How to Start a Company in Nigeria: Your Complete Business Roadmap

How to start a company in Nigeria step-by-step guide

Economic Overview

The economy of Nigeria is a middle-income, mixed economy and emerging market with expanding manufacturing, financial, service, communications, technology and entertainment sectors.

Nigeria’s economic future holds both promise and challenges. The country’s vast market, young population, and abundant natural resources offer immense potential.

Types of Company structures in Nigeria

Nigeria offers a variety of business structures to cater to different entrepreneurial ventures. Common types include sole proprietorships, partnerships, limited liability companies (LLCs), and public limited companies (PLCs). Each structure has its own advantages and disadvantages regarding liability, ownership, taxation, and regulatory compliance. Understanding these options is essential for selecting the most suitable structure for your business.

Requirements for company registration in Nigeria

• Proposed company name (two options should be provided)
• Physical address of the company
• Contact information (email and phone number)
• Names, addresses, and identification details of directors and shareholders
• Memorandum and Articles of Association outlining the company’s objectives and regulations
• Proof of identity for directors and shareholders (passport, driver’s license)
• Proof of address for directors and shareholders
• Proposed authorized share capital
• Division of shares among shareholders

Note: Specific requirements may vary depending on the type of company (private limited, public limited, etc.) and the nature of the business. It’s advisable to consult with a legal or business advisor for accurate and up-to-date information.

By fulfilling these requirements and following the registration process outlined by the Corporate Affairs Commission (CAC), you can establish a legal business entity in Nigeria.

Additional Requirements on How to start a company in Nigeria

• Company Secretary: Mandatory for foreign-owned companies
• Registered Agent: A Nigerian resident to act as a legal representative
• Other Permits and Licenses: Depending on the nature of your business, additional permits or licenses may be required from relevant regulatory authorities.

The Role of the Corporate Affairs Commission (CAC)

The Corporate Affairs Commission (CAC) is a regulatory body established by the Nigerian government to oversee the incorporation, operations, and dissolution of companies, business names, and incorporated trustees. It plays a role in role in maintaining the integrity of the business environment in Nigeria by regulating the formation, operation, and dissolution of companies.

Procedure for company Registration in Nigeria

• Company registration process in Nigeria

1.Name Reservation:

• Choose a unique name for your company.
• Conduct a name search through the Corporate Affairs Commission (CAC) to check availability.
• Reserve the preferred name if available.

2.Preparation of Incorporation Documents:

• Draft the company’s Memorandum and Articles of Association outlining its objectives, structure, and regulations.
• Prepare a list of directors and shareholders with their details.
• Obtain necessary identification documents (passport, driver’s license) for directors and shareholders.
• Determine the company’s registered address.

3. Submission of Application

• Complete the required registration forms.
• Submit the completed forms, along with supporting documents, to the CAC.
• Pay the prescribed registration fees.

4. Issuance of Certificate of Incorporation

• Upon successful verification, the CAC will issue a Certificate of Incorporation, marking the official registration of the company.
• Get a Tax Identification Number (TIN) which is a unique identifier assigned to individuals and businesses by the Federal Inland Revenue Service (FIRS) in Nigeria. It’s essential for effective tax administration and compliance.

Here’s why your company needs a TIN:

• Tax Identification: It’s the primary identifier for your company in all tax-related matters.
• Tax Compliance: It’s mandatory for filing tax returns, paying taxes, and interacting with the tax authority.
• Business Transactions: It’s required for opening a corporate bank account and conducting business transactions.
• Government Regulations: Many government agencies and ministries require a TIN for various permits and licenses.
• Legal Compliance: Operating a business without a TIN is a violation of tax laws and can lead to penalties.
• Open a business Bank Account: This Enables smooth transactions with suppliers, customers, and employees and builds a credit profile for the company, essential for accessing loans.

Additional Requirements for Foreign Investors

1. If you’re a foreign investor, there are additional requirements. For instance, you’ll need to obtain a business permit from the Nigerian Investment Promotion Commission (NIPC).
2. Minimum Share Capital: A minimum share capital of N10 million is required for companies with foreign shareholders.
3. Shareholders: While there’s no restriction on foreign ownership, at least one director must be a Nigerian resident.
4. Nominee Directors: Foreigners can appoint Nigerian residents as nominee directors to fulfill local director requirements.
5. Repatriation of Funds: Obtain necessary approvals for transferring funds out of the country.
6. Local Partnerships: Building relationships with local partners can be beneficial.
7. Professional Advice: Seek legal and financial counsel to navigate the complex regulatory environment.

FAQS on How to start a company in Nigeria

What are the common types of business structures in Nigeria?

The most common business structures in Nigeria are sole proprietorship, partnership, and limited liability company (LLC).

How long does it take to register a company in Nigeria?

The registration process can take a few days to a few weeks depending on the completeness of your application and the efficiency of the Corporate Affairs Commission (CAC).

What documents are required for company registration?

Required documents include the company’s Memorandum and Articles of Association, proof of identity and address for directors and shareholders, and a completed registration form.

Is a physical office address required for company registration?

Yes, a physical address is required for company registration in Nigeria.

What happens after company registration?

After registration, you’ll need to obtain a Tax Identification Number (TIN) from the Federal Inland Revenue Service (FIRS) and comply with other regulatory requirements based on your business activities.

Can foreigners register a company in Nigeria?

Yes, foreigners can register companies in Nigeria, but there are specific requirements, such as appointing a local representative.

What are the tax implications for a newly registered company?

Companies in Nigeria are subject to corporate income tax, value added tax (VAT), and other relevant taxes.

What is the corporate and VAT rate in Nigeria?

Nigeria employs a tiered corporate income tax (CIT) system based on company turnover:

• Large Companies: Companies with an annual turnover exceeding NGN100 million are subject to a 30% CIT rate.
• Medium-Sized Companies: Companies with an annual turnover between NGN 25 million and NGN 100 million pay a 20% CIT rate.
• Small Companies: Companies with an annual turnover below NGN 25 million are exempt from CIT.
• VAT in Nigeria is levied at a standard rate of 7.5% on the supply of most goods and services. Businesses with an annual turnover exceeding NGN 25 million are required to register for VAT.

Conclusion on How to start a company in Nigeria

Registering a company in Nigeria is the first step towards establishing a successful business. While the process may seem complex, understanding the requirements and seeking professional guidance can streamline the process. Reach out to us today for free Consultation.