Doing Business in Nigeria

SEVEN FREQUENTLY ASKED QUESTIONS

14TH SEPTEMBER 2012

Detail Commercial Solicitors

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About DETAIL
DETAIL is distinct as Nigeria's first commercial solicitor firm to
specialise exclusively in non-court room practice.
DETAIL’s Corporate & Commercial practice includes: advising foreign
start ups; business acquisitions; shareholder structures; due diligence;
partnerships and joint ventures. DETAIL is an International Financial
Law Review (IFLR) recommended law firm (2011).

Our scope of services includes:-

 Infrastructure & Public-Private Partnerships
 Real Estate & Construction
 Capital Markets
 Oil & Gas
 Detail Nominees - specialized advisory services for
business

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Frequently Asked Questions
DETAIL is commonly asked the following questions by people
seeking to do business in Nigeria.

1. What is the Legal Framework?

2. What corporate structures are available?
3. Can foreigners repatriate profits?
4. What is the taxation regime?
5. Are there any business incentives?
6. What are the risks of doing business in Nigeria?
7. What Dispute Resolution options are available?

Conclusion: Opportunities arising from legal reforms

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1. Legal Framework
 Common Law system
 Federal, State & Local Governments
 Exclusive, Concurrent & Residual Legislations
 Local Government Bye-Laws
 The Law governing the formation and registration of business
entities in Nigeria is the Companies and Allied Matters Act

FEDERAL GOVT Power, Railways, Companies, etc

STATE GOVT Urban Planning, Water, Housing etc

LOCAL GOVT Street naming, Refuse disposal,

registration of births, marriages etc

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2. Corporate Structure
 Do we need a Nigerian registered entity?
• Types of corporate structures
• Portfolio  investment  vs.  ‘doing  business’
• Litmus  test  is  “carrying on business in Nigeria”
• Transactions  are  “void”:    Nitel vs. Pentascope
• Trust and nominee options

 Is 100% foreign ownership permitted?

Barriers to entry
• Nigerian Content Law in Oil & Gas Industry
• Insurance Act
• Cabotage Act
• Specialised services (e.g. Law)
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3. Repatriation of Profits

 Is there a clear procedure for converting and

repatriating profits?

 100% repatriation subject to:

- Certificate of capital importation

- NIPC Registration
- National Office of Technology approvals
- Applicable Tax

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4. Company Taxation
Corporate Taxes Remittance Obligations
Companies Income Tax – 30% Personal Income Tax (on behalf of
employees)

Education Tax -2% Withholding Tax

Value Added Tax

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5. Business incentives
What tax breaks and incentives are available?
 Pioneer status (5-7yrs)
 Relief for Research and Development (120% deductible
expense)
 Investment in Infrastructure (20% deduction)
 Investment in Economically Disadvantaged Areas (7yrs Tax
Holiday)
 Local Raw Material Utilization (20% tax credit)
 Free Trade Zones
 Double Taxation Treaties
 Investment Promotion Protection Agreement (expropriation &
nationalization.
Sector-specific incentives
 Gas to Power Incentives, Agriculture, solid minerals, energy,
water transport

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6. Risk Mitigation

Risk Mitigation
Political risk  Contractual protection
 Investment Promotion Protection (Bilateral)
Agreement
 Nigerian Investment Promotion Commission
Act
Foreign exchange risk  Normal business cost
Compliance risk  Full compliance matrix
Corruption risk  Anti-bribery policy
Security risk  Adequate security measures
Infrastructure risk  Priced into cost/benefit analysis

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7. Dispute Resolution

Litigation vs. Alternative Dispute Resolution

Is Nigeria a signatory to the New York Convention on
Enforcement of Arbitral Awards?

Choice of law considerations

Technology transfer contracts
Contracts with Federal/State governments

How is our judicial system rated?

Speed of access to justice
Enforcement against Government is still a problem
Maevis Ltd vs. Federal Airports Authority of Nigeria

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Opportunities arising from legal reforms
Sector Reforms/Opportunities
Finance & Capital Markets SEC Rules/NSE Rules/CBN Reforms/Insurance
Reforms
REITs, Asset/Mortgage Backed Securities
Private Equity
Securities Lending
Islamic Finance
Infrastructure & PPPs Development of State legal frameworks
Implementation of the ICRC Act
Real Estate & Construction Diversification of investment
Property Joint Ventures
Property Funds
Co-ownership
Retail & Hospitality
Power Implementation of Reform Laws
Franchising General commercial opportunities

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 Thank you for listening.

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