Nigeria operates a free-market economy and there are no restrictions on foreigners setting up companies in Nigeria. Subject to the laws of Nigeria, a foreign individual or entity can set up a fully owned company in Nigeria and operate, employ expatriates and repatriate profits. However, before any foreigner can carry on business in Nigeria, it is a mandatory requirement that the entity is duly registered in the country.
Introduction
The Companies and Allied Matters Act 2020 (CAMA) is the principal legislation that governs the registration of companies in Nigeria while the Corporate Affairs Commission (CAC) is the regulatory authority. Apart from the registration of the company, there are other regulatory requirements that must be met before any company can legally commence its business in Nigeria.
Registration with CAC
The process involved in the registration of a company in Nigeria are as follows:
- Availability and Reservation of Proposed Name
- Application and Registration
- Approval
Availability and Reservation of Name
The first step is to conduct a name availability search with the CAC. The purpose of this is to ensure that the proposed name of the company is available for use and that there is no other company that has registered the same or similar name. Once the name is available, the CAC would issue a certificate of name reservation, which is usually valid for 60 days, enabling the registration to proceed to the next stage. It is always advisable to propose two names in case the first name is not approved.
Application and Registration
Following the reservation of the proposed name above, the next step would be to prepare all the necessary documents in support of the application. These includes the memorandum and articles of association of the proposed company. To this end, the promoters of the proposed company are required to provide the following information:
- The type of company to be registered
- Registered address of the company
- The objects or nature of business of the company
- Details of the company secretaries
- Minimum issued share capital. (Please note that there is a minimum issued share capital requirement of N10,000,000 for companies with foreign participation. The minimum issued share capital could be more depending on the sector the company wishes to operate in).
- Particulars of the proposed shareholders.
- Particulars of the proposed directors.
Approval by CAC
Once the above information has been received and completed, they are submitted to the CAC for vetting. Payment of the filing fee is made and stamp duty is charged on the minimum issued share capital at the rate of 0.75%. If satisfied, the CAC shall issue a certificate of incorporation evidencing that the company is now a legal entity authorized to commence business in Nigeria. Simultaneously, the Federal Inland Revenue Services (FIRS) would issue a Tax Identification Number (TIN) to the newly registered company. The TIN is a unique identifier that is linked to the company which enables it charge and remit the appropriate taxes to the FIRS.
Business Registration with Nigerian Investment Promotion Commission (NIPC)
Following the successful incorporation of the new entity with the CAC, there is a mandatory requirement for that entity to be registered with the NIPC before the company could legally commence any business in Nigeria. The NIPC has the primary responsibility to encourage, promote and coordinate investment in the Nigerian economy. The NIPC also has the responsibility of granting some incentives like pioneer status to any company which qualifies for such status.
The application to the NIPC involves filling the relevant application form, providing details of the shareholders and directors of the company and paying the appropriate official fee. If satisfied, the NIPC would issues a Certificate of Business Registration to the entity.
Business Permit, Expatriate Quota and Work Permit
In addition to the above, a wholly owned foreign company wishing to operate in Nigeria must obtain a business permit from the Nigerian Ministry of Interior and expatriate quotas if it wishes to employ foreigners in the country. The expatriate quota is the precursor to the application for and issuance of work permit to the foreigner being employed by the company in Nigeria. Once approved, the expatriate is issued a Combined Expatriate Residence Permit and Aliens Card (CERPAC) which allows the employee to reside and work in Nigeria.
Certificate of Capital Importation
The company will need to obtain a Certificate of Capital Importation (CCI) from an authorised dealer, usually a local bank to serve as evidence of importation of capital which could be equity, debt, cash or goods into the country. The CCI also guarantees the unconditional repatriation of capital and profits out of the country.
Other Registrations/licensing Requirements
Depending on the sector of the Nigerian economy where the new company wishes to operate, it may be necessary to obtain registrations and/or licenses from some of the following (non-exhaustive) agencies:
- Central Bank of Nigeria (CBN)
- National Agency for Food and Drug Administration and Control (NAFDAC)
- Nigerian Electricity Regulatory Commission (NERC)
- Nigerian Communications Commission (NCC)
- Nigerian Civil Aviation Authority (NCAA)
- Nigerian Maritime Administration and Safety Agency (NIMASA)
Conclusion
Nigeria is a country of over 200 million people and operates a free market economy. There are no restrictions on foreigners wholly owning and operating companies in the country. The CAMA is the principal legislation that governs company registrations in the country and the CAC is the main regulatory body that oversees the registration of companies in Nigeria. The NIPC has the primary responsibility to encourage, promote and coordinate investment in the Nigerian economy. Any company wishing to employ expatriates in Nigeria must first obtain an expatriate quota for the relevant expatriate positions and then obtain work and residency permits.
There are other licensing and registration regimes, which depending on the sector the company wishes to operate in, it will also have to register with those agencies.
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