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HOW TO REGISTER AND OPERATE A FOREIGN COMPANY IN NIGERIA

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HOW TO REGISTER AND OPERATE A FOREIGN COMPANY IN NIGERIA

How to register a foreign company in Nigeria

INTRODUCTION

Any company legally established in one country of the world may desire that such company be legally established in some other countries. The procedure for incorporating a foreign company in one country is more or less substantially different from the other. In Nigeria, this procedure is governed by the Companies and Allied Matters Act (CAMA) 2004.

A foreign company may open for business as a secondary establishment, such as an office, agency, branch or subsidiary in Nigeria. However, such company needs to fulfill certain legal requirements necessary to obtain local incorporation of the Nigerian branch or subsidiary as a separate entity in Nigeria for that purpose.

In the same vein, every foreign individual seeking to engage in any form of business in Nigeria must also incorporate a company and meet other requirements to set up a business in Nigeria as stipulated by requisite laws.

A foreign company or foreign national may not carry on business in Nigeria or exercise any of the powers of a registered company until so incorporated.

 

EXEMPTION OF FOREIGN COMPANIES

A foreign company may apply in accordance with Section 56 of the Companies and Allied Matters Act (CAMA) for exemption from incorporating a local subsidiary if such a foreign company falls within the following categories stipulated in the Act. Such categories include foreign companies invited to Nigeria to carry out a specialized duty by government among few others.

Every other foreign company that does not fall within the categories mentioned above must incorporate a company before commencing business transactions in Nigeria.

STEPS AND REQUIREMENTS FOR A FOREIGNER TO CARRY ON BUSINESS IN NIGERIA

  • The Incorporation of Company at the Corporate Affairs Commission (CAC) in accordance with the CAMA
  • Obtainment of a business permit from Ministry of Interiors
  • Registration with Nigerian Investment Promotion Commission (NIPC)
  • Obtainment of Tax Identification number (TIN), VAT, and Tax Clearance Certificate.
  • Obtainment of Nigerian Expatriate quotas
  • Immigrations requirements and Residence permit (CERPAC)
  • Obtainment of an export certificate in case the registered company intends to export goods or raw materials out of Nigeria
  • Obtainment of requisite license where the company intends to engage in a specialized sector that requires government agency’s approval or permit.
  • Obtainment of Certificate of Capital Importation.

Having mentioned the steps and requirements that must be followed or obtained to establish a company in Nigeria, we would briefly highlight or detail some of the impotent features of the said requirements.

INCORPORATION OF COMPANY WITH CAC

The first requirement for any foreigner, either individual or corporate entity, willing to start a business in Nigeria is to incorporate a company in accordance with the provisions of the laws. Under Nigerian Law, every company with foreign participation must have minimum of N10, 000,000 authorized share capital. That simply means the company must have at least 10,000,000 shares divided into 1 Naira per share. That does not imply such foreign individual or company is required to pay this amount immediately to government or any entity in Nigeria, it simply indicates the extent promoter’s risks and liabilities to the company. Additionally, every Nigerian company must be composed of minimum of two members (shareholders) and two directors. However, in the absence of a second person to act as a director, a foreign individual or entity may engage the services of a local director or even shareholder in compliance with the provisions of the Act. Although several foreign jurisdictions now allow a single individual to form a company, but this is not acceptable under Nigerian law.

 

REGISTRATION WITH THE NIPC

Furthermore, registration with Nigerian Investment Promotion Commission (NIPC) is vital. The Nigerian Investment Promotion Commission (NIPC) is Federal Government Agency in Nigeria established by the NIPC Act to promote, co-ordinate and monitor all investments in Nigeria. The basic functions and powers of the NIPC are as prescribed by Act. The Commission among other things, to co-ordinate, monitor, encourage and provide necessary assistance and guidance for the establishment and operation of enterprises in Nigeria, initiate and support measures which shall enhance the investment climate in Nigeria for both Nigerian and non-Nigerian investors among others as well as perform such other functions as are supplementary or incidental to the attainment of the objectives of NIPC Act.

Registration with the NIPC is a major prerequisite for a business permit.

BUSINESS PERMIT

A business permit is issued by Ministry of Interiors and allow individuals or companies to conduct business within the government’s geographical jurisdiction. It is the authorization to start a business. A business permit is an operational and permanent permit for the local operation of a business with expatriate investment either as a branch or subsidiary of a foreign company or otherwise.

Pursuant to Section 36(1)(a) and (b) of the Immigration Act (2015), and Paragraph 4 of the Immigration Regulations (2017) no person other than a Nigerian citizen shall, on his own account or in partnership with any other person, practice a profession or establish or take over any trade or business whatsoever or register or take over any company with limited liability for any purpose without the written consent of the Minister of Internal Affairs. The consent of the Minister of Internal Affairs is issued in the form of Business Permit. This business permit is required for wholly foreign owned companies.

 

 

EXPATRIATE QUOTAS

By virtue of 36(1)(a) and (b) of the Immigration Act, 2015 a foreigner granted a business permit must be able to fit into the Expatriate quota. A business permit allows a foreigner to take up employment in Nigeria. However, all companies that intend to employ foreigners must have expatriate quota. Expatriate quota refers to the allowable number of foreigners to be employed by business organizations operating or wishing to operate in Nigeria. This approval granted to this business organization is what is known as Expatriate Quota. Expatriate quotas are of two types:

  1. Permanent Until Reviewed (PUR), which is usually granted to the Chairman of the Board of a company or the Managing Director. It is permanent until a need arises for its review.
  2. Temporary Quota (TQ), which is usually granted to the directors or other employees of the company. It is usually granted for a maximum period of 5years subject to renewal for another period of two years

The quota position attaches to a particular post or position. Therefore, the same quota can cover different persons.

IMMIGRATION REQUIREMENTS AND RESIDENCE PERMIT

The laws guiding immigration processes in Nigeria are the Immigration Act 2015 and the Immigration Regulations 2017, issued by the Honourable Minister of Interior Lt. Gen Abdulrahman Dambazau (retired). The key objective for issuing the Regulations is to create a legal framework for the implementation of the Immigration Act 2015. The Comptroller General of the Nigerian Immigration Service (CGI) issues residence permits to immigrants that intend to reside in Nigeria.

The immigration permits that may be granted to a foreign company or its employees are

  • Resident Permits
  • Temporary Work Permits (TWP)
  • Subject to Regulation (STR) Visa

We would like to enunciate briefly on the above

RESIDENT OR WORK PERMITS

The Immigration laws provide that residence permits, otherwise known as the Combined Expatriate Resident Permit and Alien Card (CERPAC) may be granted for a maximum period of two years. CERPAC is required for expatriates resident or working in Nigeria. This therefore confirms that an expatriate can obtain a residence permit valid for two years. The CERPAC CARD is a document, which allows a foreigner to reside in Nigeria and carry out business as specified in the permit, or to accompany a resident or citizen of Nigeria as a dependent. Every CERPAC must be submitted for renewal after the two years expiration.

However, the validity of a residence permit is subject to the validity of the expatriate quota. Valid residence permits can also be used for reentry into Nigeria. It is worthy of mention that the date endorsed in the passport is the effective date for re-entry purposes and not the date on the Combined Expatriate Resident Permit and Alien Card (CERPAC) temporary receipt.

With regards to an Investment visa, the Regulations provide that a foreign national that imports a minimum ‘threshold of capital’ over a period of time may be issued with a permanent residence permit (PR). However, this investment PR is subject to revocation upon withdrawal of investment from Nigeria.

TEMPORARY WORK PERMIT (TWP)

This is an approved visa endorsement authorizing an immigrant to enter Nigeria in order to perform a specific job within a specified period of time. TWP are usually issued for a period of 3 months. The Comptroller of Nigerian Immigration Service must approve all TWP cable visa.

 

SUBJECT TO REGULATION (STR) VISA

This visa is required from a foreigner who wishes to take up business in Nigeria. Subject to Section 33 of the Immigration Act, prospective employer must write to the Comptroller General that he has a slot on the expatriate quota. The employer applies to the Nigerian Embassy or Consular office at the country where the employee resides. Upon his arrival in Nigeria, he would be granted a residence permit.

STR visas are valid for 90 days without reference to the Comptroller General provided that the applicant provides specified documents.

 

AN EXPORT CERTIFICATE

The two government agencies vested with the power to grant export licenses or certificates are:

  • The Nigeria Export Promotion Council (NEPC) which is saddled with the responsibility of issuing out export licences for agricultural commodities and manufactured goods
  • The Federal Ministry of Solid Minerals Development, which is responsible for granting licences for extraction and exportation in Nigeria.

SPECIALISED OPERATING LICENSE AND OTHER REQUISITE LICENSES

For companies intending to carry out operations in specialized sectors, there is the need to get operating licenses and other requisite licenses from appropriate bodies. Some of these include:

  • Department of Petroleum Resources (DPR) – Oil & Gas Sector
  • Nigerian Communications Commission (NCC) – Telecommunications Section
  • Central Bank of Nigeria (CBN) – Financial Sector
  • Ministry of Mines and Steel Development (MMSD) – Solid minerals Sector
  • National Agency for Food and Drug Administration and Control (NAFDAC) – Pharmaceuticals and Foods e.t.c

CERTIFICATE OF CAPITAL IMPORTATION

Subject to the Regulation released by Central Bank of Nigeria on the 12th of June, 2012, certificates of capital importation are to be issued in respect of importations of equipment and raw materials, foreign exchange inflow for loans, investments or capital subjects to existing guidelines as specified in the Foreign Exchange Manuals.

This certificate is required for wholly foreign companies.

 

CONCLUSION

By virtue of Section 54 of the CAMA, every foreigner seeking to do business in Nigeria must incorporate his company except his company falls within the purview of Section 56 of the CAMA which deals with the exemption of some foreign companies from incorporation.

Although Nigerian legal framework for foreign participation in Nigeria’s business is friendly, it also still advised that a foreign individual or company seeking to do business in Nigeria consult with an expert to navigate through all the regulatory requirements.

 

Written by Corporate & Commercial Law Team at Resolution Law Firm, Nigeria

Tel:     +2348099223322

Email: info@resolutionlawng.com

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