Starting Businesses In Nigerian By Foreign Investors: Summary of Benefits and General Guidelines
Nigeria has been projected to be the 4th most populous Country by the year 2050. The huge population and needs for developments coupled with a business friendly government in place have made Nigeria to be a destination of choice for any investors in the world.
There are steps investors seeking to do business in Nigeria must follow which I would briefly enumerate below together with the incentives of doing business in Nigeria:
The first step for anyone seeking to do business in Nigeria should take is an incorporation of a company. There are different types of companies that can be registered in Nigeria. Major types of such companies include Private Company Limited by Shares; Public Company Limited by Shares; Private Company Limited by Guarantee.
A new investor seeking to start a business in Nigerian would be advised to simply register Private Company Limited by Shares, which is the most frequent types of companies people registered.
Meanwhile, a foreign company seeking to undertake a business in Nigeria might still be able to carry out such activity without company’s registration. Subject to the provision of Section 56 of Companies and Allied Matters Act (CAMA) LFN 2004, some certain categories of companies seeking to participate in a quick business in Nigeria with government or Agencies of government approved to execute specified projects among others in Nigeria might be granted an exemption.
The Federal Executive council, a committee that comprises of the President of Nigerian and his cabinet, is the only organ of government empowered to grant such exemption. This would make the whole process cumbersome, an investor cannot be advised to be seeking or waiting for such exemption in other to start a business in Nigeria.
Although the minimum authorized share capital of a private company limited by shares in Nigeria is N10, 000 (Ten Thousand Naira), a private company with foreign equity participation is required to have a minimum share capital of N10, 000,000 (Ten Million Naira).
BENEFITS AND FEATURES OF INCORPORATING A BUSINESS IN NIGERIA
Having briefly described the summary of business incorporation in Nigeria, it is important to highlight some of the features and benefits of registering a business in Nigeria:
1) Foreign nationals and entities can fully own a company in Nigeria: save for few exceptions, which include companies seeking to bid for contracts in oil and gas industry that requires 51% of shares of such companies be owned by Nigerians, foreign nationals may register and fully own shares of a limited liability company 100% in Nigeria.
2) Tax incentives for companies in certain industries: There are numerous tax incentives available for different types of newly registered companies in Nigeria. Some of these incentives include Pioneer Status Scheme, which grants a tax holiday exempting companies from certain industries obligations to pay corporate income tax and to withhold tax on dividends for 5 years. Such tax incentives include non-taxation in respect of gains from the sale of shares. In addition, a foreign company may be exempted from the interest payable on a loan granted to a Nigerian company, subject to terms and conditions.
3) Repatriation of Capital and Interest: a foreign company registered and undertook business in Nigeria is entitled to repatriate all its capital, profits and interests. However, such foreign company must have a Certificate of Capital Importation. Nigerian Foreign Exchange laws require that foreign investors wishing to repatriate their capital, dividends and profits should have evidence of capital invested to the country through Authorized Dealers (all banks licensed by Central Bank of Nigerian are Authorized Dealers). Immediately a foreign investor brought money into the country, an Authorized Dealer used to import the capital would issue the Certificate of Capital Importation. With such Certificate, foreign investors are entitled to repatriate all their capitals, dividends, interests or profits.
4) Seamless Immigration System and Business Permit: Having registered a company in Nigeria, investors are entitled to benefit from Nigerian seamless immigration and business permit system. A company registered by foreign nationals or has foreigners, as shareholders must obtain a Business Permit Certificate. And any company seeking to employ foreigners can also apply for Expatriate Quota Approvals. After Expatriate quotas must have been granted to the company, any foreigners the company wishes to employ can seamlessly apply for Nigerian residency and work permit otherwise known as Combined Expatriate Residence Permit and Aliens Card (CERPAC). A company worker or shareholder seeking to visit Nigeria for business prior the processing of CERPAC, which takes about 6 weeks to process may apply for a Temporary Work permit (TWP), which can be processed within 2 to 4 days.
5) Swift and Efficient Business Registration: The company registration in Nigeria is now very fast and efficient. Besides, an investor might not need to be physically present in Nigeria to incorporate a company. Under Nigerian law, minimum of 2 shareholders are required to incorporate a company. A single investor can arrange a second nominee shareholder. Additionally, a foreigner needs not to personally acquire an address in Nigeria before he or she can register a company. And of recent, there have been many good and efficient office arrangements in Nigerian’s big cities such as Lagos, Port Harcourt and Abuja. With these arrangements, a foreign company seeking to maintain a temporary address in Nigerian can contract numerous companies offering office spaces, maintain addresses and also help handle calls and correspondences on behalf of the company.
Nigerian is well positioned for business. The policy of Nigerian current government is supportive of foreign investors, and such policy will be sustained for a very long time since Nigeria desires of having more investors to accelerate growth and development.
Any person or organization seeking to do business in Nigeria is expected to seek detail legal advice from one of the many business lawyers in Nigeria.
Written by Olusola Jegede, a Partner at Resolution Law Firm, one of the leading corporate law firms in Lagos, Nigeria.
The information written on this page does not constitute a legal advice. Anyone seeking to do business or invest in Nigeria should seek professional legal advice before doing so.