BUSINESS SETUP IN NIGERIA – PROCEDURE & LEGAL REQUIREMENTS

There are various legal and regulatory requirements that must be met for a business set up in Nigeria. However, the requirements vary and depend on whether the promoters of the business entities are Nigerians or foreigners and the nature of the business to be carried out.

The legal and regulatory requirements to be complied with before a full set-up and commencement of business in Nigeria are explained below.

1.?? Registration with the Corporate Affairs Commission- This is typically the first step to take when setting up a business entity in Nigeria. The Corporate Affairs Commission (CAC) is the regulatory body in charge of the registration of business entities in Nigeria. A business entity can choose to be registered as a business name, a limited liability company or a partnership depending on the suitability for the business type and the legal requirements for the business; however, the only type of business recommended for foreigners is the private company limited by shares.

Section 78 of the Companies and Allied Matters Act (CAMA), 2020, provides that any foreign company that wishes to carry on business in Nigeria must take steps to register in Nigeria as a separate entity before its commencement of business.

The share capital requirement for companies varies with the Nationality of the promoters of the company; while Nigerians can register a company with a minimum of N100,000 authorized share capital, foreigners are required to have a minimum of N100,000,000 authorized share capital. A foreign-owned company must also have a minimum of 2 directors, and in some instances, it is mandatory to include a Nigerians as a director. Examples of such cases are companies engaging in oil & gas services and mining.

2.?? Tax Registration- After the business has been registered, the next step is to approach the Federal Inland Revenue Service for tax registration and clearance. At this stage, the Tax Identification Number (TIN) will be generated and activated for the company business.

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3.?? Registration with the NIPC- The Nigerian Investment Promotion Commission (NIPC) was established to monitor and encourage foreign portfolio investment and foreign direct investment in Nigeria. Foreign-owned companies are required to register with the NIPC. The company will be required to submit its incorporation documents, details of the company's business, and the amount to be invested in the company. The registration with NIPC guarantees foreign investments in Nigeria against any form of government takeover.

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4.?? Business Permit- This is required for foreign-owned companies, and it is obtained from the Federal Ministry of Interior. The requisite documents for the application include the company's incorporation documents, the business plan, a document showing that the company has secured a physical address to carry out its business, the evidence of capital importation, and evidence showing that the company is widely reputed in that line of business.

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5.?? Expatriate Quota- This is also issued by the Federal Ministry of Interior, and the application can be made together with the application for a business permit. It is required for employees or expatriates coming into Nigeria to reside for work purposes. While a business permit is required for the company itself, the expatriate quota is required for individual employees who wish to come to Nigeria to work. An expatriate quota will not be required if the company does not wish to send any director or employee to Nigeria to work.

6.?? Resident Permit (CERPAC)- CERPAC is an acronym for Combined Expatriate Residential Permit and Alien Card.?It is the permit that every foreigner must possess to work and reside in Nigeria validly. The CERPAC is obtained from the Nigerian Immigration Service upon the arrival of an expatriate in Nigeria with an STR Visa.

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7.?? Obtaining Licenses and Permits- The company should obtain the relevant industry licenses and permits before it commences its business. Each business must get a license or permit relevant to the industry where it operates or carries out its business. In most cases, failure to obtain the licenses may result in appropriate sanctions being levied on the company or inability to partake in the sector at all.

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8.?? Bank Account Opening- It is expected that any person who wishes to carry on business in Nigeria must have an account through which the company can receive money from its transactions. All registered companies in Nigeria are eligible to open corporate accounts in multiple currencies such as Naira, GBP, USD and Euro. The director of the company must provide his/her bank verification number (BVN), passport photographs, means of identification, a completed and duly signed account opening form, and the company's incorporation documents shall be submitted to the bank before an account can be opened for such a company.

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9.?? Appointment of Company Secretary- The company secretary must be appointed by a foreign-owned company at the point of company registration. The company secretary has the duty to maintain the registers and books and file the annual returns for the company. Appointment of a secretary is only mandatory for a foreign-owned company; a company owned by Nigerian citizen(s) is not mandated to appoint a secretary; they can only do so for the proper administration or operation of the company.

The business setup process in Nigeria is relatively seamless and fast. It is also important to note that some of these requirements can be processed simultaneously. It is also advisable to contact a professional to guide and offer professional advice on the appropriate procedure and requirements for a full company set up in Nigeria.

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By Corporate & Commercial Law Team at Resolution Law Firm

Email: [email protected]

Tel: +2348099223322