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Company Limited by Guarantee (GTE)

Company formation in Nigeria

Best Answer

The GTE is best suited for: Non-profit organisations, NGOs, and charitable bodies, Professional associations and industry bodies, Social enterprises and foundations, Membership organisations operating in Nigeria. GTEs operating for charitable, educational, or religious purposes may apply for tax exemption under Section 23 of the Companies Income Tax Act. If approved, the entity pays no corporate income tax on income applied to its stated objects. GTEs that engage in commercial activities beyond their stated objects may lose the exemption and become subject to standard corporate tax rates.

Who this is for
  • Non-profit organisations, NGOs, and charitable bodies
  • Professional associations and industry bodies
  • Social enterprises and foundations
  • Membership organisations operating in Nigeria

Key Facts

Min. Shareholders1
Max. ShareholdersUnlimited
Min. Directors2
Minimum CapitalNo share capital โ€” members guarantee a specified amount (typically NGN 100,000+)
LiabilityLimited to guarantee amount
Setup Timeline3โ€“6 weeks
Annual CostNGN 300,000 โ€“ 1,500,000 depending on activities

Step-by-Step Formation Process

1

Reserve a company name and obtain attorney-general consent

Reserve the name through the CAC portal. For a GTE, the Federal Attorney General must consent to the registration before the CAC processes the application. Submit the proposed objects and memorandum for review.

2

Prepare incorporation documents

Draft the Memorandum and Articles of Association with the guarantee clause, specifying each member's maximum liability. Include the company's objects (charitable, educational, or other non-profit purposes).

3

File with the CAC and obtain Certificate of Incorporation

Submit all documents through the CAC portal along with the attorney-general consent letter. Pay the applicable fees. The CAC issues the Certificate of Incorporation upon approval.

Required Documents

  • Valid ID or passport copies of all initial members and directors
  • Memorandum and Articles of Association with guarantee clause
  • Federal Attorney General consent letter
  • Particulars of first directors and secretary
  • Notice of registered office address
  • Statement of objects (must be non-profit)

Cost Overview

Cost Breakdown (USD)
Annual Cost
NGN 300,000 โ€“ 1,500,000 depending on activities
Country Formation Range
NGN 200,000 โ€“ 1,500,000 ($130 โ€“ $1,000)

Tax Treatment

GTEs operating for charitable, educational, or religious purposes may apply for tax exemption under Section 23 of the Companies Income Tax Act. If approved, the entity pays no corporate income tax on income applied to its stated objects. GTEs that engage in commercial activities beyond their stated objects may lose the exemption and become subject to standard corporate tax rates.

Pros & Cons

Advantages
  • No share capital required โ€” liability limited to each member's guarantee amount
  • Appropriate legal structure for non-profits, NGOs, and charitable organisations
  • Can apply for tax exemption under Section 23 of the Companies Income Tax Act
  • Widely recognised by international donors and development organisations
Disadvantages
  • Cannot distribute profits to members
  • Attorney-general consent requirement adds time and complexity
  • Not suitable for commercial businesses seeking profit distribution
  • More limited in scope than a company limited by shares

Other Structures in Nigeria

Private Company Limited by Shares (Ltd)

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This content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.