WHAT IS A FOREIGN COMPANY?
A foreign company is any company which before or after the commencement of this Companies and Allied matters Act 2020 was incorporated outside Nigeria (section 78).
The Corporate Affairs Commission is the regulatory body responsible for overseeing all matters related to companies, operating under the jurisdiction of the Companies and Allied Matters Act of 2020.
Foreign companies intending to operate in Nigeria are required to take certain steps to obtain incorporation as a separate entity in Nigeria for their business activities. Until the foreign company is incorporated in Nigeria, it is not allowed to carry on business in the country or exercise any powers of a registered company. The company is also not permitted to have a place of business or an address for service of documents or processes in Nigeria, except for receiving notices and other documents related to matters preliminary to incorporation.
If any foreign company fails to comply with the requirements of section 80 of this Act, insofar as they may apply to the company, it is considered an offense.
However, foreign companies falling under certain categories may apply for an exemption from the provisions mentioned in section 78 of the Act. These categories include:
- Foreign companies other than those specified in paragraph (d) that are invited to Nigeria by or with the approval of the Federal Government to execute any specified individual project.
- Foreign companies that are in Nigeria for the execution of specific individual loan projects on behalf of a donor country or international organization.
- Engineering consultants and technical experts engaged in any individual specialist project under contract with any of the governments in the Federation or any of their agencies, or with any other body or person, where such a contract has been approved by the Federal Government.
- Foreign government-owned companies engaged solely in export promotion activities.
How to Register Your Company in Nigeria
Registering a foreign company in Nigeria involves taking important steps and obtaining specific permits and documents. As a foreigner looking to start a business in Nigeria, you need to follow certain procedures to ensure that your company operates legally and complies with local regulations. Let’s explore the necessary permits and documents in more detail:
- Registration: Registration is with the Corporate Affairs Commission (CAC) under the provisions of the Companie and Allied Matterss Act (CAMA) 2020. In Nigeria, foreign individuals or companies looking to engage in business must begin by registering a company with a minimum authorized share capital of N10,000,000 (Ten Million Naira). This translates to the company having at least 10,000,000 shares, each valued at 1 Naira per share.
- Appointment of a Local Representative: Nigerian law requires foreign companies to have a local representative or agent who is resident in Nigeria. This representative will be responsible for accepting legal documents and notices on behalf of the company.The requirement to appoint a local representative or agent applies when a foreign company is not physically present or directly operating within Nigeria. In such cases, the local representative serves as the company’s point of contact and facilitates communication and legal obligations within the country.
A foreign company may choose to establish a presence in Nigeria through various means, such as:
Representative Office: This is a non-operational office that serves as a liaison for the foreign company. It cannot engage in profit-generating activities but can conduct market research, promote the parent company’s products/services, and establish business contacts.
Branch Office: A branch office is an extension of the foreign company and can engage in commercial activities on its behalf. However, it is not a separate legal entity from the parent company.
Subsidiary Company: A subsidiary company is a separate legal entity incorporated in Nigeria, but its majority ownership lies with the foreign parent company. It can conduct business independently and has its own legal identity.
Joint Ventures or Partnerships: The foreign company can also enter into joint ventures or partnerships with Nigerian entities to carry out specific projects or activities.
3. Business Permits and Licenses: Depending on the type of business the foreign company plans to run, it may need specific permits and licenses. These requirements vary based on the industry and the location of the business. A business permit is a necessary authorization issued by the Ministry of Interiors for foreign companies to operate within Nigeria. It allows wholly-owned foreign companies, including those with expatriate investment, to conduct business locally. Without the written consent of the Minister of Interior Affairs, no foreign company can establish a business in Nigeria. This consent is granted in the form of a Business Permit. Ensure you obtain this permit to legally operate your foreign company in the country. Larn about the requirements here https://ecitibiz.interior.gov.ng/expatriate/requirements
4. Expatriate Quotas: The Ministry of Interior grants expatriate quotas to foreign-owned and local companies in Nigeria. The purpose of this quota system is to allow these companies to legally hire or recruit foreign employees to work and live in Nigeria. Companies can apply for the expatriate quota when they start their business or after incorporating their company. Additionally, they can apply for more quotas if they need to hire additional foreign employees.
Once the expatriate quota is approved, the employees can obtain a Subject to Regularization (STR) Visa. This visa helps them obtain the mandatory Combined Expatriate Residence Permit and Aliens Card (CERPAC).
5. Work Permits for Foreign Employees: If you intend to hire foreign employees to work in Nigeria, they will need valid work permits and residence permits. Ensure that your foreign staff complies with the immigration regulations. The Combined Expatriate Resident Permit and Alien Card (CERPAC) is required for foreigners working or residing in Nigeria. It allows them to live and conduct business in the country for up to two years, subject to the validity of the expatriate quota. The Nigeria Immigration Service (NIS) is responsible for issuing and renewing CERPAC, and there are two types: CERPAC Green Card and CERPAC Brown Card.
6. Capital Importation Certificate (if applicable): For the foreign company intending to invest capital in Nigeria, obtaining a Capital Importation Certificate (if applicable) is essential. This certificate serves as proof of the inflow of foreign currency, whether as equity or debt, cash, or goods, for investment purposes. The Central Bank of Nigeria issues the certificate, providing valuable evidence of the foreign company’s direct capital investment in the country.
7. Tax Identification Number (TIN): Obtain a Tax Identification Number from the Federal Inland Revenue Service (FIRS). This number is necessary for tax purposes and conducting business transactions in Nigeria.
8. Sector-Specific Approvals: Some industries have additional requirements or approvals from specific regulatory bodies. For example, if you are in the pharmaceutical or food and beverage sector, you may need approval from NAFDAC (National Agency for Food and Drug Administration and Control).
9. Local Content Compliance (for certain industries): In certain sectors, such as the oil and gas industry, there are requirements to comply with local content laws and engage Nigerian employees and businesses in your operations.