REQUIREMENTS FOR STARTING A BUSINESS IN NIGERIA
To participate in the Nigerian market, you will need to decide between starting a new business and buying an existing one.
REQUIREMENTS FOR STARTING A BUSINESS IN NIGERIA
To participate in the Nigerian market, you will need to decide between starting a new business and buying an existing one. However, there are numerous business structures to choose from when starting a new company. The four main types are sole proprietorships, partnerships, corporations as trustees, and companies. You must select the corporate structure that will best serve your company's needs. The cost, tax, legal, regulatory, and financial risk implications will be determined by the business structure. A solicitor may be able to help with your situation.
The Companies and Allied Matters Act (CAMA), Cap. C20, is the primary law in Nigeria that regulates how businesses are established. Different business entity kinds can be registered in Nigeria. The decision to open a business is influenced by a number of variables, including control, liability protection, cost, the complexity of formation, tax ramifications, purpose, capital, and ongoing management.
TYPES OF BUSINESS STRUCTURES IN NIGERIA
A company limited by shares (Ltd or Plc) 2. A company limited by guarantee (Ltd/Gte) 3. An unlimited liability company (Ultd) Any of the above companies may be a Private Company or a Public Company. 4. Business Name (registered as Sole Proprietorship or Partnership)
THE FOLLOWING ARE THE GENERAL REQUIREMENTS FOR STARTING A BUSINESS IN NIGERIA
RESERVE & REGISTER THE APPROVED NAME
Only names that are distinct from those of Nigerian Companies that have already been registered may be used. To check if the name is accessible for usage, you must do a name availability search at the Corporate Affairs Commission (CAC) registry. Where it is available, registration for the same will be permitted. Within 24 hours, you can check the availability of a name and make a reservation. In Nigeria, companies or business names must be registered with the Corporate Affairs Commission. In order to access the Nigerian market, foreign investors may want to create a new Nigerian business or a new Nigerian subsidiary that likewise functions as a separate legal entity from the offshore parent firm.
PREPARE AND FILE REGISTRATION AND INCORPORATION DEEDS
A Lawyer can help you create a MEMART to meet your business objectives and file a copy of it at the Corporate Affairs Commission register. They can also help you pay stamp duties on the incorporation deeds and complete registration of the company as a legal entity. Company's MEMART or Business Name's Partnership Deed will deal with ownership and management issues and contain the rules governing how the business is run. The deed will pin down the key issues and set out any restrictions on what the business can do and how decisions will be made.
COMPANY SHARE STRUCTURE
Any type of corporate share issued by a firm in Nigeria, whether ordinary or preferred, must have one vote per share. Shares with a weighted vote are not allowed. A firm must have two directors at a minimum (non-employee shareholders). Private businesses, however, cannot have more than 50 non-employee shareholders.
COMPANY SECRETARY
According to CAMA requirements, firms limited by shares must designate a company secretary. The company secretary's duties include filing the firm's yearly returns and maintaining the company's statutory books, among other administrative and statutory responsibilities. A secretary can be appointed by a business name to handle administrative tasks. On the other hand, no such appointment is reported to the Corporate Affairs Commission.
APPOINT THE DIRECTORS
The directors are a company's shadow and the cornerstone of corporate governance. Directors of a firm may be foreign or Nigerian, as well as residents or non-residents.
REGISTRATION WITH NIGERIA INVESTMENT AND PROMOTION COMMISSION (NIPC)
Foreigners going to Nigeria to invest or take part in any investment must first register with the NIPC. NIPC is responsible for coordinating and promoting investment in Nigeria.
TAX REGISTRATIONS AND TAX CLEARANCE CERTIFICATE
A tax clearance certificate, tax identity number, and value-added tax number must be registered with the Federal Inland Revenue Service for any new business that is established. The business would be able to submit its taxes thanks to the tax identification number.
BUSINESS PERMIT
For foreigners coming to carry on business in Nigeria, a business permit is required. Every company wholly owned by foreigners must apply to the Ministry of Interiors for a business permit.
EXPATRIATE QUOTA
For businesses that hire foreign nationals, an expatriate quota will be necessary for any foreign nationals who want to work there. Only corporations with a limited number of shares are eligible to apply for or obtain expatriate quotas for their overseas employees.
BANK ACCOUNT OPENING AND CAPITAL IMPORTATION
In Nigeria, opening a bank account is a must for starting a business. The owner may utilise either his personal account or an account set up in the company's name as the business name. While a bank account must be opened in the company's name for corporations limited by shares. The prerequisites for opening a bank account are the same regardless of which Nigerian bank a business chooses to bank with. The incorporation certificate and related documents, a reliable form of identification, the account opening package properly filled out and signed, the company's board resolution authorising the opening of an account, the Tax Identification Number (TIN), and the Bank Verification Number are some examples of these requirements (BVN).
The business may decide to import capital through the authorised dealers of the Central Bank of Nigeria once a bank account has been opened. A loan or equity might be used to import money. The authorised dealer must issue a certificate of capital importation within 48 hours of the capital's arrival. The corporation can freely repatriate its money and revenues in the future thanks to the certificate of capital importation.
OFFICE AND PROPERTY ACQUISITION
In order to conduct business, it is expected of every company to obtain a place of business. A takeoff address is required for the registration process when a foreign company is founded in Nigeria. All businesses established in Nigeria must meet this condition.
In conclusion, it is critical for anyone starting a business in Nigeria to be aware of the factors that could affect their decision on the type of company to register and the conditions that must be met in order to comply with CAMA.
NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com
WRITTEN BY CHAMAN LAW FIRM TEAM
EMAIL: chamanlawfirm@gmail.com
TEL: 08065553671, 08024230080