Sunday, 25 August 2019

Formation of Non-Governmental Organizations (NGO’s) in Nigeria

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Foundations, Initiatives, Non-Profits, Civil Societies, although with different names are all classified as Non-governmental Organisations (NGOs). A Non-Governmental Organization is an organization that is neither part of a government nor a conventional for-profit business. They are organizations that may be funded by governments, foundations, businesses or private like-minded people for the benefit of the general public or a specific section of the public. Unlike companies created solely for profit-making purposes, NGOs are created to serve a public purpose which can either be charitable or for a specific purpose such as for the promotion of commerce, art, science, religion, human rights, sports, culture, education, research etc. All property, income and profits made by an NGO are channeled towards the promotion of the NGO’s objectives i.e. to make public impact and not for the personal interest of the founder(s).

In Nigeria, there are different types of NGOs that are permitted to operate under statute such as trade unions, social clubs, religious organizations, professional associations, political parties, cooperative societies, cultural associations, specialized professionally run NGOs, etc. But before these NGOs may operate, they must be duly registered.

An NGO may be registered as a company limited by guarantee or as incorporated trustees (by which trustees of the NGO, rather than the NGO itself, obtains the status of a body corporate). Both procedures are regulated by the Company and Allied Matters Act (CAMA).

The procedures for registering a company limited by guarantee and incorporated trustees both begin with a search for the availability of the proposed name of the NGO. The proposed name must be available and approved for use by the Corporate Affairs Commission. Availability of a proposed name for use simply implies that the name or any name closely resembling it has not been used already and that there is no objection based on policy for its use.

A company limited by guarantee cannot be registered with share capital and cannot have the objective of making profits to be distributed to its members. The procedure for the registration of a company limited by guarantee, after the approval of the proposed name is as follows:
  1. Obtaining of consent of the Attorney General of the Federation;
  2. Preparation of the memorandum and articles of association and appendage of signature by the subscribers;
  3. Completion of application forms;
  4. Stamping of forms and memorandum and articles of association;
  5. Filing of the documents with the Corporate Affairs Commission;
  6. Issuance of the certificate of incorporation.

For registration of incorporated trustees, after approval of the proposed name has been obtained, an application form is procured from the Corporate Affairs Commission which contains a guide on the process. A notice of the proposed incorporation of trustees must be published in at least three (3) national daily newspapers containing:
  1. The approved name of the NGO;
  2. The aims/objects of the NGO; and
  3. The names of the trustees.
The Trustees are the people nominated and given powers to act on behalf of and manage the NGO and who must be at least two in number. The rationale behind the publication of the notice is to allow those who have any objection to the formation of the NGO the opportunity to bring such objections to the notice of the CAC.

The duly completed application is then submitted to the CAC in triplicate accompanied by the required attachments and filing fees and a certificate of incorporation is issued to the applicants.

The major difference between a company limited by guarantee and incorporated trustees is that for a company limited by guarantee, legal personality is conferred on the NGO itself while for incorporated trustees, legal personality is conferred on the trustees of the NGO, rather than the NGO itself.

Very few organizations opt to register their NGOs as companies limited by guarantee. Most would rather choose to incorporate their trustees. This is because of the requirement of applying for the consent of the Attorney-General of the Federation, who has the absolute discretion to grant or deny consent.

One may ask, “Why register an NGO?” After all, many people help others or promote their causes in whatever way they can without having to go through the rigorous process of registration. There are many benefits to registering an NGO. Some of these benefits are-
  1. Legal Recognition and Public Validation– Registration of an NGO establishes a trust between the public and the NGO and encourages the public to support the cause of the NGO through donations, foreign aid and grants which are important sources of funding for any NGO.
  2. Tax Exemptions and Reliefs– Tax incentives are granted to NGOs in form of exemption from income tax i.e. no tax is levied on money that comes to the NGO like donations, aid and grants. However, tax is charged on profits made from investments, sale of property and any trade or business which the NGO engages in. NGOs are also exempt from payment of import duty on certain goods meant for charitable or humanitarian purposes as approved by the Minister of Finance.
  3. Legal Personality– When an NGO is registered, legal personality is conferred on it and it becomes a legal person separate from the founders or owners with capacity to hold acquire and transfer property, enter into contracts/agreements etc. and carry on activities in its own name as a fully fledged person. Unregistered NGOs however, cannot carry out any activities in their own names but have to act through people.
  4. Perpetual Succession– This simply means that by virtue of an NGO’s registration, the NGO would continue to exist even after the death of the founder(s).
  5. A registered NGO has the capacity to hold a common seal.

These and many more are the advantages of registering one’s NGO in Nigeria.

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