Complete Guide Before 2026
Introduction
With the new tax law set to take effect in January 2026, Nigerian entrepreneurs are increasingly seeking ways to strengthen their business structures and optimise for compliance and growth. One of the most effective ways to achieve this is to upgrade a registered business name to a limited liability company (LLC) under the Corporate Affairs Commission (CAC). While the process offers major benefits, including tax efficiency, limited liability, and enhanced credibility, it must be done in accordance with the Companies and Allied Matters Act (CAMA) 2020 and CAC Guidelines.
This article by Fathenso Professional Services outlines the two approved CAC methods for upgrading your business name to a company, the relevant legal framework, and what every business owner should know before making the change.
Option 1: Register a Company While Retaining the Business Name
This method allows you to apply for CAC consent to use your existing business name as a company name while keeping your business name active on the CAC register.
Requirements
• All annual returns for the business name must be up to date.
• The business must be active on the CAC portal.
• You must apply for CAC consent to use the same name for your new company.
Key Points
• You can use the same name, with the addition of “Limited (Ltd)” — applicable only to companies limited by shares.
• The business name will continue to exist and coexist with the new company.
• You will not retain your RC number — the new company will receive a fresh RC number.
• You will not retain the original date of registration of the business name.
• The consent to use the name is not a transfer of the registration details — it only permits reuse of the name.
• The history and goodwill of the business can continue, but legally, it is now recognised as a company, a separate legal entity from the old business name.
This is suitable for businesses that wish to maintain brand continuity while formalising operations under a limited company structure.
Option 2: Upgrade and cease using the Business Name.
In this process, you obtain CAC consent to use your business name for company registration, then proceed to register the company and apply for cessation of the business name.
Steps
1. Apply for CAC consent to use the existing business name as your company name.
2. Register the company under that approved name.
3. Then apply for cessation of the business name after successful company registration.
Key Points
• The process may be done interchangeably (register first or cease first).
• Once cessation is approved, the business name is removed from the CAC portal and will cease to exist.
• The new company will have a new RC number and a new registration date.
• The business history and reputation may be retained for brand purposes, but legally, the company is a new and distinct entity.
This is suitable for business owners who intend to discontinue their business name and operate exclusively as a company.
Relevant Laws and Legal Provisions
The following legal provisions govern the upgrade of a business name to a company:
1. Companies and Allied Matters Act (CAMA) 2020
• Section 852(1)(a–d): Provides for the registration, conversion, and re-registration of business names and companies.
• Section 30(1)(a–d): Regulates the reservation and use of names, including where consent is required for similar names.
• Section 868: Defines “company,” “business name,” and their distinct legal identities.
2. CAC Guidelines on Business Name to Company Upgrade
• Annual returns must be up to date before consent is granted.
• Consent must be obtained before using an existing business name as a company name.
• The upgraded company will be assigned a new RC number and registration date.
• The old business name may either remain active or be ceased, depending on the chosen option.
3. Federal Inland Revenue Service (FIRS) Act
• Upon upgrading, the business becomes subject to the Companies Income Tax Act (CITA) instead of the Personal Income Tax Act (PITA).
• This shift allows for better tax planning and compliance opportunities.
Why You Should Upgrade Before 2026.
With the 2026 tax reforms approaching, upgrading your business name to a company offers:
• Improved tax structure and compliance benefits.
• Limited liability protection for shareholders.
• Access to government contracts and financing opportunities.
• Enhanced credibility and investor confidence.
• Continuity of brand and goodwill, now backed by corporate legal standing.
Important Legal Notes
• There is no legal process to downgrade or convert a company back to a business name.
• The consent to use a name does not transfer registration rights — it simply authorises reuse of the same or similar name for a company.
Conclusion
Upgrading your business name to a company is a smart strategic move that enhances your credibility, compliance status, and growth potential. Although the history and goodwill of your business can continue, legally, the new entity is now a company, distinct from your old business name. As the 2026 tax regime takes effect, businesses that act early will be better positioned to enjoy the advantages of corporate structure, tax planning, and investor readiness.
At Fathenso Professional Services, we provide expert assistance with business formation, post-incorporation services, and tax services.
Disclaimer: The information in this blog is provided for general information purposes only and does not constitute legal or professional advice.