Nigeria: Effect Of Requirement For Registration Of A Foreign Company In Nigeria

Last Updated: 29 March 2018
Article by Emmanuel Ekpenyong

Section 54 (1) of the Companies and Allied Matters Act ("the CAMA") provides that a foreign company who has the intention of carrying on business in Nigeria shall take steps to be registered as a separate entity in Nigeria. Until the foreign company is registered in Nigeria, it shall not carry on business in Nigeria or exercise the power of a registered company. It shall not have a place of business or address for service of documents other than for the receipt of notice and other documents which are preliminary to registration under the CAMA. If a foreign company contravenes the provision, its acts shall be void.

This is a carryover from the Companies Act of 1968 which prohibited a foreign company not incorporated in Nigeria from carrying on business in the country. Section 370 of the Act provides that a foreign company shall give notice in writing of its intention to carry on business in Nigeria to the registrar and immediately take steps to incorporate a separate entity in Nigeria. Until the entity is so incorporated, the foreign company shall only have a place of business in Nigeria for the purpose of matters preliminary to incorporation of a company.

The Court interpreted the provisions of Section 370 of the Companies Act of 1968 in the case of Wema Bank Limited v Nigerian National Shipping Line Ltd and Anor (1979) F.R.C.L.R, 133. In that case, a German company applied to join a case as a co-defendant in a matter between 2 companies. The plaintiff contended that under Section 370 (1) of the Act, the German company is not a juristic person having not complied with incorporation under the Act. It has no right of action and cannot be joined as a party to the case. The Court opine that although foreign companies not incorporated in Nigeria are juristic persons under the law of their respective country, they lacked the power to sue and be sued in their own names and could not be joined in the action. The Court held that;

".... a juristic person may be defined as a person or entity known by law. Such a person can sue or be sued. Can it therefore be said that in Nigeria all foreign companies not incorporated in Nigeria are by our laws not legal persons? There is doubt that they are, but before they can be vested with powers of company incorporated in Nigeria one of which is the power to sue and be sued in its own name; such companies must be incorporated in Nigeria. This opinion is based on the ground that a company is a creature of the statute and until the provision of the statute have been fully complied with, the company cannot be said to have come into existence.

The Companies Act No. 51 of 1968 laid down certain provisions to be complied with by a foreign company before it is recognized as registered in Nigeria and after registration, the company can then sue or be sued in its own name since it is then recognized by the law of Nigeria as a legal person"

This caused hardship which was inimical to foreign investments and trade. It was inevitable that the provisions of the CAMA will take steps to cure the hardship and mischief in the Companies Act of 1968. It did in Section 60 (b) of the CAMA which provides that;

"Nothing in this chapter shall be construed as affecting the rights or liability of a foreign company to sue and be sued in its name or name of its agents"

The Nigerian courts interpreted Section 54 of the CAMA vis-à-vis Section 60 (b) of the CAMA in the case of Ritz and Co. KG v Techno Ltd, (1999) 4 NWLR (Pt. 598) 298 the Court of Appeal, per Justice Muntaka-Comassie JCA (as he then was) who delivered lead judgment thus;

"In the result, I hold that it cannot be right as held by the trial court that a foreign company cannot carry on business in Nigeria and therefore cannot sue and be sued in view of the Companies and Allied Matters Act, 1990 until it is properly incorporated. I think there is a fundamental misapprehension of the particular section relied upon by both the trial court and the learned counsel for the respondent. The relevant law to my understanding is that a foreign company which has not been registered in Nigeria under the Act supra cannot carry on business in Nigeria unless and until it has taken steps to incorporate same. Failure to do so, some punishments have been stipulated in the same chapter i.e. chapter 3. I must state clearly that same has capacity to sue and be sued. Section 54 is concerned with "carry on business""

In Bank of Baroda v Iyalabam Co. Ltd, (2009) 13 NWLR (Pt. 785) 551, the Court held that Nigerian courts recognize as juristic persons, corporations established by foreign law by virtue of the fact of their creation and continuance under and by virtue of that law. Such recognition is encouraged by comity of nations and such foreign company is permitted under the proper instruments of the foreign country. In Saeby Jernstoberi MFAS v Olaogun Enterprises Ltd, (1999) 14 NWLR (Pt. 637) 128,  the Nigerian Supreme Court, per Ayoola JSC explained the rationale of a foreign company's right to sue or be sued in a Nigerian courts thus;

"The principle of law that a foreign corporation, duly created by laws of a foreign State recognized by Nigeria may sue or be sued in its corporate name in our courts is part of the Common Law. The suggestion that a foreign company duly incorporated outside Nigeria should first be registered in Nigeria under the provisions of the Companies Act 1968 (which was the applicable statute) dealing with registration of foreign company as defined by that Act is too preposterous and patently inimical to international trade to merit any prolonged or serious consideration. It suffices to say that the Appellant Company with its registered address in Copenhagen properly sued in its corporate name"

From the foregoing, the current law is that a foreign company must be registered in Nigeria to carry on business in Nigeria. Nevertheless, non-registration of a foreign company does not prevent it from suing a Nigerian or Nigerian company before Nigerian courts or prevent a Nigerian or Nigerian company from suing it before Nigerian courts. This is in line with international best practices.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Emmanuel Ekpenyong
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions