In Nigeria, How To Start And Run A Business
This handbook is intended to assist entrepreneurs, particularly Micro, Small, and Medium-Sized Enterprises, in navigating the legal and regulatory issues that arise while beginning a business in Nigeria. Follow the steps below to get started:
CHOOSE YOUR BUSINESS STRUCTURE
When selecting how to enter the Nigerian market, you will have to select between starting a new firm and buying an existing one. A variety of business structures are available when starting a new business. Sole proprietorships, partnerships, incorporated trustees, and corporations are the four main types. You must choose the company structure that best suits your organization’s demands. The cost, tax, legal, regulatory, and financial risk ramifications will be determined by the business structure. A Solicitor may be required in your circumstances.
IN NIGERIA, THERE ARE TWO TYPES OF REGISTERABLE ORGANIZATIONS.
In Nigeria, registrable business entities include:
1. A firm with a share capital (Ltd or Plc)
2. A limited liability business (Ltd/Get)
3. A limited-liability corporation (Ultd)
Any of the companies listed above can be classified as either private or public.
4. Name of the Firm (registered as Sole Proprietorship or Partnership)
Trustees who are not individuals (usually formed for not-for-profit or charitable purposes)
COMPANY LIMITED BY SHARES OVER A BUSINESS NAME: WHAT ARE THE BENEFITS?
A business is a separate legal entity from the rest of the world. Its shareholders, directors, and employees do not share the same identity. It has perpetual succession, which means it can continue to operate even if its directors or stockholders resign, go bankrupt, or die. Limited liability protection is provided to shareholders and directors based on personal guarantees and/or the value of the company’s stock. Selling shares or offering a stake in the company to outside investors is a relatively simple way to expand or scale up. In its name, the business can sue or be sued. The credibility of a corporation is greater. It is easier to raise huge sums of money or sell a portion of the company. It will be able to take advantage of the government’s investment incentives, pioneer status, and tax exemption.
BOOK A NAME RESERVATION
You can only use a name that isn’t the same as one of Nigeria’s already registered businesses. To see if the name is accessible for usage, you must do a name availability search at the Corporate Affairs Commission (CAC) registry. It will be accepted for registration wherever it is available. Within 24 hours, you can check for availability and make a reservation.
THE APPROVED NAME SHOULD BE REGISTERED.
Businesses must register with the Corporate Affairs Commission in Nigeria as either a Business Name or a Company. Foreign investors looking to enter the Nigerian market may choose to form a new Nigerian business or a new Nigerian subsidiary that acts as a separate legal entity from the offshore parent.
REGISTRATION AND INCORPORATION DEEDS MUST BE PREPARED AND FILE
A Solicitor can help you create a MEMART to meet your business objectives and file a copy at the Corporate Affairs Commission registry; pay stamp duties on the incorporation deeds; and complete registration of the company as a legal entity. The MART of the Company or the Partnership Deed of the Business Name will cover ownership and management problems as well as the regulations that govern how the company is managed. The deed will outline the major challenges and any limitations on what the company can do and how decisions are made.
STRUCTURE OF COMPANY SHARE
Every share of a company’s ordinary or preferential stock (whether ordinary or preferential) must have one vote. Weighted voting shares are not permitted. At least two directors are required in a firm (non-employee shareholders). Non-employee shareholders are limited to 50 in private enterprises.
The board of directors is a company’s shadow and is responsible for corporate governance. The directors of a firm might be international or Nigerian, and they might be residents or non-residents.
PATENT AND TRADEMARK REGISTRATION
Certain intellectual assets may be owned exclusively by your company. To register and protect these rights like patents, trade secrets, copyrights, or trademarks, as well as to prevent infringements, you will need the help of a solicitor.
REGISTER WITH THE APPROPRIATE REGULATORY AGENCY AND OBTAIN A LICENCE FROM THEM.
Relevant government agencies such as the National Agency for Food and Drug Administration and Control (NAFDAC), the Nigerian Investment Promotions Commission (NIPC), the National Office for Technology Acquisition and Promotion (NOTAP), the Nigerian Copyright Commission (NCC), the Nigerian Customs Service, and the Central Bank of Nigeria (CBN) are all responsible for monitoring, regulatory control, and licensing of certain businesses. To prevent punitive liability, you must get the required license and adhere to all applicable health and safety, environmental, and other regulatory duties.
APPLY FOR TAX AUTHORITIES REGISTRATION
Corporate and personnel taxes are collected by the Federal Inland Revenue Service (FIRS) and the State Board of Internal Revenue. Every corporation, business name, or incorporated trustee must register with the FIRS and get a Tax Identification Number (TIN) and a Value Added Tax (VAT) Number, as well as file and present the Annual Return in prescribed forms to the CAC within the timeframe. Financial returns must be prepared and filed within 18 months of the organization’s incorporation/registration, and within 42 days of the organization’s Annual General Meeting. In theory, a fiscal year can begin on any day. For tax evasion and default, there is criminal liability. For tax advice, you can contact a lawyer or an accountant.
SEARCH FOR AN OFFICE OR BUSINESS LOCATION.
A Solicitor can advise you on the various alternatives available if you are wanting to buy or lease a business or office space. In Nigeria, land purchase and development are handled by the state or local government agency where the property is located. State jurisdictions may have different requirements for approvals, evaluations (including environmental and structural studies), and other regulatory requirements.
PUBLISH CONTRACTS FOR EMPLOYMENT
To avoid future legal problems, use the services of a Solicitor to write employment contracts and workshop manuals for your employees (or addendums for employees outside Nigeria) and to ensure compliance with the Labour Act’s requirements.
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COMPLETE ADMINISTRATIVE DUTY
The Federal Inland Revenue Service requires annual accounting and tax returns from you (FIRS). The Corporate Affairs Commission will also require you to file a statement of affairs or an annual return (CAC). Missing deadlines or submitting erroneous information can result in a fine. Other legal criteria exist. The Companies and Allied Matters Act, the Labour Act, the Insurance Act, and the Pension Reform Act, for example, all impose requirements on you. A qualified Solicitor can provide you with guidance and assistance in completing these administrative responsibilities.
FOREIGN COMPANIES’ BUSINESSES IN NIGERIA
A Nigerian company can be owned entirely by foreign investors or offshore corporations. A foreign company intending to establish business operations in Nigeria, on the other hand, shall take all necessary efforts to have its Nigerian subsidiary incorporated as a separate organization in Nigeria. The foreign firm cannot do business or exercise any of the functions of a registered company in Nigeria until it is incorporated. Our Law Firm (Lex Artifex, LLP.) can help a foreign company form and incorporate a Nigerian affiliate or subsidiary through a Power of Attorney.
EXPATRIATE QUOTA AND GET A BUSINESS PERMIT
The Nigerian Investment Promotion Commission (NIPC) and the Nigerian Immigration Service, respectively, can assist international investors and firms in obtaining a Business Permit and an Expatriate Quota from Lex Artifex, LLP. Expatriate employees do not need work permits, but they are subject to their employer’s requirements quotas, which require them to obtain residence licenses that allow them to send money back home.
A business permit allows a foreign corporation to operate as a parent company or as a subsidiary of a foreign firm with foreign capital. Expatriate quotas provide a corporation permission to hire specified expatriates for specified job categories, as well as a time limit on how long they can stay. Work permits for expatriate individuals are based on the expatriate quota (those qualifications must fulfill the criteria established for the particular quota position).
BUYING A COMPANY IN NIGERIA
Buying an existing Nigerian firm could be a better option than forming a new or subsidiary firm. The Securities and Exchange Commission oversees mergers and acquisitions in Nigeria (SEC). Investors that want to buy a Nigerian company may need to submit a formal bid. The SEC must approve and the Federal High Court must sanction a deal to purchase a Nigerian company.
NIGERIAN STOCK EXCHANGE INTRODUCTION (NSE)
Nigeria has a stock exchange, which allows for long-term money to be accessed. Your company must meet the prescribed conditions outlined in the stock exchange listing guidelines to get and maintain an NSE listing. This includes standards for corporation transparency and reporting.
IN NIGERIA, HOW TO DO BUSINESS
Local and international direct investment, as well as international portfolio investment, are welcome in Nigeria. Nigeria’s rules treat foreign investment in the same way as local investors.