Introduction
Non-profit organizations, often referred to as Non-Governmental Organizations (NGOs), are entities that operate for purposes other than generating profit. In Nigeria, the establishment and regulation of NGOs are primarily governed by the Companies and Allied Matters Act 2020 (CAMA).
These organizations are usually registered as “Incorporated Trustees” under Part F of CAMA 2020. NGOs operate independently of government control, except in specific circumstances, and are formed to promote various causes such as religious, educational, literary, scientific, social, cultural, sporting, or charitable purposes.
Considerations in Forming a Non-Profit Organization
1. Availability Search and Reservation of Name
Before starting an NGO, the first step is to conduct a name availability search to ensure that the proposed name is not already in use. If the name is available, it can be reserved on the Corporate Affairs Commission (CAC) portal. This reservation must be made by a CAC-accredited agent.
2. Drafting a Constitution
The constitution of an NGO outlines the rules and regulations governing its internal affairs. For an NGO registered as an incorporated trustee, the constitution must align with the specifications provided in Section 827 of CAMA 2020.
3. Appointment of Trustees
CAMA 2020 requires that a minimum of two trustees be appointed for an incorporated trustee. These trustees must meet certain qualifications: they must not be minors, must be of sound mind, must not be undischarged bankrupts, and must not have been convicted of offenses involving fraud or dishonesty within five years of their proposed appointment.
4. Registration of an Incorporated Trustee
Upon successful registration with the CAC, the NGO acquires legal status, granting it the ability to operate in Nigeria with a common seal and the capacity to sue or be sued in its corporate name. The organization also gains perpetual succession, meaning it continues to exist beyond the life of its founders. It can hold, acquire, transfer, assign, or dispose of property or interests belonging to the organization.
5. Filing of Annual Returns and Statement of Affairs
Section 848 of CAMA 2020 mandates NGOs to file annual returns with the CAC. Additionally, Section 845 requires registered trustees to submit a bi-annual statement of affairs to ensure transparency and accountability in the organization’s operations.
6. Tax Exemption Status
Non-profit organizations can apply for tax-exempt status under Section 23(1) of the Companies Income Tax Act (CITA). To obtain this status, they must apply to the Federal Inland Revenue Services (FIRS) for a certificate of exemption.
Conclusion
The formation of a non-profit organization in Nigeria involves several legal procedures that must be carefully followed to ensure smooth operations. Understanding and adhering to these legal requirements is crucial for the successful establishment and management of an NGO.
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