All business enterprises must be registered
with the Corporate Affairs Commission. Business activities may be undertaken
in Nigeria as a:
(i) Private or Public limited liability
company;
(ii) Unlimited liability company;
(iii) Company limited by guarantee;
(iv) Foreign Company (branch or subsidiary of foreign company)
(v) Partnership/Firm;
(vi) Sole Proprietorship;
(vii) Incorporated trustees (religious, charitable, philanthropic or
cultural);
(viii) Representative office in special cases ;
The Companies and Allied Matters Act, 1990
(the Companies Act) is the principal law regulating the incorporation of
businesses. The administration of the Companies Act is undertaken by the
CORPORATE AFFAIRS COMMISSION (CAC), which undertakes the administration of
the Companies Act.
The minimum authorised share capital is N10,
000 in the case of private companies or N500,000 in the case of public
companies. The Memorandum of Association must state inter-alia that the
subscribers “shall take amongst them a total number of shares of a value not
less than 25 per cent of the authorised capital and that each subscriber
shall write opposite his name the number of shares he takes.” The law
permits and acknowledges the roles of attorneys and other relevant
professionals in facilitating business transactions provided, of course,
that this “agency arrangement is disclosed”.
The Companies Act prohibits “notice of any
trust, express, implied or constructive” and such shall not be entered on
the register of members or be receivable by the CAC.
All categories of company shares should carry
one vote. Shares with “weighted” voting right are prohibited. All shares
(i.e. whether ordinary or preferential) issued by a company must carry one
vote in respect of each share.
Consequently, preference shareholders are entitled to receive notices and
attend all general meetings of the company and may speak and vote on any
resolution before the meeting.
Every company is obliged to disclose on its
letterhead paper used in correspondence, following particulars:
(i) Name of company/ enterprise;
(ii) Address;
(iii) Registration/Incorporation Number;
(iv) Names of Directors and Alternate Directors (If any).
In addition, the law requires companies/enterprises to ensure that the
Certificate of Registration be displayed in conspicuous positions at their
principal and branch offices.
A non-Nigerian may invest and participate in
the operation of any enterprise in Nigeria . However, a foreign company
wishing to set up business operations in Nigeria should take all steps
necessary to obtain local incorporation of the Nigerian branch or subsidiary
as a separate entity in Nigeria for that purpose. Until so incorporated, the
foreign company may not carry on business in Nigeria or exercise any of the
powers of a registered company.
The foreign investor may incorporate a Nigerian branch or subsidiary by
giving a power of attorney to a qualified solicitor in Nigeria for this
purpose. The incorporation documents in this instance would disclose that
the solicitor is merely acting as an “agent” of a “principal” whose name(s)
should also appear in the document. The power of attorney should be designed
to lapse and the appointed solicitor ceases to function upon the conclusion
of all registration formalities.
The locally incorporated branch or subsidiary company must then register
with the Nigerian Investment Promotion Commission (NIPC) before commencing
formal operations. The new company may also apply to NIPC for other
investment approvals (e.g expatriate quota) and other incentives.
Where exemption from local incorporation is
desired, a foreign company may apply in accordance with Section 56 of the
Companies Act, to the National Council of Ministers for exemption from
incorporating a local subsidiary if such foreign company belongs to one of
the following categories:
(a) “foreign companies invited to Nigeria by or with the approval of the
Federal Government of Nigeria to execute any specified individual project;
(b) foreign companies which are in Nigeria for the execution of a specific
individual loan project on behalf of a donor country or international
organisation;
(c) foreign government-owned companies engaged solely in export promotion
activities; and
(d) engineering consultants and technical experts engaged on any individual
specialist project under contract with any of the governments in the
Federation or any of their agencies or with any other body or person, where
such contract has been approved by the Federal Government.”
The application for exemption from disclosing certain details about the
applicant is to be made to the Secretary to the Government of the Federation
(SGF). If successful, the request of the applicant is granted upon such
terms and conditions as the National Council of Ministers may think fit.
Foreign companies may set up representative
offices in Nigeria . A representative office however, cannot engage in
business or conclude contracts or open or negotiate any letters of credit.
It can only serve as a promotional and liaison office, and its local
operational expenses have to be inflowed from the foreign company. A
representative office has to be registered with the CA
