An NGO limited by guarantee in Nigeria is a type of non-governmental organization (NGO) that is formed as a company limited by guarantee, which means that its members do not have the right to a share of the company’s assets if it is wound up but only an amount that they guarantee to contribute to the company’s assets if it is wound up. This type of NGO is set up for non-profit and social welfare purposes, such as providing education, health services, or community development programs. Although this entity tends to be utilised more for non-profits, a company limited by guarantee can be either a for-profit company or a not-for-profit.
A company limited by guarantee has no share capital, hence there are no shareholders (unlike a private company limited by shares). Instead, the “owners” of the company are called guarantors. A guarantee is a fixed sum of money that a guarantor must pay when setting up the company. It serves as a form of assurance that certain conditions will be met. For example, if the company becomes insolvent or breaks a certain law, then the guarantors must pay the guarantee.
Characteristics of an NGO Limited by Guarantee in Nigeria
- Legal entity: An NGO limited by guarantee is a legal entity that can enter into contracts, own property, and sue or be sued in its own name.
- Management by directors: An NGO limited by guarantee is managed by a board of directors who are responsible for making decisions about the organization’s operations and activities and for ensuring that the NGO complies with all legal and regulatory requirements.
- Non-profit and for-profit: An NGO limited by guarantee is established for non-profit and social welfare purposes, such as providing education, health services, or community development programs but can as well be registered as a for-profit depending on the nature.
- Limited liability: An NGO limited by guarantee is a company limited by guarantee, meaning that members do not have the right to a share of the company’s assets if it is wound up but only an amount that they guarantee to contribute to the company’s assets if it is wound up.
- Perpetual existence: An NGO limited by guarantee can have a perpetual existence and does not dissolve upon the death or incapacity of its directors or members.
- Tax benefits: NGO limited by guarantee may be eligible for tax benefits and exemptions, depending on the nature of the NGO and the specific laws and regulations in place in Nigeria.
- Compliance with laws and regulations: An NGO limited by guarantee is required to comply with all laws and regulations that apply to NGOs in Nigeria, including those related to taxes, investments, and reporting.
- Transparency: An NGO limited by guarantee is required to keep accurate records of its operations, transactions, and members, and to provide regular reports to the relevant authorities.
- Accountability: The directors of an NGO limited by guarantee are accountable to the members and are required to provide an annual report detailing the management of the NGO, its income, and expenditure.
- Social welfare oriented: The main objective of an NGO limited by guarantee is to provide services and support to the community, promote social welfare and improve the standard of living.
Requirment for registering an NGO as a Limited by Guarrantee in Nigeria
- CAC/IT FORM 1: Application form completed in triplicate with the full names, residence, occupation and signature of the Guarantors of the applicant organization.
- FORM CAC 1: (NGO Ltd/GTE) Availability Check and Reservation of Name with the name of the proposed organization stated as “Incorporated trustees of … .”
- FORM CAC 3, Notice of Situation Address of the Registered Organization.
- Written Application for Registration of the NGO Ltd/GTE signed by the Chairman and Secretary.
- Constitution of the applicant organization clearly stating its aims and objectives; duly signed and dated (2 copies).
- Impression or drawing of the Common Seal of the body to be incorporated.
- Copy of the Resolution adopting the ‘Special Clause’ into the constitution. Note that a ‘special clause’ is an undertaking that upon winding up, the assets of the company will not be distributed to the members but to a similar association with similar aims and objectives.
- Evidence of ownership of land or an undertaking in lieu to own a land within 2 years of incorporation or registration.
- Cuts of the original newspapers advertisement in 3 national dailies, one being local newspaper widely circulating in the area where the association is based, clearly stating and calling for objections to the registration of the association within 28 days.
- 2 passport photographs each, of the Guarantors attached to the Guarantors declaration form sworn to at the High Court with the receipts attached.
- Copy of the extract of the Minutes of Meeting where the Guarantors were appointed, having the list of the members present and absent and showing the voting pattern, signed by the Chairman and Secretary of the Association, in the letter-headed paper of the Association.
- Guarantors declaration form duly sworn at the High Court confirming that the Guarantors were not disqualified from acting as Guarantor pursuant to sections 591 – 592 of CAMA. This requirement replaces the earlier cumbersome process of obtaining State Security Service (SSS) report on each Guarantor.
- Letter authorizing the person (solicitor) handling the registration process to act for the applicant organization. Thus, although CAC’s accreditation is not required from the person/solicitor who is engaged to register incorporated Guarantor; there must be evidence of approval by the organization for the person to act on their behalf.
- Any other document of proficiency, especially for professional organization and non government organization (NGO).
- Original receipt of prescribed registration fees.