In Nigeria today foreigners are
allow to incorporate a company, but there are outlined procedure necessary for
that. In this article i outlined those procedures and steps to follow.
METHODS OF
CONDUCTING BUSINESS
All business enterprises
must be registered with the Corporate Affairs Commission. Business activities
may be undertaken in Nigeria as a:
(i)
Private Limited Liability Company;
(ii)
Public Limited Liability Company (Plc);
(ii) Unlimited Liability Company;
(iii) Company Limited by Guarantee;
(iv) Foreign Company (branch or subsidiary
of foreign company);
(v) Partnership/Firm;
(vi) Sole Proprietorship;
(vii) Incorporated trustees (religious, charitable, philanthropic or cultural);
(viii) Representative office in special cases.
THE COMPANIES AND ALLIED MATTERS ACT AND INCORPORATION PROCEDURES
The Companies and Allied
Matters Act, 1990 (the Companies Act) is the principal law regulating the
incorporation of businesses. The administration of the Companies Act is
undertaken by the CORPORATE AFFAIRS COMMISSION (CAC), which undertakes the
administration of the Companies Act.
Minimum Share Capital
The minimum authorized share capital is
N10, 000 (Ten Thousand Naira) in the case of private companies or N500,000
(Five Hundred Thousand Naira) in the case of public companies with a minimum
subscription of 25% of the authorized share capital respectively.
OPERATIONS OF
FOREIGN COMPANIES IN NIGERIA
A non-Nigerian may invest
and participate in the operation of any enterprise in Nigeria. However, a
foreign company wishing to set up business operations in Nigeria should take
all steps necessary to obtain local incorporation of the Nigerian branch or
subsidiary as a separate entity in Nigeria for that purpose. Until so
incorporated, the foreign company may not carry on business in Nigeria or
exercise any of the powers of a registered company.
The foreign investor may
incorporate a Nigerian branch or subsidiary by giving a power of attorney to a
qualified solicitor in Nigeria for this purpose. The incorporation documents in
this instance would disclose that the solicitor is merely acting as an “agent”
of a “principal” whose name(s) should also appear in the document. The power of
attorney should be designed to lapse and the appointed solicitor ceases to
function upon the conclusion of all registration formalities.
The locally incorporated
branch or subsidiary company must then register with the Nigerian Investment
Promotion Commission (NIPC) before commencing formal operations. The new
company may also apply to NIPC for other investment approvals (e.g. expatriate
quota) and other incentives.
Exemption to
the General Rule
Where exemption from local
incorporation is desired, a foreign company may apply in accordance with
Section 56 of the Companies Act, to the National Council of Ministers for
exemption from incorporating a local subsidiary if such foreign company belongs
to one of the following categories:
(a) “foreign companies invited to Nigeria by or
with the approval of the Federal Government of Nigeria to execute any specified
individual project;
(b) foreign companies which are in Nigeria for the
execution of a specific individual loan project on behalf of a donor country or
international organization;
(c) foreign government-owned companies engaged
solely in export promotion activities; and
(d) engineering consultants and technical experts
engaged on any individual specialist project under contract with any of the
governments in the Federation or any of their agencies or with any other body
or person, where such contract has been approved by the Federal Government.”
The application for
exemption from disclosing certain details about the applicant is to be made to
the Secretary to the Government of the Federation (SGF). If successful, the request
of the applicant is granted upon such terms and conditions, as the National
Council of Ministers may think fit.
Representative
Offices
Foreign
companies may set up representative offices in Nigeria. A representative office
however, cannot engage in business or conclude contracts or open or negotiate
any letters of credit. It can only serve as a promotional and liaison office
and its local operational expenses have to be floated by the foreign company. A
representative office has to be registered with the CAC.
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