Foreign Investment & Joint Ventures
Foreign Investment & Joint Ventures
100% FOREIGN OWNERSHIP
Section 17 of the NIPC Act provides that foreigners may hold 100% equity ownership of a private company.
FOREIGN INVESTMENT APPROVALS
- 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.
- 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.
- Residence Permit Section 10 of the Immigration Act also provides that a foreigner desiring to reside in Nigeria must obtain a residence permit.
- 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.
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.
We guide the foreign investor around the pitfalls of doing business in Nigeria. We are uniquely positioned to obtain the various statutory permits required to set up a new business or invest in a business interest, and we have assisted many clients in making a smooth & cost effective transition into the Nigerian market.
We advise on the best choice of vehicle to enter into the Nigerian market, undertake start-up advisory, handle company formation and provide company secretarial services. We also advise clients on shareholder agreements and other collaboration arrangements including those for Joint Ventures, Agency, Partnerships and Technical Service.
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 (approximately $20.00)
FOREIGN EXCHANGE REGULATION
The Foreign Exchange Act guides the importation of capital and repatriation of dividends, profits, royalties, fees and more 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 authorized dealers.
INVESTING IN NIGERIA
The most significant legislation dealing with foreign investment is the Nigeria Investment Promotion Commission Act 1995 (NIPC Act). This Act removes all restrictions on foreign investment in Nigeria by enterprises, save for those contained in the list of embargoed enterprises. The NIPC Act makes provisions for unconditional repatriation and transferability (through authorized dealers) of dividends, profits, payments for foreign loan servicing and proceeds of sale of enterprises. The provisions of the Act are augmented by the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995