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The article you will find below should guide you step by step and through the process. I wish you good luck though!You may still visit Page on macrosecnominees.comCopyright © Abraham & Co.A GUIDE TO DOING BUSINESSIN NIGERIA Doing Business in Nigeria2CONTENT PageForms of Business Enterprise 3Registration of a Company and Application for 5Start-up ApprovalsThe Tax System 8Checklist for Establishing Business in Nigeria 9 Doing Business in Nigeria3FORMS OF BUSINESS ENTERPRISEBusiness activities may be undertaken in Nigeria through any of the followingvehicles; that is:(i) Private or Public limited liability Company;(ii) Unlimited liability company;(iii) Company limited by Guarantee;(iv) Foreign Company (branch or subsidiary of a foreign company);(v) Partnership/Firm;(vi) Sole Proprietorship;(vii) Incorporated Trustees;(viii) Representative Office.All business enterprises, both local and foreign must be registered with theRegistrar-General of the Corporate Affairs Commission (“Registrar ofCompanies”), and must comply with the internal regulations applicable toparticular businesses. The law governing the formation and regulation ofbusiness enterprises in Nigeria is the Companies and Allied Matters Act, 1990(“CAMA”), and under this law is the Corporate Affairs Commission, which isthe body responsible for the registration and regulation of companies.Foreigners may invest and participate in the operation of any enterprise inNigeria. By virtue of the provisions of the CAMA, a foreign investor, wishingto set up business operations in Nigeria is obliged to take all steps necessaryto obtain local incorporation of a Nigerian company, or branch or subsidiaryof an existing company, which would be a separate and distinct entity fromits parent company. Until so incorporated, a foreigner may not carry onbusiness in Nigeria or exercise any of the powers of a registered company.The CAMA, however, sets out exceptions to the general rule that all foreigninvestors doing business in Nigeria must incorporate in Nigeria. Theseexceptions include companies engaged by the Federal Government toexecute specific projects, companies undertaking approved loan projects onbehalf of donor countries or international organizations, and foreigngovernment owned companies engaged wholly in export promotionactivities. Doing Business in Nigeria4These exemptions are granted for a fixed period of time (usually threeyears), are hardly ever renewed and may be revoked by the FederalExecutive Council. Investors envisaging a long-term existence in Nigeria aretherefore well advised to incorporate a local company.Foreign companies may also set up Representative Offices in Nigeria. ARepresentative Office however, cannot engage in business, concludecontracts or open or negotiate any Letters of Credit. It can only serve as apromotional and/or liaison office. In this circumstance, its local operationalexpenses have to flow in from the foreign company. A Representative Officealso must be registered with the CAC. Doing Business in Nigeria5REGISTRATION OF A COMPANY AND APPLICATION FOR START-UPAPPROVALSAs stated earlier, under the Companies and Allied Matters Act, 1990(“CAMA”) the body responsible for the registration and regulation ofcompanies is the Corporate Affairs Commission (“CAC”), which has its headoffice in Abuja, the Federal Capital Territory.Procedure for Company IncorporationAn application for incorporation is made to the Registrar-General of the CAC.Prior to the application being made, submitting a written application to theCAC, and paying a prescribed fee may reserve the name of the proposedcompany. Subsequently the application to the Registrar-General is submittedin the prescribed form along with the following documents:• A copy of the Memorandum and Articles of Association of theCompany (which must be subscribed to by at least two persons,together holding at least 25% of the company’s authorized sharecapital together with evidence of payment of stamp duty.• A statement of the authorized share capital of the company togetherwith evidence that the stamp duty payable in respect of the amountof share capital has been paid.• A statement of the particulars of the initial directors of the company,of which there must be at least two.• A notice of the situation of the registered office of the company.• A declaration, sworn to by a Lawyer that all matters preliminary to theregistration of the company have been complied with.Stamp duty and filing fees are payable to the Federal Commissioner forStamp Duties and the Registrar - General of Companies respectively. If theapplication is approved, a Certificate of Incorporation will be issued and thecompany can commence business subject to its having obtained thenecessary investment approvals. Doing Business in Nigeria6Investment Authorizations and ApprovalsThe principal laws regulating foreign investment in Nigeria are, the NigerianInvestment Promotion Commission (“NIPC”) Act No. 16 of 1995, and theForeign Exchange (Monitoring and Miscellaneous Provisions) Act No. 17 of1995.Once registration is completed, there are other approvals that the foreignInvestor would require, to secure enhanced returns from an investment andremit the proceeds of such investment. Some of these approvals aremandatory, others are only required where the company wishes to employexpatriates or take advantage of certain incentive schemes. The nonmandatoryapprovals are asterisked (*).Registration with the NIPCThe Nigerian Investment Promotion Commission (“NIPC”) was establishedunder the Nigerian Investment Promotion Commission Act, 1995, whichprovides that any enterprise in which there is foreign participation must beregistered with the NIPC. The NIPC Act permits foreigners to own up to100% of any business enterprise with the exception of enterprises on the“negative list” of the Act. The negative list includes enterprises involved inthe production of and dealing in arms, ammunition, narcotic drugs andpsychotropic substances.Procedure for obtaining NIPC Registration• Application is made to the Nigerian Investment Promotion Commission• Completed copies of the NIPC Form 1 (Original and 3 copies)• Original copy of receipt of purchase of NIPC Form 1 (and threecopies)• A copy of COMPANYs’ Certificate of Incorporation (and three copies)• Evidence that COMPANY has a minimum share capital of=N=10million. (3 copies)• COMPANYs’ Allotment of shares and Particulars of Directors (3 copies)• Details of the shareholding structure of COMPANY (3 copies)• Joint Venture, Shareholders’ or Partnership Agreement, whereapplicable (3 copies). Doing Business in Nigeria7Business PermitIn order for an enterprise in which there is foreign participation to undertakeany business in Nigeria, it must obtain a business permit from the Ministry ofInternal Affairs. A business permit will only be granted in respect ofcompanies having an authorized share capital of at least =N=10,000,000.00(approximately 80,000 US Dollars). One of the documents that a companyapplying for business permit is required to submit is a Certificate if CapitalImportation to evidence the importation of the foreign investor’scapital/equity contribution into Nigeria.Procedure for obtaining Business Permit• Application is made to the Ministry of Internal Affairs• Completed copies of the NIPC Form 1 (Original and 3 copies)• Original copy of receipt of purchase of NIPC Form 1 (and threecopies)• A copy of COMPANYs’ Certificate of Incorporation (and three copies)• Evidence that COMPANY has a minimum share capital of=N=10million. (3 copies)• COMPANYs’ Allotment of shares and Particulars of Directors (3 copies)• Details of the shareholding structure of COMPANY (3 copies)• Joint Venture, Shareholders’ or Partnership Agreement, whereapplicable (3 copies).Certificate of Capital ImportationInvestors who wish to be able to remit dividends to non-residentshareholders or repatriate capital on disinvestments must ensure that theyobtain a Certificate of Capital Importation from the Nigerian bank throughwhich the payment is transferred into Nigeria.Procedure for Obtaining Certificate of Capital importation (CCI)• Application will be made to COMPANY’s bankers• The foreign shareholders will instruct their bank (“the remitting bank”)by telex to transfer the necessary funds either directly to COMPANY’sbankers or to their foreign affiliate; Doing Business in Nigeria8• The transfer must be accompanied by a telex stating that the moneybeing remitted to the bank is for the account of COMPANY and thatthe money represents the foreign investors’ capital contribution to theequity of COMPANY;• Upon confirmation that the funds have been remitted to Nigeria,COMPANY is required to send a formal letter of application to thereceiving bank to issue a CCI in respect of the equity contribution.• The following documents must be submitted together with the letterof application:o A Board resolution of COMPANY authorizing the foreigninvestment;o A letter from COMPANY stating the purpose for which themoney has been remitted;o A copy of the certificate of incorporation of COMPANY;o A copy of the swift message from the remitting bank.• If satisfied with the documentation the receiving bank will issue a CCIin respect of the funds. The receiving bank is required to notify theCBN whenever it issues a CCI.Expatriate Quota*A company wishing to employ expatriates must obtain an Expatriate Quotaposition for each expatriate it wishes to employ. The Expatriate Quotaestablishes the maximum number of expatriates that the enterprise mayemploy. A company having a paid-up share capital of not less that=N=10,000,000.0 (Ten million Naira only) (approximately 80,000 US Dollars)is entitled to one automatic quota positions, while a company capitalized at=N=20,000,000.00 (twenty million Naira only) (approximately 155,000 USDollars) is entitled to four automatic quota positions.Procedure for obtaining Expatriate Quota• Application is made to the Ministry of Internal Affairs• In addition to the requirements listed under Business Permitapplication, the following requirements have to be met for ExpatriateQuota applications:• Evidence of acquisition of operational machinery and equipment Doing Business in Nigeria9• Management and Technical Services Agreement• Minimum authorized share capital of =N=10million• Tax Clearance Certificate• Company applying for Permanent Until Reviewed (PUR) Quota slotsmust show evidence of payment of tax for minimum of =N=1 million.• Names, addresses, qualifications and positions to be occupied by theexpatriate• Project Implementation Program• Training Program for Nigerians and a Management SuccessionScheduleApproval for Transfer of Technology and other Agreements*By virtue of the provisions of the National Office for Technology Acquisitionand Promotion Act, 1992 any agreement under which a foreigner is toprovide foreign technology, management, or assistance, to a Nigeriancompany must be approved by the National Office for Technology Acquisitionand Promotion (“NOTAP”). Fees payable for the provision of suchtechnology or services must also be approved by the NOTAP.Registration with the Department of Petroleum Resources*Companies that wish to engage in petroleum operations in Nigeria arerequired to register with the Department of Petroleum Resources (“DPR”).The DPR issues Permits, upon application, in respect of oil exploration andproduction activities, as well as oil service activities. Fees payable depend onthe category of operations for which the company applies.THE TAX SYSTEMThe Tax Structure and Taxing AuthoritiesThe federal, state, and local governments levy taxes. The Federal Board ofInland Revenue (“FBIR”) administers Federal Taxes through its operationalarm called the Federal Inland Revenue Service (“FIRS”), State taxes areadministered by the Internal Revenue Boards of respective States, while thevarious councils administer local Government taxes. Doing Business in Nigeria10Principal TaxesTaxes on income and gains• Companies Income Tax• Personal Income Tax• Capital Gains Tax• Petroleum Profits TaxTaxes on transactions• Value Added Tax• Stamp Duty• Customs and Excise DutyOther taxes• Sales Tax (Lagos State only)• Local Government taxesDouble Taxation ReliefNigeria currently has seven comprehensive double tax treaties. Treaties onincome and capital gains are currently in force with:• United Kingdom and Northern Ireland• Canada• France• Netherlands• Belgium• Romania• PakistanCHECKLIST FOR ESTABLISHING A BUSINESS IN NIGERIA9 Incorporate Local Company9 Register with Tax Authorities and Obtain First Tax ClearanceCertificate Doing Business in Nigeria119 Open Corporate Bank Account/s in the name of the Local Companyand obtain a Certificate of Capital Importation from the Bank inrespect of any imported capital sum9 Apply for Business Permit and Expatriate Quota9 Obtain Residence Permits for Expatriate Staff9 Register with Appropriate Regulatory Authorities Relevant to theCompany’s Business (such as NCC, DPR, NAFDAC, etc.)9 Secure Office Space/ residential accommodation for Expatriate StaffThese are the first steps to be taken by any person that wishes toestablish business in Nigeria. At the end of the first financial year, thecompany would be required to file Tax and Annual Returns. In addition,the Company would be required to appoint External Auditors and aCompany Secretary.For further information and help contact:[email protected] is the company secretarial arm of Abraham & Co. (Solicitors & Advocates)