Tuesday, 25 October 2016

How to Incorporate a Foreign Company in Nigeria… (Basic Preliminaries)

Do you own a foreign company and you desire to launch the company in Nigeria? Have you been researching on how to go about it? This article is written just for you.

Foreign participation is a welcome development in Nigeria. As a foreign company seeking to come to Nigeria, you can have a 100% ownership of your business in Nigeria without government interference.

There are similarities in the process of registering a foreign company and a purely local company (for instance, you need two or more shareholders to register your company in Nigeria). The key difference is that there are additional requirements to register and operate a foreign company.

Back to the question “what is a foreign Company”? For the purposes of this article, a foreign company is a company validly existing under a foreign law, but with the intention of carrying on business in Nigeria takes necessary steps to register as a legal entity in Nigeria.

You may say “okay, now this definition is really long, so what does it mean?” Put in a simple way, it means that if your company wants to come to Nigeria to do business- full time, then, you must register the company as a separate entity in Nigeria.

As a foreign company seeking to operate in Nigeria, you cannot have a place of business in Nigeria neither can you do business if your company is not registered. The only thing you can do is perhaps to have a place where you can receive notices and documents that are necessary to bring your company into existence in Nigeria.

You may ask at this point “what if I want to have Nigerians in my company?” this is a welcome idea because it will reduce the cumbersome requirements needed of a wholely foreign owned company.
To operate your foreign company in Nigeria, here are some of the things that you must apply for: 

  1. Certificate of capital importation (CCI)
  2. Expatriate quota
  3. Work permit
  4. Residence permit
  5. Combined Expatriate Residence Permit and Aliens Card (CERPAC)
  6. Subject to Regularisation Visa etc.
You can engage the services of a Business Advisory Law Office to help you to register your company and also process necessary documents from the appropriate body, after which you will be able to do business in Nigeria.

Some foreign companies are allowed to operate in Nigeria without the need for registration! I hope this does not come as a surprise to you, but, yes you can actually be granted exemption from registering in Nigeria before you do business.

There are four categories of foreign companies that can be granted exemption in Nigeria, they are:

  1. Foreign companies invited into Nigeria to execute specified individual project
  2.  Foreign companies invited to execute specific individual loan project on behalf of a donor Country or international organisation.
  3. Foreign owned government company engaged solely in export promotion activities
  4. Engineering consultants and technical experts engaged in any individual specialist project under contract with government in Nigeria.
If you fall under any of the above categories, you may engage a lawyer to write an application letter on your behalf to the President of the Federal Republic of Nigeria through the Secretary to the President. Such letter ought to contain the following details:

  1. Your company’s name;
  2.  Members of your company;
  3.  Names and addresses of your Directors;
  4. Stamped photocopy of your company’s memorandum and article of association; and
  5. The details of what your company intends to do in Nigeria.
Once your application is granted, your company will be exempted from the need to register, but it will continue to have the status of an unregistered company.

Where a foreign company is exempted under any bilateral treaty with Nigeria, it will continue to remain exempted from registering locally in Nigeria.

That your company is granted exemption does not mean that it is granted a licence to operate for life in Nigeria; exception is usually for a specified period, and after it expires, you will not be able to enjoy the benefits of an exempted company again.

Other than expiration, the president has power to revoke exemption clause particularly if it conflicts with any provision of a local law.

If exemption is however granted, it must be published in a Federal Gazette by the president.
Your exempted company is expected to keep some records with the Nigerian Corporate Affairs particularly its Annual Returns. You can reach me for further details on how to file annual returns of a foreign company in Nigeria.

Once you fail to register before carrying on business in Nigeria, everything you do may not receive the support of the local laws. That is not to suggest that you will not be able to sue to recover money, but there will be limitations to what you can do or not do.

There are trades which all companies (foreign and local) are not allowed to trade in. These include:
  1. Production of arms and ammunition
  2. Production and dealing in narcotics drugs and psychotropic substances
  3. Production of military and paramilitary wears including those of police, custom, immigration and prison service wears
  4. Such other items as the Federal Executive Council may from time to time determine in the negative list.

I hinted earlier that your foreign company may choose to have 100% full ownership of your business in Nigeria, otherwise, you may choose to involve a Nigerian in the ownership. From my experience in advising stakeholders of foreign companies with interest in bringing their business to Nigeria it is easy for me to strongly warn against 100% foreign ownership for obvious reasons, one of which is that if your company is unable to obtain expatriate quota, residence and working permit for its expatriates, they will be at risk of paying fines and getting deported.


ABOUT THE AUTHOR

Joy Abina is an Associate at Attorneys’ Haven L.P. She got her LL.B Degree from Rivers State University of Science and Technology and B.L. from the Nigerian Law School. Joy is passionate about core litigation practices and she combines that seamlessly with Business Advisory. You can reach her on 08144069217 or attorneyshaven@gmail.com