First of all, we would like to familiarise ourselves with the major types of businesses that operate under Nigerian law. When viewed within the context of the above topic, the tendency will be to look at the business in question as being the sole proprietorship or individual entrepreneur operating on a small scale with the aim of growing the business to a larger scale.
That would not be a wrong perspective to start from, but there are other forms of businesses in operation in the economy that would also have need of the services of a business lawyer. These can be listed as follows:
- The sole proprietorship (as mentioned above);
- Partnerships;
- Cooperative societies (e.g. farmers, traders, marketers of good, even the Police and staff of companies have cooperative societies);
- Statutory corporations (i.e. entities usually set up by governments);
- Private companies and conglomerates;
- Incorporated Trustees and Not-for-profit organisations like Non- Governmental Organisations (NGOs). These are not businesses in the traditional sense since their orientation is more altruistic than commercial; nevertheless since they enter into contracts with other entities they still conduct business-like activities that require business law.
This is by no means a complete categorisation of the various types of businesses that can be seen operating in the economy but the key thing is that they operate within specific jurisdictions, systems and legal frameworks.
They cannot really operate smoothly unless they are recognised as legal entities that have capacity to enter into contracts and Nigerian law confers this necessary recognition and creates the framework for the regulation and operation of these various businesses.
These laws are plenty and varied in their complexity, therefore in the course of carrying on business one has to be familiar with the laws regulating the operation of that business or at least operate within the limits of those laws since as the saying goes, “Ignoranceofthelawisnotanexcuse”.
Since it’s impracticable to require every business person to first go and study business law before commencing business, they would have to resort to or rely on the knowledge and expertise of the business lawyer in the same manner that they rely of builders to construct their homes and offices rather than attempt it themselves.
Having said all that, the major reasons you need a lawyer for your business can be categorised as follows:
Inception of the Business: The lawyer advises you on the advantages and disadvantages of each business entity model available to you as a start-up and guides you on the suitable type of business structure to adopt. The lawyer is trained to prepare all the documentation and complete processes/procedures leading to the incorporation of the entity of choice with the regulatory authority i.e. the Corporate Affairs Commission (CAC). This is very important because the wrong decision can be incredibly costly to fix and the problem might not be evident for years.
The lawyer also helps you to register your business for Federal or State Tax Identification and helps you understand the tax consequences of the more basic business transactions in which your business would be involved.
Operational Businesses:
An ongoing business operates by virtue of interactions of the market forces of demand and supply and in so doing enters into contractual relationships with other persons or parties. The lawyer is needed in such contractual relationships or transactions, especially those that of necessity or by law are required to be in writing.
In those instances, the lawyer is needed to handle aspects of negotiation, interpretation and documentation of such contracts which may vary in complexity. Such agreements vary from employment contracts for staff, tenancy/lease agreements to more complicated contracts.
The scope of business is very wide and cannot be covered in full but in the following important aspects, the lawyer is a very vital component in assuring that the business is well protected and positioned for further growth:
1. Financing:
The lawyer also reviews the negotiation of favourable terms for
instance in the sourcing of finance for the business from lenders e.g. bank loans.
2. Employment:
The lawyer helps you develop a hiring and firing process for employees,
3. Intellectual Property Rights:
The lawyer handles the protection of intellectual property rights for creative works and inventions;
4. Regulatory Compliance:
The lawyer advises on legal regulatory compliance issues e.g. obtaining necessary operating licenses and permits, filing of periodic statutory returns and reports;
5. Management Continuity:
The lawyer also helps in filing necessary documentation to facilitate reconstitution of management of the business especially if it is a corporate entity or in the case of sole proprietorships, the inheritance of the business by the entrepreneur’s designate via instruments such as Wills or Letters of Administration.
In conclusion, the scope of activity in which professional legal guidance and input is necessary for businesses is very wide and varied and the lawyer will always be a useful professional to have by your side to enable you navigate efficiently, successfully and with minimal exposure to legal liability to other contracting parties and regulatory bodies.
Max C. Iwunna© 05/6/2020
