For the smooth and easy setup of a foreign owned company in Nigeria, the business owner must comply with corporate laws of the new jurisdiction to guarantee a hitch free start of the business in Nigeria.
It is therefore important for an individual or business entity to ask for legal advice from the best commercial lawyers in Nigeria; this would equally help in securing all statutory business permits and approvals required for the business operation & set up.
The compliance of the business owner with Nigeria regulations and corporate due diligence will provide practical solutions that will serve the immediate and long-term best interest of the foreign investors carried out by the retained business lawyer in Nigeria.
What is Limited Liability Company
The ideal enterprise for this type of intended business investment should be limited liability company simply defined in law, also by British oxford dictionary as a ‘‘Private company whose owners are legally responsible for its debts only to the extent of the amount of the capital they invested’’ or as defined by Small Business Encyclopedia in the international business magazine entrepreneur.com, Ask an Expert Session with Jason Feifer as ‘’ A form of business organisation with liability shield advantages of a corporation and the flexibility and tax pass-through advantages of Partnership’’. Equally established in the case of Salomon v A Salomon & Co Ltd 1897 AC 22 as a Company being a separate legal personality from the owners.
Before going into the procedures, we must note, that there are several laws of the Nigerian National Parliament stipulating the rules and regulations of business in Nigeria and others laws in respect of a fully owned foreign company with foreign shareholders; a good example of such laws are the Company & Allied Matters Act, Immigration Act, Foreign Exchange Laws, Capital Import Law Central Bank of Nigeria Act, NIPC Act and other laws not mentioned.
The following steps are the best ways to set up a new foreign owned business in Nigeria:
- The first law requirement the intending foreign business owner or organization must know is to contract a knowledgeable business lawyer to incorporate a Limited Liability Company which is simply defined as a (Registered Company).
- Note, the required share capital for a foreign owned company is a minimum of 10,000,000 Share Capital and above because this is the minimum share capital that would be accepted by the Ministry of Interior and Nigeria Investment Promotion Commission for the purposes of securing Business Permits and Expatriate Quota approvals.
Note: You are not paying 10million naira for the registration; it is mere numbers showing the size of the company and also meaning in law that the liabilities of the company are limited to the share capital.
Required Information and Documents for a New Company Registration.
- Proposed name of the company to be reserved at the Commission.
- Share Capital of the Company.
- Division of the Share Capital in percentage ratio.
- Name of the Directors, minimum of 2 and maximum of 50 for a Private company including shareholding.
- Nigeria office address.
- Directors & shareholders residential addresses overseas.
- Data page of shareholders and Directors international passport or Government issued means of Identification, or a valid Driver’s Licence.
- Signing of all the incorporation documents by the directors and shareholders.
This could be transported to the Directors via international courier transport companies and returned to the lawyer in Nigeria for filing at the Commission.
Note: Electronic or digital signatures are not accepted by the commission.
Upon receipt of all the signed documents and other attached documents by the Solicitor, the application will be filed accordingly and the company registered certificate of incorporation could be ready for pick up within 14days except there are queries on the Application by the Commission.
At this point, it will be very important for the foreign owned company to either secure a physical office or at least a contact office address in Nigeria because it will be needed for Business Permit & Expatriate quota approvals at the Ministry of Interior.
Required Government Approvals and Other Due Diligence after Incorporation
- Tax Registration and Opening of Bank Account.
It is compulsory to obtain Tax Identification Number (TIN) from Federal Inland Revenue Service, also Value Added Tax Registration referred to as (VAT). The good news now is, Nigeria Corporate Commission in collaboration with the Federal Inland Revenue Service now automatically issues the Tax Numbers some few days after incorporation of a company.
- Bank Account Opening.
With the TIN ready, the company can open a corporate account for Capital Importation for the kick-off of the business, they should also make sure they comply with requirements of laws as regards the importation of capital or funds into Nigeria as stipulated by the Central Bank of Nigeria Circulars and Regulations.
The next stage:
Application for Business Permit and Expatriate Quota including NIPC Registration
As part of the Federal Government new initiative on Ease of Doing Business in Nigeria. The commercial law firm handling the applications can now route the 3 applications for Business Permit, Expatriate Quota and NIPC registration of the foreign owned company through NIPC Desk office in the Ministry of Interior directly to the Minister through the Citizenship and Business Department.
- Certificate Of Incorporation
- Memorandum and Articles Of Association
- Current Tax Clearance Certificate;
- Evidence of Acquisition of Business/Factory Building;
- Receipt to Operate in the Oil Industry i.e. DPR Permit (for Oil Service Companies)
- Evidence of Capital Importation e.g. a Certificate of Capital Importation, if Available;
- Partnership/Joint Venture Agreement, the Responsibility Structure;
- Feasibility Study Report (for joint venture companies)
- Evidence of Acquisition of Operating Equipment and Machinery, such as Equipment, Vehicles, Business Machines, etc
- Project Implementation Programme
- Profile of Expatriate Personnel Detailing their Qualifications and Experience, Positions to be held by them in the Company and the duration of each Quota Position.
- For construction companies and Letter awarding construction contract.
If all the relevant documents and statutory fees are paid, the Approvals could be secured within 2 months except there are queries.
This is the last stage of processes required for setting up of a business in Nigeria, it is mandatory for the Directors and Expatriates Employees including their family members to secure a Resident Permit to live and work in Nigeria. The application will be processed by the Controller General of Immigration Service and it would be issued under the authority of the Minister of Interior as provided for in the Immigration Act 2015 and Immigration Regulations 2017.
The usual practice is that the Nigeria Immigration Service will issue an employee of the foreign owned company a Resident Permit popularly called CERPAC card meaning (Combined Expatriate Resident Permit and Alien Card). Take note, this Resident Permit is valid for 2 years and renewable after expiration, and this is only possible after the oversea owned company must have obtained a Business Permit and Expatriate Quota Approvals. There is a Government specified amount of US dollar statutory fee to be paid for the CERPAC approval.
We must clarify that in some categories of business, the law requires peculiar approvals and licences for a foreign or overseas owned company to operate in some important sectors of the Nigerian Economy, a good example are oil and gas sector, communication, pharmaceuticals, banking & insurance, capital market which will be approved by other special Government regulated agencies.
Therefore, if you need to know more about easy and best ways to set up a foreign owned company in Nigeria, we always strive to work with business owners to determine the best choice of company to fit in into their business goals and needs in Nigeria.
We encourage prospective foreign business owners to invest in the country in view of her good laws, and great returns on investment in Africa as the economy power house. Equally, as the high-quality commercial law firm of distinction in Nigeria, we assure you a hassle-free legal compliance of business with Nigeria regulation and due diligence.
We are more than ready to assist and help to make all the business regulation requirements a seamless one in Nigeria!
BAM & GAD SOLICITORS
The post The Easy Guide, Fast & Best Ways to Set Up A Foreign Owned Business Legally in Nigeria appeared first on BAM & GAD SOLICITORS.