The Foreign Investors’ Complete Guide To Starting A Company In Nigeria

Are you a foreign investor interested in starting a company in Nigeria? If you are, I congratulate you for encountering this article.

One thing I know that must have influenced your decision is your discovery of how lucrative it is to operate a company in Nigeria.

Also Read: Understanding The Types Of Companies In Nigeria To Make The Best Choice in Business

As a matter of fact, the secret that makes the foreign investors who own the Chinese and Italian restaurants in Nigeria stand out is because of their grasp understanding of what it requires for a foreigner to start a company in Nigeria.

In this article, I will be discussing every legal thing you need as a foreign investor to start a company in Nigeria so you don’t make mistakes or fall into the wrong hands. Specifically, we will discuss the following:

Company Formation And Registration Requirements

All companies must register their businesses. Failure to register would mean such a person is operating an unlawful business.

The organization that all companies must register with is the Corporate Affairs Commission (CAC) and it is a governmental agency saddled with the responsibility of registering business and non-governmental organizations.

A company can register either as a Limited Liability Company (LLC), Unlimited Company, or Company Limited By Guarantee (Ltd/Gte).

However, for a company interested in making profits, the LLC is the most popular choice and it will be our focus in this article. The reason is because it is the best form for a business and is profit oriented.

A company in Nigeria must first meet the following requirements to be registered as a company.

1. Shareholders

– Minimum Number: At least one shareholder is required.

– Who Can Be a Shareholder: Shareholders can be individuals or corporate entities.

Apart from Nigerian citizens and residents, foreigners can also be shareholders, but they must comply with the Nigerian Investment Promotion Commission (NIPC) regulations and might need to obtain a business and residence permit. This will be discussed more elaborately layer in this article.

Where the shareholders are individual foreigners, a minimum of two persons are required to be shareholders for the company.

2. Directors:

A minimum of two directors is required for a private limited company owned by foreigners.

– Who can be a Director: According to Companies And Allied Matters Act (CAMA) which is the law governing company operations in Nigeria, a person qualified to be a director of the company must:

– Be above 18 years but not older than 70 years.

– Be a person of sound mind (not a mentally unstable person)

– Must not be a person declared by the bank to be a debtor.

– Not be disqualified by a High Court from being a director.

– Directors should possess relevant experience and qualifications to manage the company effectively.

3. Authorized Share Capital

The minimum authorized share capital for any company owned by a foreign investor in Nigeria is N100,000,000.

This ensures the company has sufficient capital to operate within the regulatory framework.

A company with this minimum share capital does not mean the company must have this amount of shares readily available in cash or at the bank.

It only means that the company can distribute all that amount of share capital to all the shareholders and the shareholders can pay for those shares over time.

However, this share capital must be fully allocated to the shareholders at the point of registration.

4. Company Name

Search and reserve a unique company name with the Corporate Affairs Commission (CAC).

Reservation of name means that you apply to the CAC for permission to use the company name you desire.

Then, the CAC informs you on whether the name is available or not if due processes are followed.

5. Registered Office Address:

Provide a physical address for the company’s operations in Nigeria.

6. Memorandum and Articles of Association (MEMART): Drafted documents outlining the company’s objectives, regulations, and operational guidelines.

7. The particulars of the following:

The directors;

Shareholders;

Company Secretary (optional)

8. Filing Fees: Pay the required CAC filing and stamp duty fees and submit proof of payment.

9. Identification Details Needed:

For Directors and Shareholders:

   – Full name

   – Date of birth

   – Gender

   – Phone number

   – Email address

   – Residential address

   – Means of identification (International Passport, National ID, Voter’s Card, or Driver’s License)

2. Company Secretary (if applicable):

   – Name and address

   – RC number (if a corporate entity)

   – Means of identification

• What is usually given is the Certificate of Incorporation, Memorandum and Articles of Association and status report.

Registration With Immigration Agencies

a. Nigerian Ministry Of Interior Affairs Requirements (Business Permit)

As a foreigner, aside from your visa process, another requirement you must meet is the business permit.

Remember I stated earlier that any business that will operate in Nigeria must be registered with CAC.

For foreigners, this is another major requirement. The business permit allows foreigners like you to run businesses in Nigeria.

This permit helps the government keep track of the businesses, makes sure the businesses follow rules and regulations, and sometimes collect the necessary taxes.

Requirements For Registration

• Completed NIPC Form I (3 copies) submitted with the original copy of the treasury receipt (3 copies)
• Copy of the Certificate of Incorporation.
• Tax clearance certificate of the registered company
• Details of the shareholding structure of the joint venture (3 copies).
• Joint venture Agreement where applicable (3 copies).
• Certified True Copies of Memorandum and Articles of Association (3 copies).
• Certified True Copies of CAC Form 02 & 07 (i.e. Particulars of Shareholders and Directors) duly certified.

b. The Combined Expatriate Resident Permit along with Alien Card (CERPAC)

After starting the business permit Registration process, the next step to start immediately is the CERPAC.

As a foreign investor starting a company in Nigeria, you of course will be employing foreign staff to work with you in the company physically either as a director or as staff.

And because of this, you and the staff will need The Combined Expatriate Resident Permit along with Alien Card (CERPAC).

Just like the business needs permit to start operating in Nigeria, you as the individual (non citizen) also needs permit to live and work in Nigeria. That is why it is also called residence permit.

If a foreigner like yourself will be a signatory to a Nigerian bank account, the foreigner must also obtain this work/residence permit.

Requirements For Registration

• Formal letter of Application from the company accepting Immigration Responsibility (IR)
• Copy of passport Bio- Data Page of the expatriate.
• Evidence of purchase of CERPAC Form (New)
• Copy of valid Expatriate Quota Approval.
• Qualifications for the new position.

Note that you can also apply to the immigration Office for temporary work/residence permit pending the time when the permanent work/residence permit (CERPAC) will be approved.

This usually takes about 3- 4 weeks to be available.

Special Requirements For Foreign Company

a. Expatriate Quota

As a foreign investor, a special requirement you must understand is the expatriate quota.

An expatriate quota is like a limit set by the country that determines how many foreign workers a company can employ.

It’s a way for a country to control the number of foreigners working within Nigerian border.

They are usually granted to registered companies in Nigeria and as the company director or CEO, you are expected to abide by this expatriate quota for your business to operate in Nigeria.

• Expatriate quotas given is usually for the period of 3 years.

b. Certificate Of Capital Importation (CCI)

Since your company will be importing money into Nigeria, you must ensure you obtain certificate of importation from the bank in respect of any inflow.

The certificate is like a special document that shows that you are permitted to legally bring in money or materials into the country from your own country.

Requirements for the Certificate include:

• Evidence of capital importation
• Approval from the appropriate professional body the company business is into.
• A Copy of Feasibility Report and Project Implementation Programme (Business Plan)
• A copy of Deed of Sub-Lease/Agreement of the company business premises
• Profile of Foreign Investor as a testimony of international expertise and credibility of the foreign partner in the proposed line of business.

The bank issues this certificate on behalf of the Central Bank of Nigeria (CBN).

c. Nigerian Investment Promotion Commission (NIPC)

Aside from you, I know you’ll have other foreign investors interested in the business who will also be investing into the business through importations of raw materials and equipment, overseas exchange inflow for loans, investments or maybe capital.

Because of this inflow, you will need to register the company with NIPC.

• What is usually given is certificate of Registration

Requirement For Registration

A formal application addressed to the Executive Secretary of the Commission and submitted to the headquarters at Abuja along with the following documents:

• Receipt of payment of the NIPC Form
• Memorandum and Article of Association
• A copy of Certificate of Incorporation, with the minimum share capital of N100,000,000.00 (Hundred Million Naira)
• Evidence of capital importation for wholly foreign companies
• The CAC Form 1.1, which comprises the details of the company’s shareholding and particulars of the directors.
• Evidence of a Joint Venture agreement where applicable
• Feasibility report and project implementation program of the company to carry on its business operations.
• Power of Attorney or Letter of Authorization if needed
• Training programme for Nigerian Staff of the company
• Payment of registration fee to be paid by the Commission.

d. Nigerian Export Promotion Council Certificate

If the company will be exporting goods out of Nigeria, then you will need to also obtain the export certificate from the Nigerian Export Promotion Council.

Requirements include the following:

• Application fees and form
• Company Certificate of Incorporation
• Memorandum and Articles of Association of Company
• Status Report of the company

Local Regulatory Bodies

a. Federal Inland Revenue Service (FIRS) Requirements

Giving to Caesar what belongs to Caesar also applies to your company. It is crucial for your foreign company to also pay taxes to the Nigerian government.

These taxes are the Company Income Tax, Value Added Tax and any other tax that is demanded based on the type of business the company is running.

To comply with this, you must register the company with the FIRS.

• What is given after registration is Tax Identification Number (TIN) and Tax Clearance Certificate (TCC)

It is this TIN that you will use in payment of your company taxes.

b. Obtainment of the particular business license for the particular type of business from the government or agency.

Depending on the line of business you will be delving into, you will need to apply for the license to operate in that area.

For instance, if you will be starting a fin tech company, you need to obtain Central Bank of Nigeria (CBN) license. Likewise a real estate company, you will need to obtain license from Real Estate Developers Association of Nigeria(REDAN).

c. Special Control Unit Against Money Laundering (SCUML)

The EFCC is the government agency in charge of issuing the SCUML certificate.

And it states that all non-financial companies must register for the SCUML certificate.

If your company will be operating as a non designated financial company in Nigeria, then it is compulsory you register the company for SCUML certificate.

Another reason is that it is necessary for opening a corporate bank account which would usually be in the name of the company.

A very much more important reason is that it helps protect your business account from being targeted for money laundering.

The requirements for SCUML registration include:

• Certificate of Incorporation
• Memorandum and Articles of AssociationForm CAC 1.1 (or CAC 2 and CAC 7 for older registrations
• Tax Identification Number (TIN)
• BVN, bank name, and account number

What is usually given is a SCUML certificate.

Intellectual Property Protection

Something good usually attracts others. Unfortunately, many would like to also take advantage of such good things.

One of it is your company’s reputation that would have been built over many years.

A proven way to prevent this is by conducting intellectual property protection.

Intellectual property is the protection given by law to unique creations of the mind, such as inventions, literature and art to prevent others from using them without your permission.

In Nigeria, the key intellectual property protections are patents, copyrights with trademarks being the most applicable to your business.

A trademark is a unique sign that shows your company’s products or services are different from others. It could be a name, logo, or symbol.

For instance, you will be conversant with names like Coca-Cola or Apple or Mercedes or Toyota. Those are the Company’s trademarks.

Since your company is an international company, many local companies will want to act or deceive prospective customers into thinking that they are affiliated with your company by using your trademarks or something similar so people can buy from them.

Registering your foreign company trademark in is the only way to protect your unique brand in the marketplace.

A Certificate of Registration is what is usually given after successful registration to prove that the trademark belongs to you.

Requirements for Trademark Registration

• Any of the marks which you intend to register (name, logo, image, or symbol) or a combination of these.
• A description of the services of the company covered by the trademark Name of the owner of the company Contact details of the owner of the company.
• Power of Attorney appointing an agent to do the registration (an accredited agent/lawyer may help to prepare the power of attorney)

Also Read: What Every Business Owner in Nigeria Should Know About Intellectual Property Rights

• Certificate of Registration is what is usually given after registration.

Contracts For Your Company

Your company will definitely be involved in numerous contracts. It is therefore important for your company to have contract documents readily available for its operations.

An important key note regarding contracts is that it must be legally valid.

For a contract to be valid, it must include certain necessary details.

These details are what your lawyer will ensure are included to protect your business and prevent losses.

Some of the documents include the following:

1. Terms and Conditions:

Since your company will be involved in commercial transactions, an important document required of you is the terms and conditions.

This document outlines customer relationships, purchase processes, cancellations, liabilities, refunds, insurance and marketing.

The contract should detail whatever process of service the company will offer.

2. Employee Contract:

You will definitely employ workers and because of this, you’ll need an employee contract.

This contract defines the job descriptions, salaries, rules and resignation procedures of your staffs.

It also helps to establish clear relationships with your employees and third-parties.

3. Company Policies/Employee Handbook:  

Your company will also require guidelines with which every worker and staff will abide with.

This handbook helps establish work environment, conduct, safety and conflict resolution guidelines for your company which every employee, director must work with.

4. Website Terms of Use:

Where you have a website running, you will need this document to regulate how the customers will use the website. They cover things like their rights, the website’s rights, and how disputes can be resolved.

5. Privacy Policy:

Now this explains how your company handles your customer’s data when they visit your website.

It also explains the extent to which their data are protected including the procedures for getting access to the information or deleting the information.

 6. Refund Policy:

During some of your transactions with your customers, it is expected that there will be situations where a customer will demand for a refund.

In such situations, you will need a well drafted refund policy that will outline the refund procedures such as the time, the conditions and qualification for a refund.

7. Independent Contractor Agreement:

Similarly to the employee contract, this defines the job description of temporary staffs or freelancer, their payment and deadlines to complete their job in the company.

8. Service Level Agreement (SLA):

As your company is providing goods and services to your customers, you will need this document to keep your customer rest assured that you are providing quality service.

9. Lease/Tenancy Agreement:

Your business transactions will take place in a developed building.

You will either buy a developed property, buy land and develop it into an office space or rent out an office space.

Either ways, a good lease/tenancy agreement is necessary to clarify the property rental/lease terms and responsibilities.

All these documents help to protect your business interests, ensure compliance with regulations, prevent future disputes, clarify expectations and regulate financial transactions.

Note that you will need to discuss with your lawyer to tailor these documents to your business services and needs.

Professional Guidance

With all the requirements highlighted in this article, you will agree with me that as a non-Nigerian citizen, you need the best professional guidance available and the best Professional Guidance you can get is from a business lawyer accredited with the Corporate Affairs Commission.

Why is this?

1. Compliance: Lawyers will in addition to many Nigerian corporate regulations, ensure you adhere to the Nigerian Company and Allied Matters Act (CAMA) which is the law that regulates company operations in Nigeria.

2. Risk Management: They will also help identify potential liabilities and protect your business interests.

3. Contract Review: Draft and review the necessary contracts, memorandum, and articles of association, letters and other documents required for effective registration and operation of your business.

Conclusion

This is why at Charis Legal Practice, we offer the full package registration as listed out in this article for a foreigner starting a company in Nigeria. Just click the link below and you can get started.

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