HOW TO ESTABLISH A FOREIGN COMPANY IN NIGERIA

Nigeria is a vast market with over 150 million consumers. Therefore, investors from various countries around the world are interested in investing in Nigeria. In this article, i will be teaching you how you can establish a foreign company in Nigeria. The Nigerian Investment Promotion Council is  the government body in charge of foreign investors in the Nigerian market.The Nigerian Investment Promotion Commission (NIPC) is to encourage, promote and co-ordinate investment in the Nigerian Economy. Pursuant to this, Nigerian Investment Promotion Council’s functions include the following: 

Registration of Enterprises

NIPC shall on application, within 14 days register all joint ventures or wholly foreign-owned enterprises and will keep; records of all such enterprises.

Provision of supports Services to Existing and potential Investors

Collation, analysis and dissemination of information about investment opportunities as sources of investment capital and advise on request, the availability, choice or suitability of partners in joint-venture projects.

Maintaining liaison; between investors and ministries, Government departments and Agencies, institutional lenders and other authorities, concerned with investments. Identification of specific projects and inviting interested investors for participation in those projects.

Provision and dissemination of up-to-date information on incentives available to investors

For the purpose of promoting identified strategic or major investment, NIPC shall, In consultation with appropriate government agencies, negotiate specific incentive package for investors.NIPC may issue guidelines and procedures which specify priority areas of investment and prescribe applicable incentives and benefits consistent with Government policy.

Government Adviser: NIPC shall, as expedient, advise the Federal Government on policy matters including fiscal measures in order to encourage deserving industries or particular sectors of the economy.

Investment Promotion and Monitoring Activities

NIPC will initiate, organize and participate in promotional activities, such as exhibitions, conferences and seminar for the stimulation of investments. Through its monitoring outfit, NIPC will identify problems and difficulties being encountered by investors and proffer viable solutions and render necessary assistance to them. 

STEPS TO TAKE IN REGISTERING YOUR FOREIGN COMPANY

Step 1

a. Established partners/shareholders and their respective percentage shareholding in the proposed company.

b. Establish name, initial authorized share capital and main objects of proposed company.

c. Prepare Joint-Venture Agreement between prospective shareholders, (except in instances where the proposed company will be 100% owned by alien shareholders) The Joint-Venture may specify mode of subscription by parties, manner of Board Composition, mutually protective quorum for meetings, specific actions which would necessitate shareholder’s approval by special or other resolutions.

d. Prepare Memorandum and Articles of Association.

e. A foreign shareholder may grant the power of attorney to his Solicitors in Nigeria, enabling them to act as his agents in executing, incorporating or performing of other statutory duties pending the grant of Business Permit (i.e. formal legal status for foreign branch/subsidiary operations)

f. Conduct a search as to the availability of the proposed company name and, if available, reserve the name with the Corporate Affairs Commission (CAC)

g. Effect payment of stamp duties, CAC filing fees, process and conclude registration of the company as a legal entity.

STEP 2

a. Obtain “Tax Clearance Certificate” for the newly registered company

b. Prepare Deeds of Sub-Lease/Assignment, as may be appropriate, to reflect firm commitment on the part of the newly registered company to acquire business premises for its proposed operations.

STEPS 3

a. Prepare and submit simultaneous applications to the NIPC on the prescribed NIPC Application Form for the following approvals:

i. Business Permit and Expatriate Quota;

ii. Pioneer Status and other incentives (where applicable)

b. The application to the NIPC should be accompanies by the following documents:

i. Copies of the duly completed NIPC Form;

ii. Copies of the treasury receipt for the purchase of the NIPC Form.

iii. Copies of the Certificate of Incorporation of the applicant company;

iv. Copies of the Tax Certificate of the applicant company;

v. Copies of the Memorandum and Articles of Association;

vi. Copies of treasury receipt as evidence of payments of stamp duties on the authorized share capital of the company as at the date of application;

vii. Copies of the Joint-Ventures Agreement-unless 100% foreign ownership is envisaged;

viii. Copies of feasibility Report and Project Implementation Program of a company its proposed business. (It is advisable that quotations, letters of intent and other such documentations relating to industrial plant and machinery to be acquired by the company be forwarded either as annexes or separately. In order to discourage the dissipation of administrative energy on speculative applications, the NIPC favors the applicant who has demonstrated positive intention to commence business as and when approvals are granted. This is why the evidence of acquisition of business premises and evident to having sourced the plant and machinery to be used in the company’s business is required);

ix. Copies of Deeds(s) of Sub-Lease/Agreement evidencing firm commitment to acquire requisite business premises for the company’s operation;

x. Copies of training program or personnel policy of the company; incorporating management succession schedule for qualified Nigerians.

xi. Particulars of names, addresses, nationalities and occupations of the proposed directors of the company;

xii. Job title designation of expatriate quota positions required, and the academic and working experience required for the occupations of such position. It is pertinent to note that expatriate quota on a “Permanent Until Reviewed” (PUR) status is only accorded to a Managing Director where the non-resident shareholders own a majority of the company’s shares, and the authorized capital of the company is N5 million and above;

xiii. Copies of information brochure on foreign shareholder (if available) as testimony of international expertise and credibility of the foreign partner in the proposed line of business.

STEP 4

a. Having obtained the requisite NIPC approvals and Business Permit Certificate, the non-resident shareholder must act with dispatch to import its foreign equity holding in the company. To ensure prompt importation of the foreign equity, the NIPC may grant business permit but defer approvals for expatriate quota and Pioneer Status and other applicable investment incentive, until evidence of capital importation is submitted;

b. After obtaining Certificate of Capital Importation from the bank, the NIPC is to be notified of this fact with the supporting documentation, I order for it to resume processing of pending approvals that might have been deferred on such ground;

c. As soon as the expatriate quota positions are granted and the respective individuals to fill the quota positions are recruited, the company must embark on steps to obtain work permit and residency status for the expatriate employees and their accompanying spouses and children (if any)

The promoters of business ventures in Nigeria are to free to appoint directors of their choice, either foreign or Nigeria, and the directors may be resident or non-resident. The application to the NIPC must reflect the names of the proposed Nigerian and foreign directors (with an indication of resident and non-resident directors). The Business Permit Certificate subsequently issued following such application usually reflects the respective names of the proprietors of the company as well as the directors representing each proprietor or co-proprietor.

Payments of foreign director’s fees are remittable in the same manner as dividends accruing to the foreign company. However, since such fees are taxed at source (5% as a withholding tax), each foreign director’s fees are remittable subject to satisfactory evidence that the taxable amounts on such fees have been paid.

 

With this steps discussed above, you can succesfully register your foreign company in Nigeria. You can contact us for more information if you are willing to start a new company in Nigeria. We will let you know how we can be of help to you.

I wish you well in your business endeavour.

To your success,

Gbeke Faith

Chief Consultant

TOSFAT Concepts

E-mail:inquiries@tosfatconcepts.com