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With a nominal GDP of over $492 billion (2016) and a more
than 180-million strong youthful population, Nigeria, is both
Africa's biggest economy and the most populous black nation on
earth. Whilst available demographic data presents the country as
the preferred investment destination on the continent, ongoing
economic reform continues to make Nigeria a progressively easier
place to do business, with attendant inflow of significant foreign
investments in recent years.
This document highlights the basic legal and regulatory
framework for doing business in Nigeria. Analyzed in simple
language understandable to all classes of persons and businesses,
domestic and foreign investors from diverse places around the globe
will find this compilation a useful guide to learning the basic
requirements of doing business, in Africa's largest consumer
market and economic hub.
INTRODUCTION
Under Nigerian Law, business activities may be undertaken in
Nigeria through any of the following entities:
private or public limited liability
company;
unlimited liability company;
company limited by guarantee;
partnership/firm;
sole proprietorship; and
incorporated trustees.
Specifically, the Companies and Allied Matters Act, Cap C20,
Laws of the Federation of Nigeria ("LFN") 2004
("CAMA") regulates the formation of business
organizations, save for partnership/firm and sole
proprietorship.
Section 54 of CAMA provides that in order to 'carry on
business' in Nigeria, a foreign company must be incorporated in
Nigeria as an entity under the provisions of CAMA. The Nigerian
company upon incorporation is a separate legal entity from its
overseas parent. However, a foreign company may apply to the
Federal Executive Council for exemption from the requirement to
register in Nigeria if it belongs to one of the categories listed
in Section 56 (1) of CAMA. The categories are as follows:
Foreign companies invited to Nigeria
by or with the approval of the Federal Government to execute any
specified individual project;
Foreign companies which are in
Nigeria for the execution of specific individual loan projects on
behalf of a donor country or international organisation;
Foreign Government-owned companies
engaged solely in export promotion activities; and
Engineering consultants and technical
experts engaged in any individual specialist project under contract
with any of the governments in the Federation or any of their
agencies or with any other body or person, where such contract has
been approved by the Federal Government.
Under Nigerian company law, a company having a share capital may
either be registered as a private limited liability company, a
public limited liability company or an unlimited company. Most
non-Nigerians desirous of setting up entities in Nigeria usually
establish private limited liability companies, at inception and may
then, based on their business models, convert these to public
limited liability entities at a later date.
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.
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