BusinessInNigeria

Nigeria was a colony of Britain up to the First day of October 1960 when Nigeria became an independent country. In consequence, Nigerian law is based almost entirely on English Law. The Nigerian Legal System is the English system with some local modifications.

Business in Nigeria necessarily starts with the company law of Nigeria . The first company law was the Companies Ordinance of 1912. This was a local enactment of the Companies (Consolidation) Act 1908 of England. Thereafter, we had the Companies Ordinance 1917 and five years later, we had the Companies Ordinance 1922.

The next major change was in 1968 when the Companies Decree 1968 was promulgated and that decree remained in force until the coming of the Companies and Allied Matters Decree No 1 of 1990. That decree is (with amendments) still the company law of Nigeria but it is now known as the Companies and Allied Matters Act 1990

This law regulates the different ways in which business may be carried out and is divided into three parts, each part dealing with one of those ways. The parts are

Setting up a company in Nigeria

The foreigner will do well (and it is advisable) to engage the services of a law firm in Nigeria in order to properly do business in Nigeria. The International Centre for Nigerian Law provides such services to foreigners wishing to do business in Nigeria through our in-house law firm, International Centre for Nigerian Law Legal Practitioners. To request the services of the in-house law firm, please send an email to ICFNL@nigeria-law.org

1. Incorporate the company

1.1 The starting point is to decide on the name of the new company. For a foreign company setting up in Nigeria, it is advisable to chose a name that is the same as the name of the parent company and ending with Nigeria Limited. It is advisable to make an application to CAC for Availability and Reservation of Name.

1.2 Draft Memorandum and Articles of Association. (MeMat) It is advisable that the objects in the MeMat be as close to that of the parent company as Nigerian law will allow.

1.3 Agree upon a share capital structure for the new company. Non-Nigerians may own 100% (One hundred percent) of a company but it is politically advisable to have some Nigerian participation.

Stamp duty is payable in respect of the share capital and also, the amount paid as filling fees depends on the share capital. It may cost more money but it is advisable to have a respectable share capital.

1.4 Nigerian law provides that at least two persons must sign a MeMat as subscribers. The law also provides that at least twenty five percent (25%) of the share be allotted on incorporation.

2. The costs

The Fees to be paid to and at CAC for matters under the Act are as specified in Companies and Allied Matters (Fees) Regulations 2003 The Minister of Commerce makes the regulations in exercise of the powers conferred upon the Minister by sections 16, 632, 668, and 692 of the Companies and Allied Matters Act and all other powers enabling the Minister in that behalf. The Minister may change the Regulations as and when he deems fit and the changes will be published in the official gazette

Stamp Duty is payable in respect of the MeMat and the MeMat must be stamped before it is presented to CAC for filling. Stamp Duty is Chargeable by the Federal Inland Revenue Service (FIRS) and is assessed on behalf of the FIRS by the Federal Commissioner of Stamp Duties according to a scale fixed by the Joint Tax Board.

All the payments are made in the national currency of Nigeria which is the Naira and the symbol is N (the capital letter N double struck through) It is also denoted in international notation as NGN

3. The fees paid to Lawyers

It is normal to formally instruct lawyers to incorporate a company and this is best done in writing. Payments made to Lawyers are made up of Fees and Costs incurred.

3.1 The costs are sums of money paid to Government or in any other way spend in the course of incorporating the company and includes Filling fees, Fess for Availability and Reservation of Name, procurement of Incorporation Forms, and costs of engrossment (printing) of the MemMat.

3.2 Fess are paid to Lawyers for their professional services.

Banking

Banking is regulated by Banks and other Financial Institutions Act. The Act was made in 1991 when Nigeria had military rule and was then referred to as Banks and other Financial Institutions Decree.

All Banks in Nigeria are licensed and regulated by the Central Bank of Nigeria.

Labour and management of Workers

Matters concerning the employment of workers are governed by the Labour Act 1990 The Nigerian Labour Congress (NLC) represents blue-collar and clerical employees (the junior workers) and there are various Senior Staff Associations that represent middle-management (white-collar) employees (the senior workers). Management level workers do not belong to unions

Immigration

Foreigners entering and residing in Nigeria

Nigerian law requires that every non-Nigerian who wishes to enter and or reside in Nigeria and every company that employs or intends to employ non-Nigerians must comply with the regulations made under the Immigration Act 1990. The Nigeria Immigration Service administers the Act

Entry into Nigeria by Non-Nigerians

As in any other country, non-Nigerians who wish to enter Nigeria must obtain a visa. A Nigerian visa is obtainable from a Nigerian Diplomatic Mission in the country where the intending visitor is domiciled. Where there is no Mission in that country then the visa may be obtained from a Mission in the country nearest to the country of domicile. The various visas are as detailed in the table below

Where ever the term “IR” is used in the table, it means “Immigration Responsibilities”. IR means acceptance (by the Nigerian individual or corporate body that invited the non-Nigerian) of Immigration Responsibility which includes but is not limited to, provision of accommodation, feeding and other logistics and where it becomes necessary, the cost of repartition or deportation of the non-Nigerian.

Type of Visa or Entry Permit	Who qualifies	Requirements and conditions for issuance

Business	Business men and or Investors coming to Nigeria for purposes of business.	Evidence of sufficient funds A valid return ticket Letter of invitation . Acceptance of IR by person or company inviting the foreigner Evidence of sufficient funds for maintenance while in Nigeria or proof of other satisfactory arrangements for support while in Nigeria. Obtainable from any Nigerian Mission. Business Visa is valid for 90 (Ninety) days but can be extended Employment is prohibited

Temporary Work Permit (TWP)	Experts invited for the purpose of doing specialised job for a short period. An example is the installation or maintenance of specialised machinery	Letter of request or invitation Confirmed Airline Return ticket Acceptance of IR TWP is issued by and obtainable only from the office of the Comptroller General of Immigration, Headquarters, Nigeria Immigration Service. Abuja. Validity is for the period specified in the TWP

Subject to Regularisation (STR)	Expatriates entering Nigeria to take up an employment	Valid passport with minimum of 6 months validity Letter of employment Letter of invitation Expatriate Quota Approval of the company inviting or offering the employment. Acceptance of IR Curriculum Vitae or Resume of the applicant Evidence of qualifications (Credentials) of the applicant Duly completed form IMM 22 If applicant is to take up the position of Chief Executive Officers (C.E.O) of company, a copy of the Resolution of the Board of Director to that effect should be provided STR is obtainable only from the Nigerian Missions in the country where the applicant is and has been domiciled for at least six (6) months prior to the making of the application

Transit	Transiting passengers with confirmed Visa to onward destination outside Nigeria. Airline Pilots and Seamen	Valid passport with minimum of 6 months validity Valid visa to onward destination outside Nigeria Confirmed Airline ticket to final destination Evidence of sufficient funds for maintenance while in Nigeria or proof of other satisfactory arrangements for support while in Nigeria.

Direct Transit	Airline Pilots and Seamen who are signing on Transiting passengers with confirmed Visa to onward destination outside Nigeria.	Same as for Transit Visa Validity is for 48 (Forty-eight) hours Employment is prohibited

Tourist	Persons visiting Nigeria for the purpose of tourism. Persons visiting family members who are in Nigeria.	Valid passport with minimum of 6 months validity Valid Visa to onward destination Valid Airline return ticket Evidence of sufficient funds for maintenance while in Nigeria Evidence of accommodation such as Hotel reservation Letter of invitation Acceptance of IR Employment is prohibited

Official or Diplomatic	Visiting Heads of States and their families Senior officials of Governments and their families Diplomats and their families Holders of United Nations Diplomatic Passport and Laisser passez Members of accredited Diplomatic Missions Members of International organizations Members of accredited International Non Governmental Organisations (NGO’s)	Valid standard, official or diplomatic passports Note Verbale Official or Diplomatic Visa’s are obtainable from any Nigerian Mission

The processes for application for any of the visas listed above are generally the same and include

. A passport valid for at least 6 months prior to application

. Non-refundable visa application fee

. Duly completed application form

. Invitation letter

. Copies of recently taken 4x4 cm coloured passport size photographs

Nigerian Missions may make country-specific rules. All prospective applicants are advised to first make enquiries from the Missions and further advised to comply with the country-specific rules (if any) made by the Missions.

Residence in Nigeria by Non- Nigerians

Every non-Nigerian who has entered Nigeria legally and who wishes to reside and or work in Nigeria must make an application for a Combined Expatriate Residence Permit and Aliens Card which is generally referred to as a CERPAC. The CERPAC is valid for two years, is renewable and is in two categories, a Green Card and a Brown card.

Possession of a CERPAC Green Card allows a non-Nigerian to reside in Nigeria and carry out an approved activity as specified in the permit, or to accompany a resident or citizen of Nigeria as a dependant.

Possession of a valid CERPAC Green Card does not exempt the holder from having a valid entry or re-entry visa. Holders of resident status in Nigeria who are proceeding on leave or temporary duty outside Nigeria should apply for re-entry visa before their departure from Nigeria.

Non Nigerians resident in Nigeria or visiting with the intention to remain in Nigeria in excess of 56 days as well as members of the crew of a ship leaving their ship and staying ashore in excess of 28 days are required by law to register and obtain a CERPAC Brown Card.

Expatriate Quota

Almost all applicants for a CERPAC are employed by companies or individuals running businesses in Nigeria. The employers must first apply for and be granted an Expatriate Quota. The Expatrtiate Quota scheme is designed by Government to prevent the indiscriminate employment of expatriates where there are qualified and suitable Nigerians to fill those positions.

Protection of Intellectual Property

Intellectual property rights are protected under various legislation in Nigeria and Nigeria is a signatory to may international treaties and conventions for the protection of these rights.

The major legislations are

1. Trade Marks Act

2. Patents and Designs Act

3. Copyright Act

Import and Export

The importation of goods is regulated by Custom, Excise Tariff etc (Consolidation) Act No 4 of 1995 (which was enacted as Custom, Excise Tariff etc (Consolidation) Decree No 4 of 1995)

The Tariff which is a schedule to the Act is a massive document. Printed on A4 size paper, it is just over one inch in thickness. The Tariff specified rates of import duty payable on importation of goods into Nigeria.

The majority of businesses will be concerned only with what cannot be imported into Nigeria and these are as specified in the Revised Import Prohibition List (Trade) and other Fiscal Policy Measures

Standards for goods to be exported to Nigeria

Goods to be exported to Nigeria must meet the standards or rules made by Standards Organisation of Nigeria (SON)

The SON also administers the Standards Organisation of Nigeria Conformity Assessment Programme (SONCAP) Certificate in respect of importation of Regulated Products

The Central Bank of Nigeria issued a circular (REF; TED/AD/100/2005 dated 29th August 2005) and in that circular, the CBN made it mandatory that with effect from 1st December 2005,

1. Importers of good must have a Product Certificate for the purpose of processing of Form M if they intend to import Regulated Products

2. SONCAP Certificate for clearance of goods at Nigeria Points of Entry in respect of importation of Regulated Products

The following are Regulated Products

1. All electrical and electronic products that could be used by members of the public whether in their homes or otherwise e.g in residential, office, retail, leisure etc environments. Examples include, but are not limited to, household appliances, IT products, communication products, lighting products, audio-visual products

2. Motor vehicle tyres

3. Automotive glass

4. Vehicle spare parts

5. Motor vehicle batteries

6. Gas Appliances

7. Toys

8. Certain galvanised steel products

9. Food and Food Products

10. Chemicals

The SON expects Banks to bring the requirements of SONCAP to the attention of all importers who approach the Banks for the purpose of importation of goods

For additional information about SON, do visit www.sononline-ng.org

Taxation

In Nigeria, all persons in employment, individuals in business, non residents who derive income from Nigeria as well as companies that operate in Nigeria are liable to pay tax.

Some taxes are payable to the Federal Government (and administered by Federal Inland Revenue Service), some are payable to the State Governments and some to Local Governments. For a complete listing of which tax is payable to which level (or tier) of Government, please see Taxes and Levies (Approved list for collection) Act. No 21 of 1998

There is usually a Body of Appeal Commissioners that is a court of first instance to handle Tax appeal cases. There is also a Value Added Tax Tribunal

The different taxes are as listed below

Name of Tax	Law authoring the tax	Brief description of the tax
a	b	c
Capital Gains Tax	Capital Gains Tax Act. Chapter 42. LFN 1990	A 10% tax imposed on Capital Gains arising from a sale, exchange or other disposition of properties known as chargeable assets.
Companies Income Tax	Companies Income Tax Act Chapter 60. LFN 1990	A tax chargeable on all companies (other than Companies engaged in petroleum operations as defined under the PPTA) registered in Nigeria.
Education Tax	Education Tax Act No 7 of 1993	A tax chargeable on all companies registered in Nigeria at 2% of chargeable profits as contribution to the Education Tax Fund.
Personal Income Tax	Personal Income Tax Act No 104 of 1993	A tax payable by all individuals and registered businesses and partnerships except those registered under Part A of Companies and Allied Matters Act 1990.
Petroleum Profits Tax	Petroleum Profits Tax Act Chapter 354. LFN 1990	Tax charged at 85% of the chargeable income for companies engaged in petroleum operations as specified under the Act.
Stamp Duties	Stamp Duties Act Chapter 411. LFN 1990	Stamp Duty is Chargeable according to a scale fixed by the Joint Tax Board.
Value Added Tax	Value Added Tax Act No 102 of 1993	A tax payable by the consumer at 5% of the net value added based on eligible transactions once consumed. All registered businesses are expected to register and have a VAT registration certificate, and boldly display their VAT registration number on all invoices.
Withholding Tax		This is not really a tax. It is an advance payment of tax (at 10%) to which individuals and organizations are entitled to demand a withholding tax credit note.

Other issues

There are also issues of local content compliance and succession plans for Nigerian personnel.

If you require clarification on any of the issues above, do send an email to us at business@nigeria-law.org and we shall be very glad to be of service

Capital Gains Tax Act.

Chapter 42. LFN 1990