Nigeria being a large oil-producing country with a population of over 225 million people has recently made amendments to its company and tax laws to create a more supportive business environment for local and foreign business owners.

The Nigerian law permits foreigners to own a new company 100% in all sectors except for a few sectors reserved for Nigerian citizens, such as small-scale businesses, agriculture, and cottage industries. It is, however, mandatory for a Company having foreign participation to have a minimum of two shareholders and two directors. At least one of the directors must be a resident of Nigeria

If you are looking to engage foreign participation or own a company in Nigeria, the first step is to establish the partners/shareholders and their respective percentage shareholdings in the proposed company. Afterward, the promoters of the company would establish the name of the proposed company, the initial authorized share capital, and the main objects or purpose of the proposed company.

Recently, The Ministry of Interior issued a revised Handbook on Expatriate Quota Administration 2022 (the “Handbook”) which has increased the minimum share capital requirement to NGN100,000,000 (One Hundred Million Naira).

Except in situations where the proposed company will be 100% owned by non-resident shareholders, the promoters should prepare a Joint Venture Agreement between prospective shareholders. The Joint Venture agreement may specify; among other things, the mode of subscription by parties, the manner of Board Composition, the quorum for meetings, and main actions which would necessitate shareholders’ approval by special or other resolutions.

Thereafter, the promoters are to acquire a name for the company and get the company duly incorporated with the Corporate Affairs Commission through a licensed lawyer.

The next important step for the company to take after being issued the certificate of incorporation is to register the company with the Federal Inland Revenue Service (FIRS) for Value Added Tax (VAT) Certificate.

Following this, the company is to prepare and submit simultaneous applications to the Ministry of the Interior (on the prescribed NIPC Application Form) for the following: –

– Registration and Expatriate Quota;

– Pioneer Status and other incentives (where applicable)

The following documents should be accompanied with the application to the Ministry of Interior;

• Original and duplicate Copy of the duly completed NIPC Form 1;
• Original Copy of the treasury receipt for the purchase of the NIPC Form;
• A Copy of the Certificate of Incorporation of the applicant company;
• A Copy of the Tax Clearance Certificate of the applicant company;
• Produce CAC’s Forms duly certified;
• A Copy of the Memorandum and Articles of Association;
• A Copy of treasury receipt as evidence of payment of stamp duties on the authorised share capital of the company as at date of application;
• A Copy of the Joint-Venture Agreement -UNLESS 100% foreign ownership is envisaged;
• A Copy of Feasibility Report and Project Implementation Programme of a company for its proposed business. It is advisable that quotations, letters of intent and other such documentation relating to industrial plant and machinery to be acquired by the company, be forwarded either as annexes or separately. In order to discourage the dissipation of administrative energy on speculative applications, the NIPC favours the applicant who has demonstrated positive intention to commence business as and when approvals are granted. Hence, the requests for evidence of acquisition of business premises and evidence of acquisition of the plant and machinery to be utilised in the company’s business;
• A Copy of Deed(s) of Sub-Lease/Agreement evidencing firm commitment to acquire requisite business premises for the company’s operation;
• A Copy of the training programme or personnel policy of the company, incorporating the management succession schedule for qualified Nigerians;
• Particulars of names, addresses, nationalities, and occupations of the proposed directors of the company;
• Job title designations of expatriate quota positions required, and the academic and working experience required for the occupants of such positions.
• Copies of information brochure on foreign shareholders (if available) as testimony of international expertise and credibility of the foreign partner in the proposed line of business.

The next step is for the foreign company to open a corporate bank account with a Nigerian bank to carry out transactions. To open a bank account in Nigeria, both directors and the appointed account signatory (if different from the director) must submit a Nigerian biometric Bank Verification Number (BVN) per Nigerian banking regulations. Directors still residing abroad can also obtain BVN by visiting foreign designated locations to process it.

There are other regulatory bodies the foreign company may also need to register with depending on the nature of business such as the National Agency for Food and Drug Administration and Control (NAFDAC), Nigerian Communications Commission (NCC), or Nigerian Electricity Regulatory Commission (NERC).

Conclusion

With the OSIC initiated by the NIPC, registering a foreign-owned business in Nigeria has been made easy. However, a foreigner intending to establish a company or business is advised to hire the service of a legal professional in Lagos Nigeria to have an easy incorporation process.

You can contact us for free legal advice on company formation in Nigeria.

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