Nigeria remains a top destination for global entrepreneurs, business people, and consultants who want to open a new company in a new and thriving marketplace.
Not only does Nigeria offer a vibrant business environment, access to international markets, and robust legal protections, but doing business here could not be easier. Whether you want to start a new company in Nigeria or expand your existing overseas business into the Nigerian market, this guide is for you.
Here, we will explain the essential elements of opening a company in Nigeria as a foreigner, permits, including the self-sponsorship route, company formation process, company types, and other considerations such as tax and banking.
Operating in Nigeria requires continual monitoring and adherence to a complex web of rules across various compliance domains—from initial business registration and taxation to industry-specific licensing, employment laws, and safety standards. Non-compliance can expose firms to penalties, fines or even loss of operating licenses if left unaddressed.
Business structures available in Nigeria
The most common business structures in Nigeria are:
Sole proprietorship
A sole proprietorship is a business owned and managed by one person. This is the simplest and most common business structure in Nigeria. For a sole proprietorship, the business name must be registered if it consists of more than:
- The surname of the individual;
- The surname and first name of the individual;
- The surname and initials of the first name of the individual.
To register a business name as a sole proprietorship you need:
- To register the business with the Corporate Affairs Commission (CAC)
- A government issued I.D card such as the National I.D card or voter’s card
- Details regarding the business such as the address and name of the business
Partnership
A partnership is a business owned and managed by two or more people. For a partnership, the business name must be registered if the name consists of more than:
- The surnames of the partners;
- The surnames and first names of the partners;
- The surnames and initials of the first names of the partners.
Limited liability company (LLC)
An LLC is a business entity that provides limited liability to its owners. This means that the owner’s assets are not at risk if the business is sued.
The liability of the owners of a limited liability company can be limited either by shares or by guarantee. Where “limited by shares”, the owners have a shareholding in the company that represents how much of the company they own.
When liability is “limited by guarantee”, the liability of the members is limited to the amount the members have agreed to contribute to the assets of the company in case the company winds up.
Thus, in any instance, the liability of an individual for the debts incurred by the company is limited only to the full extent of the capital contributed by the shareholder or the guarantee offered.
An LLC must be registered at the Corporate Affairs Commission.
Requirements for setting up a foreign company in Nigeria
1. Your business name
Two possible names for the company must be provided. A public search will be conducted to be sure the name is not already in use. Then an application will be made to the Corporate Affairs Commission (CAC) for reservation of the name. If approved by the CAC, the selected name will be reserved for sixty days to enable the promoters to complete their registration.
2. Business objective
The company industry or sector will have to be identified and the objects for which the business is being registered provided. This will form part of the memorandum of association of the company after it is registered.
3. Registration details
Your proposed company email, a Registered Address in Nigeria (this does not need to be where the company will carry out business but must be able to receive correspondences from CAC). Please note that the registered address is also relevant to taxation. The shareholder’s name(s), residential address, phone number, email address, occupation, electronic signature(s) and government-issued means of identification must be presented to CAC.
4. Share capital requirement
Currently, foreigner-owned companies, that is, companies who have shareholders who are non-Nigerians must register with ten (10) million share capital (this can be changed by CAC, always confirm at the time of registration). Where a foreign shareholder uses a nominee (local shareholder to act for them) the rule under CAMA 2020 is that the minimum issued share capital of a private company is N100,000 whilst the minimum issued share capital of a public company is N2,000,000.
5. Shareholders
The person(s) who will hold shares in the company called ‘shareholder’ must be provided. It is now legal for one (1) individual to solely own a company in Nigeria rather than the previous minimum of two (2).
6. Directors
The list of directors must be provided. Foreigners can be directors in Nigeria and nominee directors (usually local persons) may also be used. It is now legal to have one (1) individual appointed as director of a company.
7. Shareholding structure
The share distribution amongst the founding shareholders must be clearly set out to know who gets what number of shares.
8. Certificate of proficiency
Where the proposed company will be set up to operate in some special sectors, the CAC may demand that the directors submit qualifying certificates showing their proficiency in that sector.
Staying compliant with auto comply.
Auto Comply was created to transform compliance into a company’s superpower, eliminating the burden of managing compliance tasks on spreadsheets. Below are Auto Comply’s features:
1. Discovery dashboard
The initial step in grasping compliance involves identifying the specific requirements for your company. AutoComply’s discovery dashboard accomplishes this by displaying obligations relevant to your company based on its country of incorporation, company type, and industry. It also supports multiple company discovery, allowing users to switch between companies or view all obligations at once through the obligation planner view.
2. Automated task and sub-task tool
Government-imposed obligations typically require the submission of forms or documents. Assigning a single team member to collect and maintain the specifics for each obligation can lead to human errors and missed deadlines over time. AutoComply addresses this issue by enabling collaborative document completion.
Admins can assign specific tasks for obligations to team members, and AutoComply automatically generates the necessary documents for submission to regulatory authorities or government agencies.
3. Alerts via email, slack, and teams
Timely compliance is essential, and AutoComply helps teams stay informed about upcoming obligations with real-time alerts delivered via email, Slack, and Microsoft Teams. Users also receive email summaries of all pending obligations.
4. Document management system
As demonstrated by the features mentioned earlier, compliance obligations generate various documents. AutoComply assists teams in managing these documents by automatically archiving them in smart folders matching the obligation, reference, and month of generation. Users can also create their folders and upload external documents.
In a nutshell, opening a company in Nigeria offers boundless opportunities for commercial success, but it requires careful planning and compliance with Nigerian’s legal requirements. Engaging an experienced company registration firm will ensure that your needs can be met while you focus on setting up your business here. Reach us at +254707280366 or send us an email at clientservice@afrilinkconsultants.com to register a company in Nigeria.
