SUMMARY OF THE GENERAL GUIDELINES FOR FOREIGNERS INTENDING TO DO BUSINESS IN NIGERIA
- Requirements For Foreigners to Register a Business a Nigeria
- In Nigeria generally, a foreigner is allowed to fully own a company or own same jointly with a Nigerian. It is only in business enterprises which are on the “negative list” that a foreigner is not allowed to fully own a company. Such business enterprises on the negative list include production and/or dealing in arms, ammunition, narcotic drugs and psychotropic substances.
- However, for a foreign-owned company, the minimum share capital before Business Permit can be granted is Ten Million Naira (N10.M).
- Please note, however, that there are some business enterprises which have prescribed minimum share capital which may be far higher than N10.M. [Information on prescribed share capital (if any) will be provided once the nature of the intended business is known].
- Directors can be Nigerians or non-Nigerians, resident or non-resident, though the status of each must be stated. In reality, it is always recommended for a foreign-owned company to have a Nigerian as the Chairman, a director or non-executive director to assist it with navigating the local business waters.
- After incorporation, there are some other regulatory approvals before a foreign-owned company will be allowed to carry on operations or be able to repatriate its income and earnings.
- The mandatory regulatory approvals include the following:
- Registration with Nigerian Investment Promotions Council (NIPC) – The NIPC is the government body saddled with the official responsibility of regulating foreign investments in Nigeria. The NIPC Act mandates that any company with foreigners’ participation must be registered with the NIPC.
- Registration with the Federal Inland Revenue Service (FIRS) – This is the regulatory body in charge of Federal tax matters including the Companies Income Tax.
- Certificate of Capita Importation – to allow repatriation of funds
- Business Permit – foreign nationals wishing to start business, trade or a profession in Nigeria must first obtain a business permit. This Business Permit is to legally allow for the local operation of such a business that has foreign interest.
- Expatriate Quota – If a company wishes to employ expatriates, such must obtain an Expatriate Quota position for each of the expatriates it wishes to employ. The expatriate quota stipulates the maximum number of expatriates that can be employed by the company.
- Residence Permit – The Nigerian Immigration Service issues a Combined Expatriate Residence Permit and Aliens Card (CERPAC) for expatriates who intend to work and live in the country. This is after the grant of the expatriate quota positions. Each expatriate will be required to apply and they can be accompanied by their families and dependants.
- Other necessary approvals include:
- Pioneer Status
- Transfer of Technology Agreements –
- Registered Office
- It is not specifically stated that a company doing business in Nigeria must have a registered office; however, many documentations for governmental approvals must contain the physical address of the applicant company. So, it is naturally assumed that such a company must have a physical location for the service of necessary papers or correspondence.
- In certain situations, evidence of the location or physical address of the company must be provided. For example, in the application forms for Business Permit and approval for Pioneer Status, there is the requirement that the company must submit evidence of business premises in form of a tenancy, lease or purchase agreement.
- Let us end by stating that obtaining a registered office/location anywhere in Nigeria should not be a matter for concern. Our firm is able to procure whatever the size, location or number of physical offices your organization may desire.
- Requirements for Accounting
- Under the Companies and Allied Matters Act (CAMA), the law mandates that all companies must maintain books of accounts and produce their financial statements under the International Financial Reporting Standard (IFRS).
- Aside this, there is no requirement of a specific chart or accounting systems or accounting software/host for company’s accounts in Nigeria.
- Please note that at the first meeting of the directors of the company, they must decide on what date of the year their financial statements will be made up to, and then give notice of this date to the CAC within 14 days.
- A report must also be prepared by the director containing a fair view of the company’s business, its development, amount recommended as dividends, amount recommended as reserves, the financial activities of the company during that year, etc.
- Taxes for Companies in Nigeria
- Companies Income Tax in Nigeria
- Personal Income tax
- Withholding Tax
- Please note that there other levies payable by companies in certain business activities.
However, exemptions are available on taxable incomes for foreign businesses.
As legal practitioners, we are available to offer your organization consultancy and legal advisory services. These services range from incorporating/registering your business enterprise, obtaining the requisite government approvals on your behalf, procuring and completing the process of acquisition of leasehold or freehold properties for your operations, engaging other professionals where their expert services are needed, and generally offering legal services for the successful take-off and continued operation of your business enterprise. Our devotion is to the success of your business venture in Nigeria.
Our guiding principle here is our integrity. We have associated with many other individuals and organizations from outside Nigeria many of whom we never knew but today remain some of our best clients, expressing their satisfaction with our professional services.
It is our belief that you too will be satisfied with our professional services.
Manuel Akinshola Esq.
Jacobs & Bigaels
If you need any information on the above matters, then contact us by phone on +234909 601 6093 or use our contact us form here.
We look forward to being of service to you.
(Disclaimer: Please note that the above summary is for advisory purposes only).