Foreigner ownership of Nigerian companies refers to the ownership of a company registered in Nigeria by non-Nigerian individuals or entities. It is possible for foreign investors to own all or part of a Nigerian company, subject to the regulations and restrictions set by the Nigerian government.
Foreign ownership of Nigerian companies is regulated by the Companies and Allied Matters Act (CAMA) 2020 and the Nigerian Investment Promotion Commission (NIPC) Act of 1995, which allows for foreign investment in almost all sectors of the Nigerian economy. The NIPC Act permits 100% foreign ownership of companies in all sectors except for a few sectors reserved for Nigerian citizens, such as small-scale businesses, agriculture, and cottage industries.
To invest in a Nigerian company, a foreigner must register the company with the Corporate Affairs Commission (CAC) and obtain the necessary permits and licenses from the relevant government agencies. The investor must also comply with the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, which requires that all foreign exchange transactions be routed through authorized dealers.
Foreign investors in Nigerian companies are also subject to taxation, as they are required to pay corporate income tax and other taxes based on the nature of their investment.
Foreign ownership of Nigerian companies can provide opportunities for both the investors and the Nigerian economy, but it is important for foreign investors to comply with the regulations and laws governing foreign investments in Nigeria, especially the CAMA, which mandates that no foreign entity shall carry on any business in Nigeria except a local incorporation has been achieved.
STEPS FOR REGISTERING A FOREIGN-OWNED COMPANY
Registering a foreign company in Nigeria involves a process of obtaining legal recognition for the foreign company to operate within the Nigerian business environment. A foreign-owned company must have a minimum of Ten Million Naira authorized share capital depending on the type of business the company is to engage in. Some businesses require more authorized share capital to set up.
Below are the steps to achieve incorporation in Nigeria:
- Reserve a company name: The first step in registering a foreign company in Nigeria is to reserve a unique name for the company with the Corporate Affairs Commission (CAC). This can be done through an authorized agent, usually a corporate lawyer.
- Incorporate the company: Once the name reservation and business permits have been obtained, the agent can then proceed to incorporate the company with the CAC by submitting the necessary documents such as the details of the company’s directors and shareholders; business objectives of the company; address of the company and details of the appointed company secretary. Take notice that only a Nigerian citizen or foreigner who is resident in Nigeria can be the company secretary. Once all the information has been provided and statutory fees paid, the CAC will register the company and issue both the company number and tax number together at the same time.
- Obtain a business permit: A wholly foreign-owned company must obtain Business Permit from the Federal Ministry of Interiors and also register with the Nigerian Investment Promotion Commission (NIPC) before commencing business operations in Nigeria.
- Open a corporate bank account: The foreign company may need to open a corporate bank account with a Nigerian bank to facilitate transactions. To open a bank account in Nigeria, both directors and the appointed account signatory (if different from the director) must submit a Nigerian biometric Bank Verification Number (BVN) in accordance with Nigerian banking regulations. Directors still residing abroad can also obtain BVN by visiting foreign designated locations to process it.
- Register with other regulatory bodies: Depending on the nature of the business, the foreign company may also need to register or obtain a permit with other regulatory bodies such as the National Agency for Food and Drug Administration and Control (NAFDAC), Nigerian Communications Commission (NCC), or Ministry of Mines and Steel Development
In summary, setting up a foreign-owned company in Nigeria requires incorporating the company with the CAC, obtaining a business permit, opening a corporate bank account, and registering with other relevant regulatory bodies if required. It is important to engage the services of a legal professional or business consultant to ensure compliance with all legal requirements and regulations.
Written by Olusola John Jegede, Esq