Nigeria is an attractive destination for foreign investments due to its many business potentials which include digital money lending, technology, healthcare (particularly telehealth/telemedicine), manufacturing, e-commerce, e-hailing, real estate, etc. The business potentials are enormous and the Nigerian government operates an open-door policy to foreign investments subject to compliance with applicable laws and regulations which regulate business operations. A foreigner cannot therefore carry on any business in Nigeria without incorporating a company for that purpose in Nigeria.
It is important to note that a company with foreign participation is a company with a foreigner being a shareholder or director.
The registration of companies in Nigeria is the regulatory responsibility of the Corporate Affairs Commission (CAC). The rules guiding the registration of companies in Nigeria are contained in the Companies and Allied Matters Act 2020 (CAMA). In addition to the registration of a company, there are other regulatory requirements that must be complied with before the commencement of business operations.
Company Registration with the Corporate Affairs Commission
The processes involved in the registration of a company by a foreigner in Nigeria includes:
a). Conducting Name Availability Search and Reservation of Name: The essence of conducting a name availability search is to ensure that the proposed name is not the same or similar to the name of another company or business already in operation. Once this is confirmed, an application for name reservation is submitted to CAC for approval. The usual practice is to have two proposed names with one being the preferred name and the other being the alternative name in the event that the preferred name is not available. Name reservation approvals are usually valid for 60 days.
b). Filing the Company Registration Application: Upon the successful reservation of a name with the CAC, the next step would be to complete the necessary documentations and file an application for the registration of the company with CAC. The information required to file the company registration application include:
- The type of company to be registered. This could be a private or public company. The most popular type of company incorporated in Nigeria is a private company limited by shares i.e. limited liability company (LLC).
- Registered address of the company in Nigeria
- The nature of business of the company
- Minimum authorized share capital. The minimum share capital for a company with foreign participation is N100,000,000 (One Hundred Million Naira) but it could be more depending on sector-specific requirement.
- Particulars of the proposed shareholders
- Particulars of the proposed directors
Upon obtaining all the information above and filing same with CAC, payment of the filing fee and stamp duties would be made to CAC. The stamp duties payable is 0.75 percent of the minimum share capital of the proposed company.
c). Approval of the Company Registration by CAC: CAC reviews all the information filed for the company registration and issues a certificate of registration, status report and stamped memorandum and articles of association upon being satisfied with the information provided for the company registration.
Registration with the Nigerian Investment Promotion Commission (NIPC)
Upon the successful registration of the company with CAC, it is necessary to register the company with the NIPC before the commencement of operation. An application for the registration is submitted to the NIPC by filing the required company’s information. A certificate of registration is issued to the company by the NIPC upon the approval of the application for registration.
The NIPC oversees the coordination of investment in Nigeria and usually grants incentives and tax waivers or exemptions to companies operating in certain sectors of the Nigerian economy as one of the measures to encourage and promote investment in the country.
Company Tax Registrations
The registered company is required to apply for tax registrations with the Federal Inland Revenue Services for applicable corporate taxes such as Company Income Tax (CIT) and Value Added Tax. Upon the registration with the FIRS, a Tax Identification Number (TIN) which is specific to the company is issued to the company with the company also profiled on TaxPro -Max, which is the electronic platform adopted for the remittance of corporate taxes.
The company is also required to apply and be profiled for the remittance of the personal income (Pay as You Earn) tax of its employees with the relevant state tax authority, where the company has employees on its payroll.
Business Permit and Expatriate Quota
It is necessary for the company to obtain business permit before the commencement of operations in Nigeria. Business permit allows a company with foreign participation to begin operation in Nigeria while expatriate quota allows the company to employ foreigners to work in Nigeria.
Other Licensing Requirements
Depending on the sector the company operations fall within, there may be a need to obtain other regulatory approvals, registrations or licensing prior to the commencement of business operations in Nigeria. Below are some of the regulatory agencies which issue sector-specific approvals or licenses:
- Nigerian Communications Commission (NCC). The NCC regulates telecommunication services in Nigeria and issues licenses necessary to commence operations in the telecommunication industry.
- Central Bank of Nigeria (CBN). The CBN issues licenses to banks and financial institutions.
- National Agency for Food and Drugs Administration and Control (NAFDAC). It registers products that are manufactured locally or imported from abroad and issues authorization necessary for the marketing, sale and distribution of the products in Nigeria. The products that are registered by NAFDAC include food, chemicals, cosmetics, pharmaceutical products and medical devices.
- Nigerian Electricity Regulatory Commission (NERC). It regulates and issues licenses for the electricity industry.
- Advertising Regulatory Council of Nigeria (ARCON). It regulates and issues licenses for advertisements in Nigeria.
Conclusion
Nigeria is an attractive destination for foreign investments as the country continues to witness a lot of investment activities in the digital money lending, manufacturing, technology and healthcare spaces among others. The business potentials in Nigeria are enormous but foreigners cannot carry on any business operation in the country unless they register a Nigerian company. Applications for company registrations are processed with CAC. There are other registration or licensing requirements necessary for a registered company to commence business operations in Nigeria.
