Foreign-owned companies that intend to start and operate businesses in Nigeria either as an individually owned company or a subsidiary of a foreign company are required to obtain a business permit and business licenses where applicable.
A business permit is an authorization or approval issued by the Nigerian government through the Department of Citizenship and Business, Ministry of Interior to a foreign-owned corporate body registered for the start and operation of a business in Nigeria.
From the above, it can be deduced that before an application for a business permit, a foreigner or foreign-owned companies must have incorporated a company with the Corporate Affairs Commission (CAC) before applying for a requisite business permit or license. In our previous write-up, we discussed the step and requirements to register a foreign-owned company in Nigeria.
Both business permits and the expatriate quota are usually applied for at the same time because apart from obtaining a business permit, any foreigner who intends to work in Nigeria can only do this through a company upon making an application for expatriate quota in Nigeria. A work permit, also known as Combined Expatriate Residence Permit and Alien Card (CERPAC) will then be issued to such a foreigner.
Requirements to Obtain Business Permit in Nigeria
The following documents are required to obtain a business permit:
- An application letter to the Permanent Secretary of the Ministry for Interior.
- Certificate of incorporation obtained from CAC.
- A copy of CAC forms showing statements of share capital structure and particulars of shareholders and directors.
- Memorandum and articles of association of the company
- Tax Clearance Certificate of the registered company.
- Evidence of acquisition of business premises (Lease Agreement or C of O).
- Feasibility report and Project Implementation Programme (Business Plan) (should be certified or registered with CAC
- Joint Venture Agreement for partnership venture between Nigerian and foreigners where applicable
- Details of the shareholding structure of the joint venture
- Approval from the Local Content Board (NCDMB) for a company participating in the upstream sectorBusiness License in NigeriaSimilarly, any company seeking to deal in mineral resources must obtain a license to own and purchase mineral resources from the Ministry of Solid Minerals Development. Furthermore, a company seeking to import or manufacture food supplements or drugs or alcoholic drinks shall require a permit from the National Agency for Food and Drug Administration and Control (NAFDAC).
- In conclusion, a business permit is only required where the company is entirely owned by foreigners, especially where such a company intends to process an expatriate quota for its foreign employees or directors, while business licenses apply to both foreign and locally owned companies depending on the type of business a particular company intends to engage in. There are various business licenses that a company may be required to obtain before it can operate legally in Nigeria.
- In the same vein where it's a Fintech Company it will be required to obtain a special license called the Payment Systems Providers (PSP) from the Central Bank of Nigeria (CBN) before it can operate.
- A business permit should not be confused with a business license, which must be applied for and obtained before a company can engage or participate in a particular sector in Nigeria. There is no uniform licensing system In Nigeria, it varies depending on the issuing authority or agency, the nature and size of the business, the location and the sector involved. For instance, a company that intends to operate in the Oil and Gas sector as a service provider must obtain a license to deal in petroleum products from the Department of Petroleum Resources (DPR). Furthermore, where the company will carry out business activities that involve the exploration of crude oil, different permits such as Oil Mining Lease shall be required.
- It is worthy to note at this point that to improve efficiency, effectiveness and also provide a centralized database, an online portal has been created for registration and the process for applying for a business permit.
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.