Investing in Nigeria
THE INVESTOR GUIDE
Thank you for your interest in Nigeria as a business location.
In this guide, we give you an overview of how to invest in Nigeria based on the questions most frequently asked by foreign investors. Of course, you can contact us if you have any other questions about investing in Nigeria. Industrial Renaissance provides a confidential one-stop-shop service to foreign companies looking to set up or expand in Nigeria.
This guide is designed to help investors and foreign companies navigate investing and operating in Nigeria. It is an online guide to the regulations, considerations and assistance relevant to investing in, establishing and running a business in Nigeria
To get started, select a topic below.
PLEASE NOTE: This guide is intended to assist you in finding the relevant information and to give you a starting point for discussion with advisers. This guide does not eliminate the need for professional advice. It is strongly recommended that you use professional advisers to advise you on legal, compliance and tax matters.
INVESTING IN NIGERIA
The Nigeria government welcomes productive foreign direct investment and foreign portfolio investment. It has brought shared prosperity to investors and to the country. It helped build Nigeria’s economy and contributes to economic growth and to innovation. Foreign investors are treated the same as domestic investors under Nigeria’s laws.
HOW TO START A COMPANY
This section details how to register a company and the things you need to keep in mind. A company is its own legal entity and lets you conduct business throughout Nigeria. You can take advantage of investment incentives or limited liability.
DECIDING ON A BUSINESS STRUCTURE
There are a number of important considerations for investors when deciding on how to enter the Nigerian market or when establishing a business in Nigeria. Investors will generally need to choose between establishing a new company or acquiring an existing company. If establishing a new business, a variety of business structures are available, each with their own regulatory and tax considerations. Your situation may require specific advice, so we recommend seeing advisors.
Nigeria has a set of common structures that investors can use when establishing a business. The four main types are: sole proprietorship; partnerships; trusts; and companies. Investors need to consider carefully which structure best suits their business needs. The business structure will determine the tax and legal implications.
You need to decide on the company structure that will suit your needs. Your situation may require specific advice from legal advisors.
TYPES OF REGISTRABLE BUSINESS ORGANIZATIONS
Registrable business organizations in Nigeria include:
- A company limited by shares (Ltd or Plc)
- A company limited by guarantee (Ltd/Gte)
- An unlimited liability company (Ultd)
Any of the above companies may be a Private Company or a Public Company.
- Business Name (registered as Sole Proprietorship or Partnership)
- Incorporated Trustees (usually formed for not-for-profit or charitable purposes)
COMPANY SHARE STRUCTURE
In line with the Companies and Allied Matters Act, all categories of company shares (i.e. whether ordinary or preferential) issued by a company must carry one vote in respect of each share. Shares with weighted voting right are prohibited. A company must have at least 2 non-employee shareholders. However, private companies must not have more than 50 non-employee shareholders.
RESERVING A COMPANY NAME
You can only use a name that is not identical to an existing company or business name. A name availability search must be conducted at the Corporate Affairs Commission registry to see if the name is available for use.
ESTABLISHING A NIGERIA COMPANY
International investors interested in entering the Nigerian market may wish to establish a new Nigerian company or establish a new Nigerian subsidiary which also operates as a Nigerian company. Nigerian companies are incorporated businesses that are also distinct legal entities. Companies in Nigeria must be registered with the Corporate Affairs Commission (CAC).
OPERATIONS OF FOREIGN COMPANIES IN NIGERIA
Foreign investors or offshore companies can hold 100% equity stake in a Nigerian company. However, a foreign company wishing to set up business operations in Nigeria should take all steps necessary to obtain incorporation of the Nigerian 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.
Through a power of attorney, we can assist a foreign company in the formation and incorporation of a Nigerian affiliate or subsidiary.
ACQUIRING A NIGERIAN COMPANY
An alternative to establishing a new or subsidiary company may be to acquire an existing Nigerian company. Merger and Acquisition processes in Nigeria are regulated by the Securities and Exchange Commission (SEC). Investors interested in acquiring a Nigerian company may have to make a formal proposal. A proposal to acquire a Nigerian Company is subject to approval by SEC and sanctioning by the Federal High Court. Our affiliate can assist you here.
APPOINTMENT OF FOREIGN DIRECTORS
The promoters of business ventures in Nigeria are free to appoint Directors of their choice, either foreign or Nigerian, and the Directors may be resident or non-resident.
PREPARATION AND FILING OF INCORPORATION DEEDS
Companies must have a Memorandum and Articles of Association, file a copy of same at the Corporate Affairs Commission registry, effect payment of stamp duties and conclude registration of the company as a legal entity. A foreign investor or offshore company can grant a power of attorney to us, enabling us to act as its Agents in executing incorporation and other statutory documents pending the commencement of business.
FINDING AN OFFICE LOCATION
If you are looking to acquire or lease a location, our affiliate can provide you with a list of options that help meet your criteria. In the interim, you may with our agreement use our address as your Nigerian address. The acquisition, lease and development of land in Nigeria are facilitated at the state or local government office of which the land is situated. Approvals, assessments (including environmental assessment) and regulatory requirements will differ between state jurisdictions.
LISTING ON THE NIGERIAN STOCK EXCHANGE (NSE)
Nigeria has a modern and active stock market, allowing access to long-term capital. To obtain and maintain an NSE listing, companies need to meet the prescribed requirements set out in the stock exchange listing rules. This includes company disclosure and reporting requirements.
REGISTERING A TRADE MARK
Companies entering Nigeria will want to protect their rights and prevent others from using their name by registering a trade mark.
REGISTER WITH THE TAX AUTHORITIES
The Federal Inland Revenue Service (FIRS) and State Board Internal Revenue are responsible for the collection of corporate and personnel taxes, respectively. Our affiliate provides advice to companies on taxation. Every company, business name or incorporated trustee must be registered with the FIRS, and make and deliver to CAC and the Annual Return in prescribed Forms within stipulated time. Filling of financial returns must be done within 18 months of incorporation/registration and must be completed and filed within 42 days after the organization’s Annual General Meeting. A financial year can in principle start on any given date. More information on taxation is available here
OBTAINING BUSINESS PERMIT AND EXPATRIATE QUOTA
We can assist investors and foreign companies to obtain Business Permit and Expatriate Quota from the Nigerian Investment Promotion Commission (NIPC) and the Nigerian Immigration Service, respectively. Expatriate personnel do not require work permits, but they remain subject to needs quota of their employer company requiring them to obtain residence permits that allow salary remittances abroad.
Business permit is the authorization for the operation of a business with foreign capital either as a parent company or a subsidiary of a foreign company. Expatriate quota is the authorization to a company to employ individual expatriates to specifically approved job designations, and also specifying the permissible duration of such employment. The expatriate quota forms the basis of work permits for expatriate individuals (those qualifications must fulfill the criteria established for the particular quota position).
ISSUE EMPLOYMENT CONTRACTS
Our affiliate can assist you in preparing employment contracts or addendums to the existing contracts for employees who will transfer within the company to work in Nigeria.
Please note that this guide is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. Omission of any matter on this guide will not relieve a company from any penalty incurred by failing to comply with the statutory obligations of relevant laws.
ESTABLISHING YOUR REGIONAL HEADQUARTERS IN NIGERIA?
Whether you are just starting up, expanding your activities, or looking to establish your Africa regional headquarters in Nigeria, Industrial Renaissance can put you in fast-track contact with the main national and sub-national stakeholders with a view to speeding up your business launch or expansion project in Nigeria. As an integrated economic development corporation, Industrial Renaissance does much more than promoting and attracting investment. In fulﬁlling its task of fostering company growth, it offers overseas investors and foreign companies through its affiliate service providers a full and varied slate of expertise and professional support. All of Industrial Renaissance’s services are conﬁdential.