Joint Ventures

Although by virtue of NIPC Act companies in any sector of the Nigerian economy can be wholly owned by foreigners. Foreign participation has usually been through joint ventures, which can take many forms from collaboration agreements to partnerships to limited liability companies. The choice of vehicle will depend on factors such as the enterprise to be undertaken, the number of parties, and financial considerations.

100% FOREIGN OWNERSHIP

Section 17 of the NIPC Act provides that foreigners may hold 100% equity ownership of a private company.

FOREIGN INVESTMENT APPROVALS

  1. Business Permit
    Foreign investors require the consent of the Minister of Internal Affairs to hold shares in Nigerian companies. The company is required to obtain a business permit. The minimum share capital required before Business Permit will be granted is N10 million.
  2. Expatriate Quota/Work Permits
    A company intending to employ expatriate staff must obtain the Government's approval to fill specific positions in the company. The approval is called Expatriate Quota.
    The number of job positions that may be filled by expatriates will depend to some extent on the share capital of thecompany. A proviso is also usually given with the grant of the quota that Nigerian staff should be employed and trained for such key positions.
  3. Residence Permit Section 10 of the Immigration Act also provides that a foreigner desiring to reside in Nigeria must obtain a residence permit.
  4. Registration with the Nigerian Investment Promotion Commission
    Section 20 of the NIPC Act (as amended) states that a company in which there is any foreign participation must apply to the Commission for registration before commencing business.

FOREIGN EXCHANGE REGULATION
The Foreign Exchange Act guides the importation of capital and repatriation of dividends, profits, royalties, fees etc in foreign exchange. Foreign investors may repatriate proceeds through domiciliary accounts in approved banks. In order to enjoy the benefits of the Foreign Exchange Act, foreign capital must be ‘imported’ into Nigeria through authorised dealers.

REGULATION OF COMPANIES
Nigerian company law closely follows English company law. The relevant statute is the Companies and Allied Matters Acts 1990 (CAMA) which stipulates that no foreign company may carry on business in Nigeria unless it is incorporated in Nigeria.

The Corporate Affairs Commission is the ‘companies registry’ charged with the incorporation of companies, filling of notices, resolution etc. The process of incorporation can usually be completed within two to four weeks. CAMA requires a minimum of two members corporate or individual to form a company. Each subscriber must take at least one share. The minimum share capital for a limited liability company is N10,000.00 (i.e approximately $100.00)

REGULATION OF CAPITAL MARKETS
The Securities and Exchange Commission established under the Investment and Securities Act of 1999 (amended by the Investment and Securities Act 2007) is the primary body responsible for the regulation of the Nigeria capital markets. Its powers and responsibilities include: registering securities for subscription or sale to the public, registering and regulating securities exchanges, and other investment exchanges, keeping and maintaining a register of foreign direct and foreign portfolio investments and regulating mergers and acquisitions.