SUMMARY OF REGULATORY SYSTEM FOR NGOS IN NIGERIA
1. CREATING NGOS
Estimates on the size and economic value of the NGO sector:
Non Governmental Organizations (NGOs) have always played vital roles in Nigerian public life. In the
pre-independence era, NGOs were often the vehicles for the provision of various kinds of advocacy in
favour of the populace under colonial rule. Their action was very often tailored to make up for the
"lacunae" in the provision of social facilities and sometimes as complement and supplement to the
efforts of the colonial authorities.
Since Nigeria's independence, NGOs have flourished and spread their influence into ever-expanding
fields of activities in the country. Their action and contributions have persistently and consistently
buttressed and supported relevant Government initiatives in all aspects of life. NGO's have played the
role of watchdogs, alerting both government and civil society to the need for action in favour of the
development of the nation and are actively involved in supportive action for the democratic policies of
the government, especially those aimed at improving the welfare of the people.
Examples of NGO's operations in tandem with government's action abound in all areas.
In education, NGOs actions support and complement government's educational programmes at all
levels, going right through from the centre to activities at the local government level. Their actions have
been eminent in the education of adults and the disadvantaged elements of society. They have also
been involved not only with the teaching of illiterates to read and write, they have also been active in the
area of health and trade.
In science, NGO's have been involved in supporting the national move to create a more science-
oriented society, especially through the popularisation of Science. There are also NGO programmes for
the encouragement of rural people to undertake programmes that engender self-reliance. Small-scale
industries have been introduced by NGOs in the rural areas to this end. Industries like soap making,
cloth dying, candle making have been encouraged by NGOs and this has contributed to the promotion
of local technologies in Nigeria.
NGOs are also active in the field of creating national cultural awareness among the peoples of the
country. Action in this area takes place at all levels of society. They involve schools and University
students and extend to the populace at large, especially in the context of efforts being made for the
development of cultural tourism in Nigeria.
With the spread of NGO's all over the country, they are often well placed to contribute to the
organization and dissemination of enlightenment programmes on sensitive societal questions such as
Sex Education, Population Control, Abortion, Child Abuse, Drug Abuse and the fight against the
There is unfortunately no accurate information on the size and economic value of the sector. There are
45,000 NGOs on the Corporate Affairs Commission’s register of NGOs, but it is not clear how many of
these are currently active.
Different types of NGOs that exist:
A broad spectrum of NGOs exist in Nigeria. Many types of organisations are allowed under Nigerian
law. These include CBOs, friendly societies, social clubs, women's groups, youth clubs, religious
organisations, cultural associations, professional associations, trade unions, political parties,
cooperative societies and specialised professionally-run NGOs which work in various thematic areas.
Legal definition(s) of the different types of NGOs that exist:
A Company Limited by Guarantee is a not-for-profit organisation whose income is applied solely for the
promotion of its objects and whose members guarantee to contribute to the debts of the company up to
a previously declared amount in the event of the company being wound up.
Section 26(1) of Companies and Allied Matters Act provides:
“Where a company is to be formed for promoting commerce, art, science, religion, sports,
culture, education, research, charity or other similar objects, and the income and property of
the company are to be applied solely towards the promotion of its objects and no portion
thereof is to be paid or transferred directly or indirectly to the members of the company except
as permitted by this Act, the company shall not be registered as a company limited by shares,
but may be registered as a company limited by guarantee.”
Incorporated Trustees are basically organisations that have mandated an individual or a group of
persons to formally register them with CAC as not –for- profit organisations for the sole purpose of
realising their objects, which would be for the benefit of society or a category thereof.
Incorporation of trustees is provided for in Part C of CAMA. Section 673 provides as follows:
(1) Where one or more trustees are appointed by any community of persons bound together by
customs, religion, kinship or nationality or by any body or association of persons established
for any religious, educational, literary, scientific, social, development, cultural, sporting or
charitable purpose, he or they may if so authorised by the community, body or association …
apply to the Commission in the manner hereafter provided for registration … as a corporate
(2) Upon being registered by the Commission, the trustee or trustees shall become a body
The law does not distinguish between NGOs that provide a public benefit and those that merely serve
their members' private or mutual interests. Religious organisations except for those who operate as
corporation sole, are not regulated by a separate law; the overwhelming majority of these bodies are
registered under Part C of CAMA. Political parties are separately regulated by the Constitution and other
laws. Trade unions are likewise regulated under separate laws.
Requirements for creating an NGO:
The "right to peaceful assembly and association" is granted in section 40 of the Constitution of the
Federal Republic of Nigeria 1999 in the following terms:
"Every person shall be entitled to assemble freely and associate with other persons, and in
particular he may form or belong to any political party, trade union or any other association for
the protection of his interests."
In a limited category of cases, Nigerian law abridges freedom to form or join associations. Under the
Criminal Code, which is applicable in the Southern states of Nigeria, it is an offence to form or join or
manage an "unlawful society." (Similar provisions exist under the Penal Code which is applicable in the
Northern States.) "Unlawful Society" is defined in section 62 (2) of the Criminal Code as follows:
" A society is an unlawful society -
i) if formed for any of the following purposes -
(a) levying war or encouraging or assisting any person to levy war on the Government or
the inhabitants of any part of Nigeria; or
(b) killing or injuring or encouraging the killing or injuring of any person; or
(c) destroying or injuring or encouraging the destruction or injuring of any property; or
(d) subverting or promoting the subversion of the Government or its officials; or
(e) committing or inciting to acts of violence or intimidation; or
(f) interfering with, or resisting, or encouraging interference with or resistance to the
administration of the law; or
(g) disturbing or encouraging the disturbance of peace and order in any part of Nigeria;
ii) if declared by an order of the President to be a society dangerous to the good government
of Nigeria or of any part thereof."
Most organisations in Nigeria need not be registered before they can be recognised in law as existing,
even if not as bodies corporate. Under Nigerian law, it is registration or lack of it that largely determines
the powers of an NGO. Where an organisation has incorporated trustees registered under CAMA, the
trustees on behalf of the organisation are empowered to “contract in the same form and manner as an
individual”. This includes the power to “hold, acquire and transfer” any property on behalf of the
association. An organisation registered as a company limited by guarantee is in its own right a full-
fledged legal person that can do anything in law in its own name. Unregistered NGOs, however, cannot
in law do anything in their own names. They can act through their (unregistered) trustees or other
officers who may in their name act as representatives of the organisation. In that representative capacity
its trustees can acquire and transfer property on behalf of the organisation.
2. REGISTERING NGOS
NGOs which are required to register and details of the agencies they must register with
(including contact details):
Registration is not compulsory.
NGOs which may register voluntarily and details of the agencies they can register with
(including contact details):
An NGO that wishes to be legally recognised anywhere in Nigeria, to have the ability to maintain and
defend lawsuits as well as own property may register with the Corporate Affairs Commission (CAC).
Corporate Affairs Commission
Plot 565, Ndola Square,
Off Michael Opara Street,
Wuse Zone 5, Abuja.
P.M.P 198, Garki, Abuja-Nigeria.
Unregistered NGOs are not under any special regulatory regime. Their activities are simply subject to
the ordinary principles of law, especially of the law of contract.
The registration process:
NGOs may register with the Corporate Affairs Commission through one of two options - either as a
company limited by guarantee (which confers the status of a body corporate on the NGO itself) or the
incorporation of trustees (by which the trustees or trustees of the NGO, rather than the NGO itself,
obtain(s) the status of a body corporate). Both are regulated by the Companies and Allied Matters Act
1990 (CAMA). Different regulatory provisions apply to Companies Limited by Guarantee and
The procedure for the registration of a company limited by guarantee is as follows:
The proposed name has to be cleared at the Corporate Affairs Commission as being “available” for use
(i.e. a certification that the name or any closely resembling it has not been used already and that there is
no other objection on policy ground to the use of the name), obtaining of the consent of the Attorney
General of the Federation, preparation and execution of the memorandum and articles of association as
well as completion of application forms, stamping of forms and memorandum and articles of
association, filing of the documents with the Corporate Affairs Commission, issuing of certificate.
The procedure for the registration of incorporated trustees is as follows:
“(1) Applications … shall be in the form prescribed by the Commission and shall state -
(a) the name of the proposed corporate body which must contain the words “Incorporated
Trustees of …”,
(b) the aims and objectives of the association which must be for the advancement of any
religious, educational, literary, scientific, social, development, cultural, sporting or
charitable purpose, and must be lawful;
(c) the names, addresses and occupations of the secretary of the association, if any.
(2) There shall be attached to the application
(a) two printed copies of the constitution of the association;
(b) duly signed copies of the minutes of the meeting appointing the trustees and
authorising the appointing the application, showing the people present and the votes
(c) the impression and drawing of the proposed common seal.
(3) The application shall be signed by the person making it.
(4) The Commission may require such declaration or other evidence in verification of the
statements and particulars in the application and such other particulars, information, and
evidence, if any, as it may think fit.”
If the Commission is satisfied that the application is in the prescribed format and that the trustees are
qualified (as prescribed in s. 675) and the organisation’s constitution contains provisions (prescribed in
s. 676), the applicants will advertise the application inviting objections, if any, in two daily newspapers
circulating in the area where the organisation is situated; at least one of the newspapers shall be a
national newspaper. (Those not qualified to be appointed as trustees are infants, persons of unsound
mind, undischarged bankrupts and persons convicted of any offence involving dishonesty within a
period of five years of the proposed appointment. The organisation's constitution shall, among other
things, state the organisation’s name and aims and make provisions in respect of the trustees,
meetings, governing board, finance and accounts.) Any objections to the incorporation of the trustees
must be made within twenty-eight days of the last of the publications. The Commission may require the
applicant “to furnish further information or explanation, and may uphold or reject the objections as it
considers fit and inform the applicant accordingly.”
If “after the advertisement, no objection is received within the period specified … or, where any objection
is received, and the same is rejected, the Commission, having regard to all the circumstances, may
assent to the application or with-hold its assent.
3. GOVERNANCE REQUIREMENTS FOR NGOS
Requirements for governing documents:
In organisations that have incorporated trustees, its officers, their powers and internal relationships with
other officers and organs, quorum, voting and proceedings at meetings generally are as prescribed by
the organisation in its constitution. CAMA provides that the organisation “may appoint a council, or
governing body which shall include the trustees and may … assign to it such administrative and
management functions as it deems expedient” (s. 684). This means that where a governing body, by
whatever name called is appointed, the trustees must be members. It is also provided that the powers of
the trustees under the Act “shall be exercised subject to the directions of the association, or of the
council or governing body.”
S676 of CAMA provides that:
“The constitution of the association shall in addition to any other matter –
(a) state the name or title of the association which shall not conflict with that of a company, or with a
business name or trade mark registered in Nigeria;
(b) make provisions, in respect of the following –
(i) appointment, powers, duties, tenure of office and replacement of the trustees;
(ii) the use and custody of the common seal;
(iii) the meetings of the association;
(iv) the number of members of the governing body, if any, the procedure for their appointment and
removal, and their powers; and where subscriptions and other contributions are to be collected,
the procedure for disbursement of the funds of the association, the keeping of accounts and
the auditing of such accounts.
In respect of organisations registered as companies limited by guarantee, the general rules of company
law which are supplemented by the provisions of articles of association apply.
NGOs not registered as companies limited by guarantee and not having incorporated trustees, will work
in accordance with their own constitution or rules and without any obligation to comply with the statutory
requirements outlined above.
What responsibilities and/or liabilities are imposed upon governing bodies of NGOs?
S26 of CAMA provides that:
(4) A company limited by guarantee shall not be incorporated with object of carrying on business for the purpose
of making profits for distribution to members.
(5) If any company limited by guarantee carries on business for the purpose of distributing profits, all efforts and
members thereof who are cognizant of the fact that it is so carrying on business shall jointly and severally liable
for the payment and discharge of all debts and liabilities of the company incurred in carrying on such business, and
the company and every such officer and member shall be liable to a fine not exceeding N100 for every day during
which it carries on such business.
(6) The total liability of the members of a company limited by guarantee to contribute to the assets of the company
in the event of its being wound up shall not at any time be less than N10,000.
(7) Subject to compliance with subsection (5) of this section, the articles of association of a company limited by
guarantee may provide that members can retire or be excluded from membership of the company.
(8) If in breach of subsection (5) of this section, the total liability of the members of any company limited by
guarantee shall at any time be less than N10,000, every director and member of the company who is cognizant of
the breach shall be liable to a fee of N50 for every day during which the default continues.
(9) If, upon the winding up of a company limited by guarantee, there remains after the discharge of all its debts and
liabilities any property of the company, the same shall not be distributed among the members but shall be
transferred to some other company limited by guarantee having objects similar to the objects of the company of
applied to some charitable object and such other company or charity shall be determined by members prior to the
dissolution of the company.
Regulations relating to payments and distribution of profits:
Apart from the trustees and board members, NGOs with incorporated trustees may employ salaried
staff. No member of the governing council shall be appointed to either a staff position or to any other
position in the organisation (i.e. including positions on the board) which entitle the holder to any payment
of fees. However, a member of a governing board may be paid “a reasonable fee for services rendered.”
An organisation registered as a company limited by guarantee, has a separate legal personality and the
capacity to employ and pay staff, the right to pay fees to directors etc. In such organisations, the very
detailed provisions of CAMA (see sections 263 to 292) settle several matters including the duties and
responsibilities of directors, quorum and voting rules, and the extent of directors’ personal liability.
Provisions include that the director has very far-reaching fiduciary duties and is expected to avoid
conflicts of his duties and other interests. It is provided that “Unless the articles otherwise provide, the
quorum necessary for the transaction of the business of directors shall be two where there are not more
than six directors but where there are more than six directors, the quorum shall be one third of the
number of directors…." It is also provided that each director shall be entitled to one vote, that any
question arising at any meeting shall be decided by a simple majority of votes and that in the case of an
equality of votes, the chairman shall have a second or casting vote.
3. COLLECTING INFORMATION ON NGOS
The CAC collects receives information on NGOs at the point of registration and annually through annual
Analysis of information:
The CAC analyses information received from NGOs in order to decide whether or not an NGO can be
registered. It also maintains a record of financial statements and annual returns submitted by NGOs.
Making information publicly available:
The CAC maintains a register of all associations with incorporated trustees and not-for-profit companies
limited by guarantee it has registered and this may be inspected by a member of the public upon
payment of a search fee. All statutory documents filed with CAC in respect of a registered NGO are
regarded as public documents. This means that on payment of the prescribed fee any member of the
public can inspect such documents.
5. ACCOUNTABILITY AND ACCOUNTING
Requirements and standards:
CAMA stipulates accounting and audit requirements for NGOs registered as companies limited by
guarantee. It compulsory for a company limited by guarantee to appoint an external auditor who must be
a member of a body of accountants in Nigeria established by an Act of the National Assembly.
Accounting records must show entries from day to day of all sums of money received and expended by
the company, and the matters in respect of which the receipt and expenditure take place.
The CAC requires both NGOs registered as companies limited by guarantee and NGOs registered with
incorporated trustees to submit financial statements to the CAC each year including an auditors’ report.
Failure to file the returns within the stipulated period is an offence punishable by a fine.
Analysis of information:
The CAC maintains a record of financial statements and annual returns submitted by NGOs.
6. PREVENTING AND INVESTIGATING ABUSE
The Corporate Affairs Commission regulates both NGOs registered as companies limited by guarantee
and as incorporated trustees.
Right of appeal:
7. REGULATIONS RELATING TO INCOME
Except to the extent that they receive any profit derived from trade or business, most registered NGOs
are exempt from tax. Unregistered NGOs do not enjoy this exemption.
NGOs are not, as organisations, exempt from payment of VAT since the tax is not on persons but goods
and services supplied. Whether or not they will pay VAT depends on the goods or services they buy or
By virtue of s. 5 and the Second Schedule to the Customs, Excise Tariff, Etc, (Consolidation) Act 1988,
certain goods are exempted from import duty. Of these, two categories are noteworthy. The first is
goods accepted by the Finance Minister "as necessary and appropriate for equipping the members
(including their officers) of a voluntary organisation which is non-profit making, enjoys international
recognition, and is approved by the Minister where he is satisfied that adequate arrangements have
been made for the legitimate use of the goods are necessary and appropriate for the successful
prosecution of the aims and objectives of the organisation." The second is goods approved by the
Finance Minister "for donation to charity where he is satisfied that the goods are provided or donated on
humanitarian grounds and if the donor is : 1) an established body recognised by the Government of the
country of the place of establishment; 2) or a person or body approved by the Federal Government of
Nigeria or approved by a person authorised by the Government in that behalf."
Tax benefit, in form of an allowable deduction, is available to any Nigerian company that makes a
donation to any of a more or less closed category of Nigerian funds and institutions.
Taxes on real estate are determined by state legislation and local government bye-law.
The clear terms of s. 26 (1) of CAMA, in requiring that a company limited by guarantee apply its income
and property "solely towards the promotion of its objects", which must be the promotion of "commerce,
art, science, religion, sport, culture, education, research, charity or other similar objects," imply that an
NGO registered as such cannot engage in commercial or economic activities. NGOs with incorporated
trustees are not under a similar statutory bar. They may therefore engage in these activities. If they
choose to go into these areas, there is no statutory provision that stops them from doing business
directly or through a for-profit subsidiary.
NB: What assistance, advice or guidance is provided to NGOs to assist them in meeting regulations
relating to income?