GUIDELINES FOR STARTING A FOREIGN BUSINESS IN NIGERIA

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The position of law in Nigeria as it relates to the formation of a Company is that any
two or more persons may form and incorporate a company by complying with the
requirements of the Companies and Allied Matters Act, 2004 (CAMA). This is the
primary Company’s legislation, and it establishes the Corporate Affairs Commission
(CAC) as the regulatory body of companies in Nigeria. This document provides a
summary of the stages to registration and the legal requirements a foreign company
needs to be aware of when where it wishes to carry out business operations in Nigeria.

When Starting a Business in Nigeria:

 Be duly registered or incorporated with the Corporate Affairs Commission

(CAC).
 Register with the Federal Inland Revenue Service (FIRS) for payments of
Company Income Tax, and with the State Inland Revenue Service for remission
of employees Personal Income Taxes.
 Foreign Companies are to register with the Nigerian Investment Promotion
Commission (NIPC)
 Companies may also be required to register with certain sectorial regulators,
like the National Office for Technology Acquisition and Promotion (NOTAP),
National Agency for Food and Drug Administration and Control (NAFDAC),
Department of Petroleum Resources (DPR), amongst others, as applicable.
 Foreign Companies are to apply for certain requisite permits with the Federal
Ministry of Internal affairs.

Incorporation:

The process of incorporation or registration with the CAC will be determined by the
type of Company to be incorporated or registered. The CAMA is divided into Sections
A, B and C. Companies registerable under Section A include private and public
companies which can be unlimited or limited by guarantee or liability, while B and C
deal with …, respectively. The emphasis of this note however is as regards the section
A registration requirements.

Where the company has a share capital, a private company is required to have a
minimum share capital of N 10,000 (ten thousand Naira) and N500, 000 (five hundred
thousand Naira) in the case of a public company. A minimum of 25% of the share
capital must be duly allotted within the subscribers to the memorandum. In practice,
companies are advised to be incorporated with a share capital of at least N1, 000, 000
(one million Naira) to enable the Company be viewed with a required level of
seriousness.

Beyond the minimum incorporation requirements, a company’s share capital

requirement may differ depending on other regulatory requirements e.g. a company
wishing to employ expatriates will require a minimum share capital of N10, 000, 000
(ten million Naira).

1) What are the stages when incorporating a Company?

 Conduct a search at the CAC for the availability of the intended name
 Where available, reserve the requested name. The name is reserved for a period
of 60 days and renewable for a further 60 days.
 Upon reservation, the requisite statutory incorporation forms and the
company’s Memorandum and Articles of Association are to be prepared and
signed by the appropriate parties.
 A company secretary is to be appointed by filling and signing the applicable
form, to be filed alongside the incorporation documents.
 The incorporation documents are to be stamped at the Federal Inland Revenue
Service (FIRS) prior to submission at the CAC, with a sworn declaration of
compliance by the lawyer involved in the incorporation process.
 The applicable filling fees are to be paid at the CAC on the submission of the
incorporation documents.
 The Certificate of Incorporation will then be processed and issued.

2) What is the requisite timeframe for incorporating a company at the CAC?

An incorporation process with the CAC usually takes about 15 working days to
completion. However, the CAC has given a single day incorporation option which
usually costs an additional fee of N50, 000 (fifty thousand Naira). Although called a
single day incorporation, this option has been known to take about 5 working days to
complete.

3) Who can be appointed as Company Secretary?

The CAMA places the duty on the directors to ensure the secretary as appointed is a
person with requisite knowledge and experience required to discharge the functions of
Company Secretary. Although the CAMA only provides qualifications for providing a
secretary for public companies, it is advised as a matter of policy that a private
company takes these qualifications into consideration when appointing a company
secretary. Based on the provisions of the CAMA, the person to be appointed shall be:

a) a member of the Institute of Chartered Secretaries and Administrators; or

b) a legal practitioner within the meaning of the Legal Practitioners Act 1975; or
c) a member of the Institute of Chartered Accountants of Nigeria or such other
bodies of accountants as are established from time to time by an Act; or
d) any person who has held the office of the secretary of a public company for at
least three years of the five years immediately preceding his appointment in a
public company; or
e) a body corporate or firm consisting of members each of whom is qualified
under the above paragraphs.

4) Can a Foreign Company operate prior to incorporation in Nigeria?

The CAMA expressly states that until incorporation a foreign company shall not carry
on business in Nigeria or exercise any of the powers of a registered company, and shall
not have a place of business or address for service of documents or processes in
Nigeria for any purpose other than the receipt of notices and other documents, as
matters preliminary to incorporation under the Act. Any Act of the Company in
contravention of this provision shall be deemed void.

5) Are there additional permits a Foreign Company incorporated in Nigeria will

require?

A foreign company incorporated in Nigeria must:

 prior to the commencement of its business obtain a business permit from the
Federal Ministry of Internal Affairs;
 obtain a certificate of capital importation obtainable from an authorized dealer
(being a registered bank in Nigeria), to be used also when processing its
Business Permit alongside other permits.
 register with the Nigerian Investment Promotion Commission (NIPC)
 obtain an Expatriate Quota from the Federal Ministry of Internal Affairs (or the
Nigerian Content Development and Monitoring Board where the Company
operates in the petroleum industry) where it wishes to employ expatriates.
 register with the applicable sectorial regulators (e.g. Department of Petroleum
Resources for companies intending to provide services in the oil industry).

6) What are the requirements for processing a Business Permit?

To apply for a business permit, the foreign company incorporated in Nigeria must
ensure it has a share capital of N10, 000, 000 (ten million Naira). It would be required
to make a formal application to the Ministry and provide a duly completed form, the
Company’s incorporation certificate and documents, tax clearance certificate, evidence
of acquisition of Business Premises (Tenancy or Lease Agreement), feasibility report,
evidence of payment of the application fee, amongst other documents.

7) What are the requirements for the obtaining of an Expatriate Quota?

Primarily, a Company wishing to apply for an expatriate quota must have a share
capital of N10, 000, 000 (ten million Naira). In order to obtain an approval, the
Company would have to identify the positions of employment for the Expatriates as
well as the training scheme to be adopted to qualify Nigerians for those positions in the
nearest future. A Formal application will need to be made to the Ministry, with the
Company providing its incorporation documents, duly completed application form, tax
clearance certificate, certificate of capital importation, evidence of payment of the
application fee, amongst other required documents.

8) What are the Visa requirements for Foreigners coming to work in Nigeria?

Non-Nigerians are required to obtain visas from a Nigerian Diplomatic Mission in the
country where the intending visitor is domiciled. Where there is no Mission in that
country, the visa may be obtained from a Mission in the country nearest to the country
of domicile.

9) What are the types of visas required in Nigeria?

The type of visas or entry permits required depends on the nature of the activity to be
carried out. The different visas/entry permits are as stated below:

 Experts invited by corporate bodies to provide specialized skilled services for a

short period, such as after sales installation, maintenance, repairs of machines &
equipment, may enter with a Temporary Work Permit (TWP)/Entry Visa.
 Business men and or Investors coming to Nigeria for purposes of business can
do so with a Business Visa/Entry Permit.
 Expatriates employed by individuals, corporate bodies or governments or
entering Nigeria to take up an employment require a Subject to Regularisation
Visa (STR)/Entry Permit.
  Every non-Nigerian wishing to reside and or work in Nigeria must make an
application for a Combined Expatriate Residence Permit and Aliens Card
(CERPAC), which is valid for two years and renewable.
 CERPAC Green Card allows a non-Nigerian to reside in Nigeria and carry out
an approved activity as specified in the permit, or to accompany a resident or
citizen of Nigeria as a dependant. Possession of a valid CERPAC Green Card
does not exempt the holder from having a valid entry or re-entry visa.
 Non Nigerians resident in Nigeria or visiting with the intention to remain in
Nigeria in excess of 56 days as well as members of the crew of a ship leaving
their ship and staying ashore in excess of 28 days are required by law to register
and obtain a CERPAC Brown Card.
 Non-Nigerians resident in ECOWAS countries are ordinarily permitted free
entry into Nigeria without a visa. However, an ECOWAS residence permit
would be required to be obtained by ECOWAS citizens intending to stay in
another ECOWAS country for a period exceeding 3 months.

10)What are the applicable Tax registration requirements?

The Company incorporated in Nigeria will be required to register with the FIRS and
obtain a tax clearance certificate. The Company registers for companies’ income tax
purposes at a Federal Tax Office nearest to its place of business or registered office.
This is done through the completion of the requisite tax registration forms for
corporate income tax registration. A letter is written to the tax authority applying for a
tax clearance certificate, the requisite form and incorporation documents submitted
alongside the other required information requested by the tax office. On receipt of the
completed form and accompanying documents, the tax office opens a file, allocates a
tax reference number and issues a tax clearance certificate. This certificate is evidence
of satisfaction of the company's tax liability for the current tax year and is renewable
annually.

11)Does the same procedure apply for VAT registrations?

The Vat registration process also entails writing a letter to the tax authority, which is
then acknowledged with a reference number assigned to the company to which to all
intents and purposes suffices for the purpose of the company charging VAT where
services are VAT is payable.

12)What about the Employees Personal Income tax?

All employers are to be registered with the relevant state tax authority for the purposes
of deducting income tax from employees. Once the application is filed with a copy of
the certificate of incorporation attached, a reference file is then opened for the
company. The Company is also to ensure it complies with other statutory registrations
required for its employees (e.g. Pensions).