Business DocumentationSurajudeen Ajibola Basiru Ph.D., BL (Notary Public),

Lecturer, College of Law, Osun State University,

and Principal Counsel, Ajibola Basiru & Co.

Introduction Any person can participate in the Nigerian

Economy in form of ownership and involvement in businesses.

Any such participation is subject only to such regulations as are necessary for national interest.

Participation could either take the form of a registered business name or an incorporated company.

Companies and Allied Matters Act ("CAMA") provides for the processes and procedures for registration and operations of these forms of business.

Types of Business Organizations The Company and Allied Matters Act

(CAMA) provides for the following types of business organizations:

Incorporated Companies Limited Liability Company. Unlimited Liability Company. Company limited by Guarantee.

Business Name registrations for: i. Partnership/Firm ii. Sole proprietorship

Applicable Laws Companies and Allied Matters Act (CAMA) –

Contains far-reaching provisions on the registration and operations of business organizations

Investment and Securities Act (ISA) – it embodies comprehensive provisions on issues relating to securities and investments in Nigeria.

Nigerian Investment Promotion Commission (NIPC) Act - charged with the responsibility of registering foreign investments in Nigeria.

Others include Banks and other Financial Institutions Act Asset Management Corporation of Nigeria Act Insurance Act Central Bank of Nigeria Act

Regulatory Agencies The key regulatory agencies existing under the relevant

laws are: Corporate Affairs Commission (CAC) responsible for

supervision and formation, incorporation and registration, management and winding-up of companies.

The Central Bank of Nigeria (CBN) - the major responsibilities of the CBN are stated by the CBN Act

Securities and Exchange Commission (SEC) responsible regulation of investments and securities business in Nigeria.

Nigerian Stock Exchange (NSE) - is the recognized market for trading in stocks, bonds, share and debentures of companies and government.

Nigerian Investment Promotion Commission (NIPC) – responsible for the coordination and monitoring of investment promotion activities in Nigeria.

Incentives There are several incentives designed by

the Federal Government to boost investment in Nigeria. These include: Pioneer Status Relief in respect of Commonwealth

Income Tax Relief in respect of Interest on any

foreign loan Export Development Fund (EDF) Duty Drawback/Suspension Scheme Currency Retention Scheme Investment & Repatriation Mechanisms

Capacity to Incorporate a Company Capacity to form a company – the law empowers

any two or more persons to form a company as long as they comply with the requirements of the CAMA.

However, CAMA prohibits the categories of persons: persons that are less than 18 years of age,

unless there are two other persons of full age who have already subscribed to the Memorandum of Association;

persons of unsound mind who have been so found by a court;

an undischarged bankrupt; and A person disqualified under Section 254 of CAMA

from being a director of a company.

Incorporating a Company - Essentials

Name: Prohibited Names - identical with an

existing company; etc. Restricted Names – require prior consent of

the Commission. Memorandum of Association - regulates the

affairs of a company particularly as it relates to doing business with the outside world.

Articles of Association - embodies the rules and regulations governing the internal management and administration of a company.

Filling of prescribed form

Other Incorporation Documents Equally expected to be prepared and delivered to CAC are the

following documents Form CAC 03: Notice of address of the registered office of the

proposed company and head office if different from the registered office.

Form CAC 07: A statement in the prescribed form showing the list and particulars of the first directors of the company together with their consent to be directors.

Form CAC 02: A statement of the authorised share capital.

Form CAC 04: A statutory declaration in a prescribe form of compliance with all requirements of the Act.

Form CAC 01 (Reservation and Availability of Name). Form CAC 02A: This is the form of Return of Allotment. It

is to be completed and delivered to CAC within one month of the allotment of the company’s shares.

Other documents required to satisfy the requirements of any law relating to the formation of company

Companies with Foreign Participation

An alien/foreign company may join in the formation of a company in Nigeria.

However, such alien or foreign company must comply with all legislations in that regard.

Modes or categories of alien participation in business in Nigeria are: Exempted companies. See S. 56 of CAMA. Portfolio investors having shares in a Nigerian company. See S.

26 Foreign Exchange Monitoring Act. Direct investors who bring in foreign currencies to do business in

Nigeria. Legal framework to be complied with by foreign investors are:

Companies and Allied Matters Act Investment and Securities Act 2007 Nigerian Investment Promotion Commission Act Immigration Act Foreign Exchange(Monitoring) Act Companies Income Tax Act Industrial development( Income Relief) Act National Office of Technology Acquisition Promotion Act

Exempted companies These are foreign companies excluded by Law from

registration as a Nigerian company. The class of foreign companies qualified for exemptions

are: Foreign govt-owned companies involved exclusively

in export promotion Activities Engineering consultants and technical experts on

the invitation of the President or Government agency or individuals

Foreign companies invited to carry out specific loan project for donor countries or international bodies

Foreign companies on the invitation of the Govt of Nigeria to execute specific project. See S. 56(1) of CAMA.

Exemption Order can be revoked by the President for good or sufficient reason etc.

Foreign companies exempted are to file Annual Returns with the CAC. See S. 57 of CAMA

The status of a foreign exempted company is an unregistered company. See S. 58 of CAMA.

Procedure for Registration of a Foreign Company in Nigeria

Prepare a joint Venture Agreement if any Fulfill all immigration requirements Register a company with the CAC Register the company incorporated with the NIPC

(See S. 19( 1)) of the NIPC Act and with NOTAP Register the company with the Securities and

Exchange Commission. Note: Foreigners can own 100 percent of any

business except those in the Negative List which are:

Production of arms and ammunition Production of military and paramilitary wears Production of narcotics. See S. 17 of the NIPC Act

Completion of Registration Stamping of all documents – (See

Stamp Duties Act) Filing and and registration of all

documents- upon payment of appropriate filing and registration fees.

Issuance of certificate of incorporation by CAC.

See - Section 36 (1),(2)&(6) of C.A.M.A

Registration of Business Name - Essentials

A firm, individual or corporation seeking to be registered, must within 28 days of commencement of business, submit to the CAC a statement in the prescribed form; containing the following particulars:

the business name; the general nature of the business; full postal address of the principal place of business; if the registration is that of a firm it must state;

the present forenames and surname, any former forenames or surnames, nationality of origin, age, sex, residence of the individuals who are partners; and

the corporate name and registered office of such corporation which is a partner

Two (2) copies each of certified passport photographs of an individual/s in a firm.

SEE Sections 657 (2),(3),(5) of C.A.M.A

Other Requirements Tax Clearance certificate of each individual or

partners; Form CAC 1 (Availability of name form). This is

to ensure that the name is available before the registration proper is commenced;

In case of Professional Partnership, copies of the qualifying certificates must be presented to the Commissioner; and

The requisite fee must be paid.

Distinguishing “company” and “business” Names

A company name is a complete legal name of an entity. The incorporation of a company is mandatory. Registration of a business name is obligatory if any

individual or partnership or anybody corporate carries on business under a name other than their own true names.

Business owners are not afforded business name protection under current legislation.

In summary, a company name is selected upon incorporation and creates a separate legal entity, distinct from its owners. Whereas a business name is selected when carrying on a business under a name other than the true owners name, no legal entity is created and there is no limitation on liability.

Understanding the Tax Regime Applicable Laws - Companies Income Tax Act (CITA) is

the applicable tax law for Companies in Nigeria. Income Chargeable - tax shall be assessed on profits,

rent, premiums, interest, royalties, discounts, charges, annuities, benefits, any fees, dues or allowances at a rate specified by the relevant tax authority.

Tax Identification Number (TIN) – A company must register with and obtain a TIN from

the Federal Inland Revenue Service (‘FIRS’) to enable the payment of taxes.

A TIN is an identification number for the company which is used by FIRS in the administration of Tax.

A TIN must be furnished on Returns, Statement and other Tax related documents.

Tax Rate Every year of assessment, a tax at the rate of

30k for every naira in respect of the total profit assessed.

A special levy of 15% on any excess profits of the company.

However, in an instance where the company’s turnover is N500, 000.00 or below and the assessable profit results in a loss, the company’s minimum would be: -0.5% of the gross profit; or -0.5% of the net assets; or -0.25% of the paid up capital; or 0.25% of the turnover of the company

for that year.

Examples of Profits Exempt from Tax Profits of a company established within an export

processing zone or a free trade zone. A new company going into the mining of solid minerals

shall be exempt from tax for the first three years of its operation.

Dividends received from investments in wholly exports oriented business.

Dividends received from small companies in the manufacturing sector in the first five years of their operation.

The interest on foreign currency domiciliary accounts in Nigeria accruing on or after 1st January, 1990.

Profits of a company engaged in petroleum operations will be taxed under the Petroleum Profit Tax Act.

Profits of any company being a body corporate established under any Local Govt Law or Edicts in force in any state.

Profits of any company established by the Law of a State for the purpose of fostering the economic development of that state.

Annual Returns Every company must file a self-assessment tax return with

FIRS at least once a year and the return must contain: The audited accounts, tax, capital allowances computation for

that year of assessment and amounts of profits from each source computed.

A duly completed self-assessment form as prescribed by the FIRS

Evidence of payment of either the whole or part of the tax due into a bank designated for collection of the tax.  

The Company’s annual return must be filed with the FIRS as follows:

In the case of a company that has been in business for more than 18 months, not more than 6 months after the end of its accounting year; and

For a newly incorporated company, within 18 months from the date of the company’s incorporation or not later than 6 months after the end of its accounting period, whichever is earlier.

General Information Land Acquisition for Business Premises in Nigeria - The Land

Use Act of 1978 abolished the land tenure system of freehold interest. Thus the only interest in Land that can be acquired in Nigeria is a leasehold interest not exceeding a period of 99 years.

Contracts of Employment - Under the law employers are free to negotiate contracts of employment with employees. Thus the contract between the employer and employee is based on power of negotiation between the employer and employee.

Certificate of Capital Importation (CCI) - Investors who wish to remit capital must first obtain a CCI from a Nigerian Bank in order for the payment to be transferred into Nigeria.

Repatriation of Capital and Profits - Under the provisions of the Foreign Exchange Act, foreign investors are free to repatriate their profits and dividends net of taxes through an authorized dealer in freely convertible currency.

Sundry Agreements Partnership Agreement Employment Agreement Memorandum of Understanding Joint Venture Agreement Management Agreement Technical Services Agreement Confidentiality Agreement/Clause Non-Compete Agreement/Clause Dispute Resolution Clause

Brainstorming Session

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