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GLOBAL INFO

Nigeria

COUNTRY:

NIGERIA

QUESTION:

ANSWER:

1.      What are the main company forms in your country?

 Private Limited Company, Public Limited Company, Company Limited by Guarantee and Unlimited Company.

2.      Which is the most preferred company form by foreign investors?

 Private Limited Company

3.      What are the basic capital requirements of this company? (Minimum amounts, types of capital, deadline of capital contribution)

For a Private Limited Company, a minimum of 2 shareholders and maximum of 50 are required by law. The minimum share capital requirement for registration of this type of company is N10, 000 (Ten Thousand Naira) and the subscribers or initial shareholders are required to subscribe and pay for a minimum of 25% of the authorised share capital.  Private Limited Companies are required by law to restrict the transfer of their shares.

Please note that while the minimum share capital requirement for private companies is N10, 000, some sectors such as the financial services Industry like banks, Insurance Companies, Travel Agencies, Stockbroking firms, Security Agencies, Bureau de’ Change, and Shipping companies have a higher minimum share capital requirement. Also companies with foreign participation must have a minimum share capital of N5million to be entitlled to Foreign Investment Approvals, required for foreigners.

A foreigner intending to carry on business in Nigeria is required to register a limited liability company, which can be a 100% wholly owned Nigerian company or a joint venture with Nigerians. Certain sectors of the economy are regulated and in those sectors foreigners have to collaborate in a joint venture with Nigerians.  For instance under the Nigerian Local Content Act, which regulates the oil and gas Industry, the maximum number of shares a foreigner is allowed to hold in a Nigerian company is 49%.  

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4.      What are the basic rules of shareholders liability for company debts in this company?

Members’ liability is limited to the amount if any, unpaid on the shares held by them. In case of winding up, members are liable to contribute the balance, if any, of the amount payable in respect of the shares held by them in accordance with the terms of the agreement under which the shares were issued or in accordance with a call validly made by the company pursuant to its articles of association.

5.      What are the basic management requirements for this company? (Only natural persons, or nationals can be managers etc.)

Ony natural persons, whether Nigerians or expatriates can be management staff/directors. There is no requiremnet for the directors to be resident in Nigeria. Generally, management staff shall not be lunatics, bankrupt, convicted of fraud by a court or below 18 years.  However, foreign nationals/expatriates are subject to additional requirements. They must have the requisite investment permits, which are expatriate quota, business permit and residence permit, if resident within the country.

6.      How long does the registration procedure of this company take?

Between 2 – 3 weeks, but under a special arrangement with significantly increased fees, registration can be completed with 2 – 3 days.

7.      What are the main costs of formation of this company in local currency?

Stamp duties are assessed ad valorem on share capital and payable to the Federal Board of Inland Revenue (FBIR) at the rate of N1.50 on every N100.00 of the proposed share capital. Stamp duty on a recommended share capital of N10 million is N150, 000       

 

Registration fee is payable to the CAC at the rate of N10, 000 for every N1 million (or part thereof) of the proposed company’s share capital. Registration fees on a N10 million share capital will accordingly be N100, 000.00

 

Out of pocket expenses for name search, name reservation for a maximum number of 60days and processing fees.

 

8.      What is the average attorney’s fee of the formation of this company in local currency?

Usually depends on the sector the company intends to operate in, as there are usually other permits and licences that have to be applied for. Generally basic attorneys’ fees range between N500, 000 – N750, 000. Depending on the sector, fees can increase significantly due to licences and permit requirements. Attorney’ fees are exclusive of out of pocket expenses.

9.      What are the basic publicity requirements of this company (filing of company changes, financial reports, etc.)

Register of Members to be kept at the Registered Office of the company; Annual Returns to be filed at the Companies Registry annually.

The Financial Statement made up of audited accounts and a declaration signed by a director or secretary of the company that the returns contain a true and correct statement of the amount of its profits, is required to be attached to the application to file Annual Returns.

 

10.   What are the main auditor requirements?

Every company is required to appoint an auditor. The auditor shall present a Report to the members at a general meeting on the accounts, balance sheet, profit and loss account, and on all group financial statements, copies of which are to be laid before the company in a General Meeting.