LEGAL ISSUES, INSURANCE AND ENVIRONMENTAL

CONSIDERATIONS
Many people desire to start their own businesses, partly motivated by the need to ‘become their
own bosses,’ and the belief that it would be a smooth ride all through. They are however rudely
shocked to the reality, when the journey begins. Many discover that entrepreneurship is a terrain
that comes with numerous pitfalls, one of which is the legal elements of the business. If not well
managed, the legal side of business can have monumental implications, capable of resulting in
tough times and eventual business collapse.

When it comes to starting a business, you might be a pro…but, what about when it comes to
working through all the legal issues you must consider as an entrepreneur when launching your
start-up? The world of business can get complicated quickly when you add in all the laws that
apply – business names, incorporation, liability, finances, trademarks, taxation...The list goes
on. Most entrepreneurs get caught up in the midst of starting their business and quickly forget
about the legal aspects that need to be considered.

For every business, a strong legal foundation is essential just as it is important to ensure the
business is on the right side of the law at all times. However, we will explore the common legal
issues that an entrepreneur you should be aware of.

Legal Issues to be Considered for Entrepreneurship Operations

1. Business Registration: For an entrepreneur to be seen as a real business owner, you
need to register your business. The first step that you need to take is to choose a business
structure. For example: sole proprietorship, partnership, liability company (public or
private), or unlimited liability company etc. The type of business structure chosen will
depend on certain factors such as budget and funding, taxation, etc.
2. Tax Laws: From one jurisdiction to another, tax laws differ; and as time evolves, so do
tax laws. It is therefore important to be aware of the changes and differences in legal and
regulatory obligations for taxation — and be able to engage the services of someone who
does — in order to consistently be on the right side of the law. Entrepreneurs must be
able to run their businesses and make decisions that are in line with appropriate tax
regulations, with a clear understanding of the risks their business is exposed to, if they

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 falter. Such laws include Companies Income Tax, Personal Income Tax, Capital Gains
Tax, Value Added Tax, Education tax etc.

3. Intellectual Property Laws

While your business is still small, it is hard to imagine that you could potentially face the
issue of people infringing on your intellectual property assets (or vice versa)…But, it can
happen easier than you think. It is worth the investment of both time and money to get
your trademarks, copyrights, patents and trade secrets legally registered. It will be a
lifesaver if, or when, an issue arises.
According to Merriam Webster Dictionary, Intellectual Property is an idea, invention, or
process that derives from the work of the mind or intellect. It includes patents, copyright,
industrial design rights, trademarks, plant variety rights, trade dress, geographical
indications, and in some jurisdictions, trade secrets.
 A patent is a form of right granted by the government to an inventor, giving the owner the
right to exclude others from making, using, selling, offering to sell, and importing an
invention for a limited period of time, in exchange for the public disclosure of the
invention. It can also be described as an exclusive right granted for an invention, which is
a product or a process that provides a new way of doing something, or offers a new
technical solution to a problem. A patent basically grants the inventor a temporary but
exclusive monopoly of the commercial exploitation of that invention. It gives the
inventor the right to exclude others from making, using, or selling the claimed invention
in that country without their consent, for the duration of the patent.
In Nigeria, the primary legislation that governs the grant of patents is the Patents
and Designs Act.
 A copyright is a legal right that grants the creator of an original work exclusive right to
its use and distribution, usually for a limited time. Copyright laws protect intellectual
property from being copied unlawfully .The exclusive rights are not absolute; they are
subject to certain limitations. In Nigeria, the primary piece of legislation for copyright is
the Copyright Act C28 Laws of the Federation of Nigeria, and the body charged with the
enforcement and protection of copyright is the Nigerian Copyright Commission
(NCC).The ownership of copyright is vested in the creator of a copyright work, usually

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 referred to as the “author” of the work. He/she owns the copyright in the work in the first
instance. However, the author is at liberty to transfer his rights to a third party. In such a
case, the person who has obtained the right by transfer or other legal means becomes the
owner of copyright.
What is eligible for copyright protection? Literary works, Musical works, Artistic
works, Cinematograph works, Sound recording and Broadcasts.
 A trademark is a word, phrase, symbol or design, or a combination of words, phrases,
symbols or designs, that identifies and distinguishes the source of the goods of one party
from those of others. It can also be defined as images, logos, pictures, symbols, names,
signs, designs, colors, sounds and jingles etc which distinguish your product or service
from others. Once a trademark is registered, it enables the trademark owner to amongst
other things- take legal action against anyone who uses the registered mark without
permission, sell and/or license the registered trademark (so in a sense it becomes an
asset), and allows the owner to legally put the ® symbol next to the brand – to show
ownership and warn others against using it.
In Nigeria, the legislation, which governs the registration of trademarks, is the
Trade Marks Act (and the Trade Mark Regulations made pursuant to it). With the surge
in e-commerce related activities, it is now easier for one’s trademark rights to be stolen or
infringed upon. By registering your trademarks, you will have exclusive right of use and
can institute a legal action against anybody who infringes on this right. You should also
look at trademark issues as a duty you owe other people not to infringe on their own
trademarks rights. The government agency in charge of registration of trademarks is the
Trademarks, patents and designs registry in the federal ministry of Industry, Trade and
Investment.
4. Labour Laws
It is necessary for entrepreneurs, not only to understand but to comply with labour
legislations that apply to their area of business. These laws ensure the efficient
management of workers affairs vis-à-vis trade unions and the government. Business
owners must be aware that there are instances where an infringement will not only make
their organisations liable, but also expose their personal assets to takeover. The Nigerian
Labour Law of 2004, for instance, stipulates how an employee’s services can be

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 terminated, and it includes where the employee passes away and where either party
terminates the employment contract having given the other party due notice. Employers
must also be aware that, within the terms of the contract, all payments must be made to
an employee before contract termination, otherwise the employer might bear damning
legal implications.
5. Insurance Laws
Insurance exists to protect personal and business interests, and it is wrong to posit that—
as many an entrepreneur do—that business insurance is a luxury. To the contrary,
insurance is a necessity. Whether it is property insurance, health, workers compensation
insurance or any other kind of insurance, it is a worthwhile protection against, and in the
event of the occurrence of, any litigation, injury, catastrophic loss, liability, theft, or any
other form of danger.
Under insurance, we have insurable risks and non- insurable risks. Non- insurable risks
are risks which insurance companies cannot insure because their potential losses or
claims cannot be insured. Thus a potential loss cannot be calculated so a premium cannot
be established. They include acts of God such as earthquake, war, flood, gambling, loss
of profit through competition etc. In the case of insurable risks, they are said to be risks in
which the insurance provider can calculate potential future losses or claims. For example
motor insurance, marine insurance, fire insurance, accident insurance, life assurance.

6. Legal Compliance
There are corporate compliance laws in place that affect companies in various industries.
The laws that apply specifically to your business will vary based on the type of business
entity you are, the state you do business in, and several other determining factors .Do
some research, and consult the help of an attorney, to ensure you know what documents
should be generated and maintained by your business to remain compliant. For example
we have NAFDAC, SON etc.

Environmental Considerations For Your Business

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 1. Climate change
The uncertainty that climate change brings about is one of the most compelling ways the
environment will affect your business. With business and industry unable or unwilling to reduce
their greenhouse gas emissions to the level that would significantly slow climate change, the
future is uncertain and risky. The type, timing, locations and magnitude of changes due to global
warming are difficult to predict and even harder to prepare for. Many businesses are likely to
hunker own until these effects become clear, slowing the economy and precluding growth.

Consider how climate change can affect your business, and plan accordingly. Your business
can take steps to reduce its own impact by taking advantage of clean, renewable energy and
reducing business travel.

2. Environmental Regulations and Compliance

The Nigerian Environmental Protection Agency (EPA) is the managing body for corporate
compliance with the laws regulating environmental activities. Depending on your industry, you
may find yourself with a variety of rules and regulations with which you must comply. Some
industries are more affected by these regulations than others.

While most people think of the EPA as it relates to conglomerate corporations such as big oil and
natural gas companies, small businesses also have compliance obligations. It is important to
determine which regulations your company must comply with to avoid potential adverse actions
such as fines or imposed closure for infractions.

3. Availability of Natural Resources

Amongst other environmental considerations is the availability of natural resources. This

important factor refers to the physical environment of a business. Natural resources are very
important for most businesses and many corporations have natural resources as their major raw
material. Lack of natural resources can hinder an organization’s producing ability and hence its
output.

4. Pollution

Pollution can also have an impact over business strategies. Pollution may cause some major
environmental events which can result in the disruption of supply chains or an increase in the

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cost of raw material. Organizations need to monitor such events and develop contingency plans
so as to deal with them.