Nigeria is the most populated African country in the world with over 200 million population. Regarded as the giant of Africa, the country boasts of the largest economy in the continent with human and natural resources in abundance.
Starting a business in Nigeria can be a successful venture since Nigeria has a growing economy with many entrepreneurs. Your target market, including the economic power and demographics of the market, the market needs your product or services aims to solve, and your capability to project revenue and place your company for growth determines the success of your business.
As an entrepreneur who wants to start a business in Nigeria, you need to have the ability to find opportunities where others are not looking, and make good use of it. However, before you can start a business in Nigeria, the first step is to register the business/company with the Nigerian Corporate Affairs Commission.
Can A Foreign Company Do Business In Nigeria?
Investing in a foreign country is fast becoming a global trend as a result of the many positive impacts it brings. This has remained a top reason why many foreigners invest in a developing country.
Yes, a foreign company can do business in Nigeria. The foreign company can be established as a secondary establishment, either as a branch, office, agency, or subsidiary. However, the company must fulfil the legal requirements involved to acquire local incorporation of the Nigerian subsidiary as a stand-alone legal entity. Registering the foreign company in Nigeria is the only way the foreign entity can legally do business in the country.
The Companies and Allied Matters Act (CAMA) governs the procedure for the incorporation of a foreign company in Nigeria, while the Corporate Affairs Commission (CAC) is the government agency responsible for administering CAMA and incorporation.
These are the steps required for a foreign-owned company that wants to start business operations in Nigeria:
- Registration of the company with CAC in accordance with the CAMA
- Acquiring the Nigerian Expatriate quotas
- Acquiring residency and immigration requirement permit
- Obtaining requisite license (usually where the company wants to do business in particular areas that requires government agency’s approval or permit.
- Obtaining the certificate of capital importation ( usually for equity or loans)
Can A Foreigner Be A Director In A Nigerian Company?
Many investors who seek to do business in Nigeria usually contemplate and wish to know if they can hold the position of a director in a Nigerian company. The answer is yes! There is no ban on foreigners being a in a Nigerian company. However, the foreigner cannot hold the position of a managing director in a Nigerian company, or be a signatory to a bank account without obtaining a work permit, in particular, the Combined Expatriate Residence Permit and Aliens Card (CERPAC) first.
The Companies and Allied Matters Act (CAMA) LFN 2004 is the Nigerian governing law for company registration. It allows a foreigner to own or establish a company in Nigeria and does not in any way preclude foreigners from being a director in a Nigerian company.
Can A Foreign Company Open A Bank Account In Nigeria?
We all understand the importance of opening a bank account as a business owner. For foreigners who wants to register a new company or who wishes to set up subsidiary companies, it’s essential to know if they can open a bank account in Nigeria.
Yes, a foreigner can open a bank account in Nigeria when the conditions to operate a bank account in Nigeria have been met. Opening a bank account in Nigeria usually require meeting two requirements which are, the individual must be a Nigerian-resident, and the individual must have a Bank Verification Number (BVN).
Nigerian nationals living abroad are not classified as foreigners as they have exclusive right to open any bank account in Nigeria if they have their BVN.
What is the cost of registering a company in Nigeria?
Companies in Nigeria are all managed by the Corporate Affairs Commission (CAC). The commission is also in charge of regulating the formation of companies, which means all companies in Nigeria, whether public or private, must be duly registered with the CAC before operations.
The cost of registering a company in Nigeria is dependent on the type of company you wish to register. The cost between a public company, private company, and company with share capital all differs. Below is all you need to know about the cost involved:
|Description of Service||Amount in Naira|
|Reservation of business name||500|
|Search on business name file||1000|
|Search on incorporated trustees file||2000|
|Registration of a private company with share capital of less than or equal to 1 million Naira||10,000|
|Registration of a private company with share capital of more than 1 million Naira and up to 500 million||5,000 Naira for every 1 million Naira share capital or part of it|
|Registration of a private company with share capital over 500 million||7,500 Naira for every 1 million Naira share capital or part of a million|
|Registration of a public company with a share capital of 1 Million Naira or less||20,000|
|Registration of a public company with a share capital of over 1 million Naira and up to 500 million Naira||10,000 Naira for every 1 million Naira share capital or part of a million|
|Registration of a Public Company with share capital of over 500 million Naira||15,000 Naira for every 1 million Naira share capital or part of a million|
|Registration of a company without a share capital||20,000|
|Filing of a notice of exemption of a foreign company from registration||30,000|
|Relisting or reinstatement of a company’s name||25,000|
|Registering charges for a private company||10,000 Naira for every 1 million Naira or part of a million|
|Registering charges for a public company||20,000 Naira for every 1 Million Naira or part of 1 million|
How Long Does It Take To Incorporate A Company In Nigeria?
A company is statutorily incorporated and regulated for the purpose of making profits. It is mandatory for all types of company to be registered in accordance with the Companies and Allied Matters Act (CAMA). In Nigeria, the requirements for incorporating a company are usually straightforward and have no intricacies, especially when handled by experts.
As for the duration, it depends on the professional handling your company’s incorporation. The registration can commence online by either the business owner or the professional hired to take care of the process. Thereafter, the services of a legal practitioner will still be required for attestation.
The requirements needed to incorporate a company are:
- Choose a name for the company and reserve it
- Choose the type of company (private unlimited company, private limited company or company limited by guarantee)
- Provide the objectives of the company
- Provide the company’s registered principal address
- Provide the share capital and formula for shareholding among shareholders
- Particulars of at least, 2 directors (means of identification).
- Particulars of the secretary of the company (one of the directors can act as the secretary).
- Details of the shareholders should be provided (name, residential address, occupation, email address, phone numbers, and means of identification (The directors can also be shareholders).
- A professionally drafted memorandum and articles of association of the company (The CAC provided a MEMART which can be followed.
Can One Person Own A Company In Nigeria?
The new company legislation signed into law on the 7th of August 2020, declared that an individual is permitted to promote, register, start, and own a company in Nigeria by either being a sole shareholder or a director of a company. Prior to this, the Companies and Allied Matters Act 1990 allows at least two individuals as shareholders or directors of a company.
In compliance with the company law of Nigeria, all business owners are required to first register their business with the Corporate Affairs Commission (CAC) before starting business operations.
What Are The Types Of Companies In Nigeria?
Despite having different types of companies in Nigeria, there are only 4 types recognized by the Nigerian Corporate Affairs Commission (CAC). The types of companies vary in numbers of partners involved. Typically, for some company types, the minimum number of partner(s) required is 1, while the maximum number for others is 50.
The main types of companies in Nigeria are:
The Private Limited Company (Ltd): This is privately owned as the name suggests. Here, the owner’s liability to their shares, the number of shareholders, and public trading of shares are all limited.
Public Limited Company (PLC): This is a limited liability company with shares that can be freely traded or sold to the public with 500,000 as the minimum share capital. In some cases, a PLC can be privately owned by another PLC.
Companies Limited by Guarantee. This type of company isn’t established with the intent of maximizing profit, but usually for charity purpose. There are no share capital since the owners doesn’t really own the company.
Unlimited Companies. This type of company is also called a private unlimited company. It is a hybrid company that is incorporated with or without a share capital, and the legal liability of the shareholders isn’t limited.
What Is The Procedure For Formation Of A Company in Nigeria?
Setting up or establishing a company in Nigeria can be less expensive when compared with the formation of a company in many countries. Also, the legal requirements for establishing a business in Nigeria are usually not complicated, and if it is for you, there are professionals who can help with that.
Any entrepreneur who wishes to set up and run a successful company in Nigeria must follow the requirements of a company formation in Nigeria.
Requirements for company setup in Nigeria:
- Register the company with CAC
- Register the company with Nigeria Investment Promotion Commission (NIPC):
- Obtainment of Value Added Tax (VAT) registrations, Tax Clearance Certificate (TCC), and Tax Identification Number (TIN)
- Obtainment of business permits with the Ministry of Interiors
- Obtainment of Expatriate Quota
- Obtainment of CERPAC
- Opening of bank account and capital importation
- Obtainment of import permit, expert permit, or the business license
- Securing a business office
- Appointment of the company secretary and auditor
What Are The Various Taxes Levied On Nigerian Companies?
There are some taxes levied on both individuals and companies operating in Nigeria by the Federal Inland Revenue Service (FIRS). These taxes are collected on behalf of the federal government and are made mandatory to be payable by companies doing business in Nigeria.
The taxes include:
Value-added tax: This tax is imposed on the supply of goods and services, and its payable by the consumer at 7.5%.
Company’s Income Tax: This tax is chargeable on all companies registered in Nigeria, excluding the ones engaged in petroleum operations. It is annual tax of registered companies which profit must have grown in, gotten in, received in, and brought into Nigeria. The company’s income tax varies between 20% and 30% of taxable income depending on the company’s annual turnover.
Education Tax: Registered companies in Nigeria are to pay a percentage of their assessable profit into an Education Tax Fund which is usually charged at 2% of the assessable income. It is a mandatory tax and not a voluntary contribution.
Capital Gains Tax: This is a 10% tax imposed on Capital Gains (Profit) arising from a sale, exchange or other disposition of properties known as chargeable assets.
Personal Income Tax: This tax is payable by all individuals, registered businesses, and partnerships excluding the incorporated companies registered under Part A of Companies and Allied Matters Act 1990.
Hotel Occupancy and Restaurants Consumption Tax: Business owners who own restaurants, hotels, fast food joints, nightclubs, event centers, and bars should take note of this tax. The business owners are expected to pay 5% tax on goods and services consumed by customers and a 10% penalty charge for defaulting.
Stamp Duty Tax: This tax is chargeable based on the scale set by the Joint Tax Board. Business owners are to pay to the federal or state government with documents such as promissory notes, conveyance of sale, bill of exchange, contracts, and agreements, among others.
How Do You Secure A Residence Permit In Nigeria?
A Nigerian resident permit is a card or document issued to a foreigner to allow him or her reside in Nigeria in a fixed or indefinite period. The Comptroller General of the Nigerian Immigration has the power to issue a Nigerian residence permit under the supervision of the Federal Ministry of Interior.
To get the residence permit, the foreigner need to submit an application to the CERPAC with the following documents:
- A fully completed CERPAC statutory form
- International passport ( there should be STR visa endorsement)
- Proof of payment of the fees for a residence permit.
- Application letter from the employer asking for stay regularization
- An STR package received from the Nigerian embassy (STR documentation)
- The resolution of the individual’s company board of directors confirming appointment
Foreigners who are eligible for the Nigerian residence permit are research fellows, foreign student, missionaries (clerics and dependent), government officials (with their dependent), foreigners employed by Nigerian companies (with their dependent), and foreign national staff of Non-Governmental Organizations (their dependents).
Section 18(2) of the Immigration Act 2015 states that a foreigner granted a residence permit do not need an entry visa.
For more information on setting up a Nigerian company, send an email to firstname.lastname@example.org or call +234 805 598 1421