Are you a foreign national looking to establish an LLC in Nigeria? This article will walk you through every step and the requirements you need for an effective and successful CAC registration for foreign companies in Nigeria without hassle.
Over the years, the commission has expanded beyond the borders of Nigeria by allowing foreign nationals to have a registered company in Nigeria.
Foreigners can now invest in the Nigerian economy to foster the GDP and overall economic activities for the benefit of the common man, like you and me.
While registering a company in Nigeria as a Nigerian can be very easy and seamless, the steps to registering companies with foreign participation in Nigeria are more complicated.
This article will provide you with an insight into foreign companies in Nigeria and how you can register one successfully.
Legal Basis for Registering a Foreign Company in Nigeria
Before any company can have a legal presence in Nigeria, it must first be registered with the Corporate Affairs Commission and be listed in their company registry.
The commission is the first agency in Nigeria that will recognize, certify and legalize such a company to carry out operations as a foreign-owned company in Nigeria.
However, that is not all. The owners of the company will also have to register with other agencies and secure a license to be able to operate effectively.
Below are the agencies a foreigner looking forward to doing business in Nigeria must register with.
- The Corporate Affairs Commission (CAC)
- Nigerian Investment Promotion Council (NIPC)
- Immigration
- EFCC
And some others, depending on the complexity of the business.
Types of Foreign Companies Eligible for CAC Registration
The following companies are eligible for registration under CAMA 2020 as foreign-owned
- Private Limited Liability Company (LTD)
- Public Limited Liability Company (PLC)
- Company Limited by Guarantee (GTE)
- Unlimited Company
In selecting between these types of registrations, the company will decide whether it wants to register as a branch or a subsidiary
Who Qualifies as a Foreign Investor in Nigeria?
A foreign investor is anyone who is not a citizen of Nigeria or a corporate body that is in existence in another country that wishes to register in Nigeria.
For persons, such a person must not be convicted of a crime or underage or not an alien to the government of Nigeria and must not have been declared bankrupt before.
Furthermore, such an investor must declare that the funds meant for the investment in the Nigerian economy are not derived from corruption or fraudulent sources.
Process for Registering a Foreign Company with CAC
The following steps are necessary to register a foreign company in Nigeria
- Visit the CAC website
- Provide 2 proposed company names. The names must not have restricted words
- Reserve the names and wait for approval.
- Once the names have been approved, proceed with registration
- Fill out company information. CAC mandates that foreign companies in Nigeria have a physical and verifiable address.
- Provide information about the Directors and shareholders behind the company
- Companies with foreign participation are usually regarded as big companies. For that reason, the services of a corporate secretary will be needed
- Select the right share capital structure and allot the shares appropriately.
CAC Minimum Share Capital For Foreign Companies in Nigeria
The Corporate Affairs Commission, CAC mandates companies with foreign participation to register with a share capital of not less than ₦100,000,000 (One hundred million Shares)
These shares must also be fully issued, as the commission stopped allotment of shares in 2023.
Required Documents for Foreign Company Registration in Nigeria
Below are the documents necessary to carry out effective CAC registration for foreign companies in Nigeria.
- Means of Identification of Directors, Shareholders, Secretary and people behind the company
- Nature of the activities of the company
- Scanned signatures of the parties involved in the company
- Statement of issued share capital
- Articles of association
Cost of CAC Registration For Foreign Companies in Nigeria
Below are the component of cost that makes up a CAC registration
- Cost of reservation
- 100 million share capital fees to CAC
- Stamp duty payment for 100 million shares
- Draft Memorandum of Association cost
- Legal and consulting fees for registration
In summary, the total cost of registering a foreign company in Nigeria should be between ₦2.5 million and ₦3.5 million, depending on the complexity of the registration and the consultant involved in the process.
Note that this fee excludes other fees for obtaining licensing with other agencies in Nigeria.
If you need the services of a professional with years of hands-on experience, then Legacy Benjamin Consult is the best consulting firm for the job. Please send us a DM on WhatsApp 08066108299 to get started
Post-Incorporation Compliance and Licensing Obligations
Registering a foreign company with CAC in Nigeria is not the end of the road. It is just the beginning. There are certain other documentations, registrations and licensing that need to be secured
1. Registration for Business Permit License With the Ministry of Interior
Foreign companies seeking to operate in Nigeria are required to secure a business permit license from the Ministry of Interior.
The ministry provides a platform to apply for and manage business permits, ensuring legal operation in Nigeria for local and foreign businesses.
Section 78 of the Companies and Allied Matters Act (CAMA) in Nigeria mandates that foreign companies intending to carry on business in Nigeria must first incorporate a separate entity in Nigeria.
“No person other than a Nigerian citizen shall, on his account or in partnership with any other person, practice a profession or establish or take over any trade or business whatsoever or register or take over any company with limited liability for any purpose without the written consent of the Minister of Internal Affairs”
So, securing a business permit license is very essential and should never be overlooked.
2. Registration for Expertriate Quota
An application for expatriate quota is also a very essential license for foreign companies.
Under 36(1)(a) and (b) of the Immigration Act, 2015, a foreigner granted a business permit must be able to fit into the Expatriate Quota.
A business permit allows a foreigner to take up employment in Nigeria. However, all companies that intend to employ foreigners must have an expatriate quota.
The expatriate quota gives permission for a certain number of foreign nationals to be employed by business organisations operating or wishing to operate in Nigeria. This approval granted to this business organisation is what is known as the Expatriate Quota.
The quota position attaches to a particular post or position. Therefore, the same expatriate quota may be used by different persons, as long as it remains valid
3. Registration for Work Permit With CARPEC
The Comprehensive Expatriate Residence Permit and Automated Cards (CERPAC) is an essential immigration document issued by the Nigerian Immigration Service (NIS) to foreign nationals residing and working in Nigeria.
It serves as both a residence permit and an identification card, granting expatriates the legal right to live, work, or conduct business in Nigeria for a specified duration, typically up to one year (renewable).
CERPAC is mandatory for all non-Nigerians who intend to stay in the country beyond 56 days for employment, business, or long-term residence purposes.
4. Registration With NIPC
Nigerian Investment Promotion Commission is responsible for monitoring all investment promotion activities, initiating and supporting measures which shall enhance the investment climate in Nigeria for both Nigerian and non-Nigerian investors.
Foreigners who wish to invest in Nigeria are mandated to register with NIPC immediately after CAC registration.
5. Tax Clearance Certificate With FIRS
Tax Clearance Certificate (TCC) is an Electronic Tax Clearance Certificate. It serves as evidence that adequate tax has been paid on the taxable income of the company.
The tax clearance certificate usually covers three years before the year of application.
6. Tax Promax
Tax ProMax is an online portal by the Federal Inland Revenue Service (FIRS) that is aimed at making the payment of taxes easy by consolidating companies’ taxes on the portal in one database.
Whether you are a local company or a foreign-owned company in Nigeria, Tax Promax is a vital compliance requirement for all companies that are registered in Nigeria.
7. TIN
A Tax Identification Number is a unique 9-digit identifier that is issued to individuals or corporate bodies to pay taxes.
Every individual or corporate body deriving an income in Nigeria, whether from employment, business, investments or other sources, must obtain a TIN before filing their first tax return.
8. SCUML Certificate
The Special Control Unit Against Money Laundering is a department under the Economic and Financial Crimes Commission that is saddled with the responsibility of monitoring transactions carried out by businesses.
This department aims to prevent, detect and punish companies or individuals involved in money laundering and suspicious business deals.
Foreign companies are also required to secure this license to stay compliant with the EFCC.
9. Corporate Bank Account
A corporate bank account is essential in enabling the company to trade in its corporate and registered company name.
10. VAT
Value-added tax is a consumption tax levied on the supply of taxable goods and services in Nigeria. Companies engaging in products or services that are VAT taxable should register for VAT with the Federal Inland Revenue Service.
VAT rate in Nigeria is currently 7.5%
Other Industry License
- Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for companies in the oil and gas Sector
- Central Bank of Nigeria (CBN) for lending and fintech companies
- Nigerian Communications Commission (NCC) for companies in telecommunications
- Ministry of Mines and Steel Development (MMSD) for companies dealing in solid minerals
- Nigerian Export Promotion Council – for companies that wish to export products outside Nigeria
- National Agency for Food and Drug Administration and Control (NAFDAC) for companies that produce foods and pharmaceutical products
- Trademark
- If the company deals in logistics, you will need a courier license
If you need a consultant to offer a full registration package from CAC to securing all the necessary licenses down to corporate account opening, contact Legacy Benjamin Consult @ WhatsApp 08066108299
Benefits of Investing in Nigeria
Below are reasons you should invest in Nigeria today.
Challenges With CAC Registration for Foreign Companies in Nigeria
Below are some common challenges associated with the formation and registration of foreign companies in Nigeria.
- High cost of registration
- Lack of capital
- Long process and documentation
- Lack of clarity on the nature of the activities of such a company
- Incomplete documents
- Suspicious persons and corporate bodies
- Cost of obtaining licenses
- Employing the services of inexperienced consultants, which could result to faulty filings
FAQs About Companies with Foreign Participation in Nigeria
Q: Can a foreigner register a company in Nigeria without being physically present?
A: Yes. it is very possible. However, such a company must be registered with a Nigerian address.
Q: What is the minimum share capital required for a foreign-owned company in Nigeria?
A: Companies with foreign participation are required to have at least N100 million shares and fully allotted
Q: Is NIPC registration necessary after CAC registration?
A: Yes. Any foreign national looking forward to investing in Nigeria should obtain NIPC license.
Q: Do I need a Nigerian partner to register a foreign company?
A: One person can form and register a company in Nigeria. However, for a big company with foreign participation, and based on our years of consulting experience, we recommend such company have Nigerian partners. An aditional of secretary in Nigeria will do.
Q: Can a foreign company open a bank account in Nigeria?
A: Yes. it is very possible
Q: How long does it take to register a foreign company in Nigeria?
A: With CAC registration, the process should take between 10 to 20 days. However, securing other documentation and licensing will take a longer period
Q: Are there any post-application filings after CAC registration?
A: Yes. Aside from registering with CAC and obtaining relevant licenses from the regulatory authority, the company will be paying yearly returns to CAC.
Q: Can a foreign company operate in Nigeria without CAC registration?
A: No.
Conclusion:
In summary, registering with CAC and obtaining all necessary licenses should be one of the things you look out for when trying to register a company in Nigeria as a foreign national.
I hope this guide has provided insightful tips on everything you need to not just register but also secure all compliance obligations.
