How can a foreigner open a company in Nigeria

Nigeria is one of the most powerful economies in Africa with a huge population and great economic potential. The country is a member of the Economic Community of West African States (ECOWAS) and enjoys exemption from customs duties. In addition, Nigerian firms can benefit from the free trade agreement of the 15 ECOWAS member countries.

Nigeria attracts a lot of international investment every year. As the market grows, the government continues to implement legislation to create a favorable business climate for domestic and foreign investors.

Under Nigerian law, a foreign person or entity may establish a wholly owned company in Nigeria and carry on business, employ foreigners and repatriate profits. However, before any foreigner can do business in Nigeria, it is a mandatory requirement that the company be duly registered in the country.

The Companies and Allied Matters Act 2020 (CAMA) is the primary law governing the incorporation of companies in Nigeria and the Corporate Affairs Commission (CAC) is the regulatory body. Apart from company registration, there are other regulatory requirements that must be met before any company can legally start operating in Nigeria.

Types of companies recognized for conducting foreign business in Nigeria:

Private limited liability company (LLC)

This is the most common form of business created by investors and requires a minimum share capital of NGN 10,000,000. However, new regulations now require a minimum share capital of NGN100,000,000, especially if the business will involve foreigners living and working in Nigeria.

A private limited liability company is a separate legal entity, separate from its owners. A company requires a minimum of one (1) and a maximum of fifty (50) shareholders and directors. Some regulated industries require a minimum of two (2) directors.

Companies of this type are restricted from freely transferring their shares and are prohibited from inviting the public to subscribe for their shares, debentures and/or deposit money for fixed periods or payable on demand, whether they bear interest or not.

Public Limited Company (PLC)

Public company — there are no restrictions on the maximum number of shareholders or their right to freely transfer their shares. The public may be invited to subscribe for its capital, and shares may be traded on any securities exchange.

Limited company (GTE)

Usually organized as a not-for-profit company, this type of company limits the liability of its members to the amount of their respective warranties.

Unlimited liability company

This type of company has no restrictions on the liability of its members.

Requirements for starting a business in Nigeria

To start a new business in Nigeria, you need to go through a step-by-step application and documentation process. General requirements for starting a business in Nigeria:

Company registration

Foreigners wishing to start a business in Nigeria must form a corporation with a minimum authorized capital. A company name or sole proprietor registration is exempt from this share capital requirement.

Registration with the Nigerian Investment and Promotion Commission (NIPC)

Foreigners investing or participating in any investment in Nigeria must first register with the NIPC. NIPC Mission — encourage and organize investments in Nigeria.

Tax exemption certificate and tax registration

When starting a business in Nigeria, you must register for a Tax Registration Certificate, Taxpayer Identification Number and Value Added Tax Number with the Federal Tax Service. You can file taxes on your business using your Taxpayer Identification Number.

Business permit

A business permit is required for foreigners starting a business in Nigeria. Every foreign company must apply for a business permit to the Ministry of Internal Affairs.

Expat quota

An expatriate quota will be required for foreigners planning to work for companies that hire expats. Only corporations with a capital limit can apply quotas for foreign employees.

Opening a bank account

To start a business in Nigeria, you must first create a business bank account. The bank will need the company's incorporation documents, a resolution of the board of directors authorizing the opening of the account, and identification documents of the directors. To open a bank account in Nigeria, some banks require foreigners to also have a permit to work in Nigeria (Combined Expatriate Residence Permit and Alien Card (CERPAC)). It is important for any person wishing to become a signatory to a bank account in Nigeria to have a Nigerian Bank Verification Number (BVN), which can be obtained in Nigeria or abroad.

Resident Directors

For a private company there must be at least two directors, and for a public company — at least three directors. A director can also be a shareholder. Although foreigners are allowed to be the sole directors of a Nigerian company, this is not the case in all sectors. Some business sectors, such as oil and gas, mining, gaming, financial technology, banking and investment, require the foreign company to appoint a local director to conduct the business.

Appointment of auditors

You must meet the criteria for appointment of auditors for your company in Nigeria. Limited liability corporations must hire an auditor to prepare and audit the company's accounts.

Company Secretary

To comply with CAMA (Companies and Allied Matters Act) rules, limited liability corporations must appoint a company secretary. The company secretary has statutory and administrative responsibilities, including maintaining the statutory books and preparing annual reports.

Purchase of real estate for commercial activities

Business owners planning to start a business in Nigeria must purchase a business location or property. To register a foreign business in Nigeria, a starting address is required. Any legal documents of the company will be presented here. A foreign address cannot be used as a company address during registration. This condition applies to all types of companies in Nigeria.