Although foreigners may now wholly own business in Nigeria under our laws, the most common form of foreign investment in Nigeria is joint venture with Nigerians. This may be due to the fact the restriction on foreign whole ownership has been lifted only in 1995. Many foreigners nevertheless find it prudent to invite Nigerian businessmen of impeccable integrity as partners in the business. Knowledge of the local environment, important local contacts, stability, public relations, among other advantages usually contributed by local Nigerian businessmen, are the logical reasons cited for preference of joint venture ("JV").
It is important that the various aspects of the JV should be carefully documented. Documents to be drawn up would include the JV agreement, technical/management services agreement, intellectual property licence agreement where applicable, and employment agreement.
This agreement is entered into before the incorporation of the Company as the basis of the relationship between the parties. It outlines the terms of the JV, which also form the basis of the Memorandum and Articles of Association of the proposed company. The parties to the JV (local or foreign) may be individuals or incorporated bodies.
Matters to be covered in a JV agreement include its purpose or object, organisation, name and principal office, share capital and structure of shareholding, management and administration of the company, scope of operation, obligations of the partners, profits and dividends. Sometimes provision is also made assigning the implementation of specific aspects of the agreement to one or the other of the JV partners. It is also necessary to provide for how the JV may be terminated.
This article is intended to provide a general guide to the subject matter and should NOT be treated as legal advice. Specific legal advice should be sought by you about your particular case and special circumstances.
For further information/enquiries, please contact Patrick Abuka on Tel: (234)1-263 4656, 1-263 3024, 1-263 1708, 1-263 3512, 1-263 5115, 1-263 4553 or Fax No: (234) 1-263 1687, 1-263 5189
You may also wish to read through related material on 'Legal Aspects of Investing in Nigeria' provided by Abuka, Ajegbo, Ilogu & Nwaogu. You can view the entire archive via the Internet on Business Monitor Online (http://www.mondaq.com), or via your online provider by entering "Abuka, Ajegbo, Ilogu & Nwaogu" and "Business Monitor" as a free text search.