Market entry into Nigeria: the approvals to line up before incorporation

Where the rules come from

The Companies and Allied Matters Act 2020 requires a foreign company that wants to carry on business in Nigeria to incorporate a Nigerian company first, unless it obtains an exemption. Once incorporated, a company with foreign shareholders registers with the Nigerian Investment Promotion Commission, and it needs a business permit from the Federal Ministry of Interior before it begins operations.

Foreign staff need an expatriate quota and individual work permits. Regulated activities, such as payments, insurance, telecoms, capital markets or oil and gas, also need a licence from the sector’s own regulator, which sets its own conditions.

What to settle before incorporation

Three decisions are hard to change once the company exists, so they come first.

1. 01Whether the sector is open, and on what terms. Most sectors allow full foreign ownership, but a few are closed and others require a Nigerian partner or a higher capital base. A name that signals a regulated activity can also need the regulator’s consent before the Corporate Affairs Commission will reserve it.
2. 02The share capital. A company with foreign shareholders is now expected to have at least ₦100 million in paid-up share capital, the figure the Ministry of Interior applies for the business permit, and regulated sectors set higher minimums. Fixing the right figure at incorporation avoids a later increase and a second round of filings.
3. 03How the capital will come in. Capital brought in through an authorised dealer bank earns a Certificate of Capital Importation. Without it, the bank will not remit dividends or capital back out through the official market, and that is hard to put right once the money has arrived another way.

Incorporation lets the company exist. The permit and the licence let it trade.

What does not

A certificate of incorporation is not permission to trade. It brings the company into existence; the business permit, and in a regulated sector the licence, are what allow it to operate. Investors who sign leases and hire staff on the strength of the certificate alone are the ones most often caught out.

Nor does full foreign ownership usually need special approval. Outside the closed sectors and those with local participation rules, a Nigerian company can be wholly foreign-owned. Its tax identification number is generally issued with the incorporation itself.

The order that works

1. 01Confirm the sector’s terms, and any regulator’s consent needed for the name or structure.
2. 02Fix the share capital to meet the ₦100 million threshold and any sector minimum.
3. 03Incorporate at the Corporate Affairs Commission.
4. 04Bring the capital in through an authorised dealer bank and collect the Certificate of Capital Importation.
5. 05Register with the Nigerian Investment Promotion Commission.
6. 06Apply for the business permit and, if foreign staff are coming, the expatriate quota and work permits.
7. 07Obtain the sector licence, then begin operations.

After that, the company files annual returns with the Commission, keeps its register of persons with significant control up to date, files tax returns with the Nigeria Revenue Service, and renews any quota before it lapses.

At Firmpoint we advise, guide and act on behalf of clients at every step of market entry, from the first sector check to the filings that follow.

• Incorporation lets the company exist; the business permit, and any sector licence, let it trade.
• Plan for at least ₦100 million in paid-up share capital where foreign shareholders are involved, and more in regulated sectors.
• Do not bring capital in outside an authorised dealer bank: without a Certificate of Capital Importation, it cannot be repatriated through the official market.