The procedure for how to register a company in Nigeria commences with the reservation of company name and uploading the relevant documents through the online portal of the Corporate Affairs Commission (CAC). The principal law governing the registration of a company in Nigeria is the Companies and Allied Matters Act 2020. It is a simple process that can be initiated by the applicant himself but mostly recommended to be done through the CAC's accredited agents.
A company intended for a business in Nigeria may be incorporated as a private company limited by shares or a public company limited by shares. This article will mainly focus on the requirements for the incorporation of a private company limited by shares in Nigeria either through Nigerian citizens or foreigners who have the intention of engaging in any business in Nigeria.
The first step towards setting up a company in Nigeria is to check for the availability of the proposed name of the new company for registration with the Corporate Affairs Commission and reserve it. Upon approval of the proposed name, the memorandum and articles of association, as well as other incorporation documents, will be prepared, stamped, and submitted at the CAC for registration, after which CAC will issue a Certificate of Incorporation. As earlier mentioned, although individuals may attempt to register its own company directly from CAC, it is always recommended to engage a CAC accredited agent for such a process.
Meanwhile, the following are the requirements for the incorporation of a company in Nigeria:
- Signed and Stamped Copies of the Memorandum and Articles of Association
- Two (2) Originals of an application for registration of a company (Form CAC 1.1) which contains the following information:
- Address of registered office of the company
- Authorized Share Capital of the company
- Particulars of First Directors and their Consent to Act
- Photocopy of the information page of the international passport or the national identity card of each director and shareholder.
- Original resolutions of the Board of Directors of the companies incorporating the company (where a company subscribes to the Memorandum and Articles of Association). Such Resolution shall include clauses expressly authorizing the company to subscribe to shares in the new company; and appointing a newly named person to execute all documents relating to the incorporation of the company. The contents of the Resolution shall include an appointment of a named person to execute all documents relating to the incorporation of the Company.
Furthermore, before a registered company can fully set up a business in Nigeria, there are other important legal requirements to be followed, especially where the company is having any foreign shareholders or intend to participate in a specially regulated industry. These requirements will be briefly discussed below.
- Business License
Registration of a company in Nigeria does not automatically qualify such a company to engage in any business stated in the company's object clause. Some businesses are specially regulated in Nigeria, and as such, special business licenses or permits are required for such business. For instance, every company that intends to manufacture or import foods and drugs must seek a license from NAFDAC. Furthermore, every company planning to engage in money lending must obtain a money lending license from a state government in Nigeria. It is a criminal offense for any person to engage in the mining sector or oil and gas sector without the requisite licenses from the Ministry of Mine and Steed Development and the Department of Petroleum Resources respectively. It is often advised that a company seeking to engage in any business in Nigeria should consult with a business lawyer to find out whether the proposed business to carry out requires a special business license or permit.
- Nigerian Investment Promotion Commission (NIPC) Business Registration
Registration with NIPC is vital where the newly registered company intends to engage in pioneer sectors that will involve investing in infrastructure within Nigeria. Such a company shall be eligible for tax exemption for a period between three to five years. The NIPC has to designate companies that are qualified for pioneer status and thereby eligible for tax exemptions.
- Obtaining Business Permit
Business Permit is issued by the Ministry of Interiors, to enable wholly-owned foreign companies to conduct business within Nigeria. Business Permit must not be confused with the NIPC business registration, as the two of them are entirely different. The Business Permit is mostly relevant where a foreign-owned company intends to apply for expatriate quotas, which will enable its staff or director to migrate to Nigeria to work, as both Business Permit and expatriate quotas are usually processed together.
- Expatriate Quota:
This is consent in writing issued by the Minister of Interior on behalf of the Federal Government of Nigeria to a foreign-owned company duly registered with the Corporate Affairs Commission to employ or bring into Nigeria expatriates. The expatriate quotas are issued to the company and not to the individual expatriates.
- National Office of Technology Acquisition and Promotion (NOTAP) Registration:
Where the business of the company would require the company to enter into an agreement(s) with any person outside Nigeria which is wholly or partially connected with the use or supply or trademarks and patents, technical/management expertise or assistance, basic or detailed engineering, machinery or plant, such agreements are required to be registered with the NOTAP.
- Application for Tax Registration: VAT and Corporate Tax:
Every company is expected to register with the Federal Inland Revenue Services (FIRS) for Income Tax and Value Added Tax (VAT) purposes within 6 months of incorporation. Upon registration, a tax file shall be opened for such a company in the nearest FIRS office to the company's address. The current Companies Income Tax rate is 30% of profits assessed on a preceding year basis for a company having a turnover of more than 100 Million Naira. The tax rate for a company with less than 100 Million Naira turnover but above Twenty-Five Million Naira is 20% of the profit. A company with less than 25 Million Naira is not liable to pay taxes, but it must also file an annual return with the FIRS.
In Conclusion, it is noteworthy to state that every company with a foreign shareholding must have a minimum of N10,000,000 authorized share capital to be eligible to process the business permit and expatriate with the Federal Ministry of Interiors.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.