are:

1. 1. Private company limited by shares:

This type of company has share capital and the liability of each member is limited to the amount, if any, unpaid on their shares. A private company cannot offer its shares for sale to the general public and may not have more than fifty (50) members.

2. 2. Public limited company:

A public company has share capital and limits the liability of each member to the amount unpaid on their shares. It may offer its shares for sale to the general public and may be listed at the securities.

3. 3. Company limited by guarantee:

This type of company does not have share capital and its members are guarantors rather than shareholders. The liability of members is limited to the amount they agree to contribute to the company’s assets if it is liquidated.