SETTING UP A BUSINESS ENTITY IN NIGERIA

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1 SETTING UP A BUSINESS ENTITY IN NIGERIA REGULATORY FRAME WORK IDOWU OKUNOWO-BADERO LAWSTONE LEGAL BARRISTERS AND SOLICITORS / MAJEKODUMI STREET, OFF ALLEN AVENUE IKEJA

2 Regulatory regime The principal law that regulates the formation and administration of companies in Nigeria is the Companies and Allied Matters Act ( CAMA ). Section 54 of CAMA prohibits any foreign company from carrying on business in Nigeria until it has taken steps to incorporate a separate entity in Nigeria.

3 Choosing a business vehicle: Business name ( Enterprise); or Limited Liability Company. Limited Liability Company : advantages : The liability of the members of the Company is limited to the nominal value of shares held by each of them. The members are not personally liable for the debts of the company The members of the Company shall have a right to share in the profit of the Company. The members can attend and vote at the meetings of the Company enjoys an independent legal personality hence it is distinct from its members.

4 Procedural steps Choose a name for the company and conduct an availability search to confirm that the name is available The reservation is for a period of 60 days upon which such will lapse. Preparation of Memorandum and Articles of Association/completion of the incorporation documents for execution by the subscribers and the first directors of the company Memorandum and Articles of Association submitted at the Corporate Affairs Commission ( CAC ) together with

5 Choosing a business vehicle: Business name ( Enterprise); or Limited Liability Company. Business Name ( Enterprise) : Advantages No requirement to file Company Income Tax yearly. The Proprietors own the company equally The members can attend and vote at the meetings of the Company Does not enjoys an independent legal personality hence it is considered one and the same as its members, and members are personally liable for its debt.

6 Stage 1: Establish partners/ Shareholders and the respective percentage shareholding in the Proposed entity Establish name, initial authorised share capital and main object of the proposed company Prepare Joint Venture Agreement between Parties/ and Memorandum and Articles of Association Foreign partner may grant Power of Attorney to its Solicitors in Nigeria for execution of incorporation documents. Effect payments of necessary fees and complete registration process

7 Procedural Steps Statement of the authorised share capital of the company and the other incorporation forms which include a statement of the particulars of the initial directors of the company, A statement of the registered address Statement of the authorised share capital of the company and the other incorporation forms which include a statement of the particulars of the initial directors of the company, A statement of the registered address Registration fees are paid to the Corporate Affairs Commission (CAC) The CAC will issue a Certificate of Incorporation

8 Stage 2: Obtain tax Clearance Certificate In Nigeria a Tax Clearance Certificate ( TCC ) is typically required for a Company to get most of its initial start-up approvals, so an application must be made to the Federal Inland Revenue Service Every company incorporated in Nigeria is required to be registered with the nearest TAX/VAT office and obtain a Taxpayer Identification Number (TIN) and a VAT Registration Number.

9 Timelines The incorporation could take one to two weeks to process Tax and VAT registration can be accomplished within a week A Nigerian company with foreign participation would be required to register with the Nigerian Investment Promotion Commission (NIPC) and to obtain an authorization called a business permit The Business Permit could be obtained in two weeks; and Quota positions (if required) could take up to 2 months to process

10 Further to receipt of the Certificate of Incorporation of the new company, your lawyers shall apply for and obtain certified true copies (CTC) of the Memorandum and Articles of Association, Form CAC2 (Return of Allotment of Shares), CAC2.1 (Notice of Appointment/Change of Company Secretary) and Form CAC7 (Particulars of Directors) from the Corporate Affairs Commission. The CTCs of these documents are necessary for the purpose of opening bank accounts and registration for Tax and VAT locally

11 END Thank you for Listening Idowu Okunowo- Badero Lawstone Legal

12 Contact Details Lagos Office: 6, Majekodunmi Street, off Allen Avenue, Ikeja-Lagos e: w: