A business formation in Nigeria ordinarily commences with the registration of a company. A company can be referred to as a corporate entity, which upon incorporation becomes a separate legal entity with the perpetual succession and the capacity to sue and be sued. The cradle of a company is on its incorporation and this entails registration with the Corporate Affairs Commission (CAC). The law governing how to register a company in Nigeria is the Companies and Allied Matters Act (CAMA) LFN 2020.
A company may be incorporated as a company limited by shares, a company limited by guarantee, and an unlimited company. Any of these types of companies may either be a private or public company. This article will mainly focus on the requirements for the incorporation of a private company in Nigeria either by indigenous citizens or foreigners who have the intention of carrying on 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 to 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.
The following documents are required for the incorporation at the Corporate Affairs Commission:
- 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
- Statutory Declaration of Compliance with the requirements of CAMA by a Legal Practitioner
- Photocopy of the information page of the 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)- Where the shareholder is a corporate entity, the original Resolution of the company shall be required. 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, there are other registrations to be done by a company intending to carry out business in Nigeria, especially a company having a foreign shareholder that include the following:.
- Nigerian Investment Promotion Commission (NIPC) Business Registration:
Registration with NIPC is vital. This Commission among other things, coordinate, monitor, encourage and provide necessary assistance and guidance for the establishment and operation of enterprises in Nigeria, initiate and support measures which shall enhance the investment climate in Nigeria for both Nigerian and non-Nigerian investors among others as well as perform such other functions as are supplementary or incidental to the attainment of the objectives of NIPC Act. NIPC business registration is a major prerequisite for a business permit.
- Business Permit:
This is issued by the Ministry of Interiors, to enable foreign companies to conduct business within the government’s geographical jurisdiction.
- 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 at the Federal Inland Revenue Services (FIRS) for Income Tax and Value Added Tax (VAT) purposes within 6months of incorporation. Upon registration, a tax identification number (TIN) would be allocated to each registered company and a tax file shall be opened for such company in the nearest FIRS to the company’s address. The TIN number must be inserted on all the company’s invoices. The current Companies Income Tax rate is 30% assessed on a preceding year basis.
- 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 foreign experts. The expatriate quotas are issued to the company and not to the individual expatriates.
In Conclusion, it is noteworthy to state that a single individual cannot set up a company in Nigeria. Every company must be composed of a minimum of 2 members (shareholders) and directors. And pursuant to the provisions of the NIPC Act, every company with a foreign shareholder and/or director must have a minimum of N10,000,000 authorized share capital.
By Corporate & Commercial Law Team at Resolution Law Firm