Legal Guidance For Navigating The Tech Startup Terrain In Nigeria

Pavestones Legal


Pavestones is a modern, full service, female led law practice with a particular focus on technology and innovation. The practice was borne out of a desire to meet the legal requirements of businesses by adopting a modern, cost effective and less archaic approach. Our key practice areas are Corporate and Commercial, Technology and Innovation, Data Protection and Compliance Services, Energy and Natural Resources and Banking and Finance.
In the dynamic Startup scene in Nigeria, attaining success depends not only on innovation and market traction but also on effectively navigating the intricate realm of legal requirements.
Nigeria Corporate/Commercial Law
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In the dynamic Startup scene in Nigeria, attaining success depends not only on innovation and market traction but also on effectively navigating the intricate realm of legal requirements.

Therefore, this newsletter provides some guidance essential for ensuring the prosperity and sustainability of tech startups in Nigeria.

What is a Start Up?

The Nigeria Start Up Act (2022) defines a startup as a company that has operated for no longer than a decade, dedicated to the creation, innovation, production, development, or adoption of a distinct digital technology, innovative product, service, or process.

What is the legal framework governing technology in Nigeria?

The regulatory framework governing technology in Nigeria extends across multiple subjects, including intellectual property rights, data privacy and security, electronic commerce, telecommunications, regulatory compliance, amongst others. Additionally, it encompasses emerging areas such as blockchain technology, artificial intelligence, and biotechnology. Recognizing the complexities involved in navigating the legal landscape in Nigeria, the following steps are outlined with the aim at offering guidance to startups:

1. Incorporation of Company: Commencing a startup's journey in Nigeria necessitates the formal incorporation of a company. During the incorporation process, adherence to the legal framework outlined by the Corporate Affairs Commission (CAC) is paramount. Additionally, the selection of the business structure, which could be a Limited Liability Company (LLC), a Partnership, or a Public Limited Company (PLC), is pivotal. Each business structure entails distinct requirements and implications pertaining to liability and governance. Furthermore, determining the share capital structure, which includes the authorized share capital, (which in some cases, is sector specific) and the allocation of shares among shareholders are integral components of the incorporation process.

2. Intellectual Property Protection: The core of any technology development company is rooted in intellectual property (IP). Safeguarding innovations via patents, trademarks, and copyrights registration is crucial for preserving the company's competitive advantage. The Trademarks, Patent and Design Registry and the Nigerian Copyright Commission (NCC) are responsible for registering and safeguarding these assets.

3. Contractual Prudence: It is essential for startup companies to meticulously draft all contractual agreements, including contracts with clients, suppliers, independent contractors, and employees. This is important because it will help clarify the rights and obligations of each of the parties involved, thereby reducing the likelihood of disputes. Ensuring contractual prudency is instrumental to the protection of the rights of startup companies.

4. Regulatory Compliance: Startup companies must stay abreast of regulatory requirements pertaining to technology, data protection, and cybersecurity. Considering the substantial reliance of technology companies on data, it is imperative for them to register with the Nigeria Data Protection Commission (NDPC) and adhere to data protection laws such as the Nigeria Data Protection Regulation (NDPR) and the Nigeria Data Protection Act (NDPA), to ensure compliance and mitigate potential legal risks. In addition, enforcing robust data protection policies and resilient cybersecurity protocols to effectively minimize the risks associated with potential data breaches is crucial.

5. Tax Considerations: All companies, including startups, are required to have a Tax Identification Number (TIN) issued by the Federal Inland Revenue Service (FIRS), as it is necessary for tax compliance. Technology companies are subject to corporate income tax, and certain transactions may attract Value-Added Tax (VAT). A thorough comprehension of these tax obligations is imperative for seamless operations and ensuring that the technology development company fulfills its fiscal responsibilities.

6. Funding and Investment: In the pursuit of investment, startups must be aware of the legal requirements and implications entailed in securing funding, including the privileges and equity sought by investors as prerequisites for financing. In Nigeria, startups have access to a variety of capital-raising avenues, such as equity financing, debt financing (through loans sourced from financial institutions or private lenders with predetermined repayment terms and interest rates), venture capital, and crowdfunding.

7. Employment: Compliance with employment regulations with respect to recruitment, termination, remuneration, and occupational safety is very crucial. It is important to safeguard the company's interests by establishing transparent employment policies and complying with regulatory mandates. This will reduce the risk of legal liabilities for the startup company.

8. Dispute Resolution Mechanisms: Considering the potential for disputes to arise during business transactions, it is imperative for companies, including startups, to implement efficient dispute resolution mechanisms. This may include mediation in contracts to facilitate amicable resolution of disputes, thereby averting the need for court intervention or adjudication through arbitration.

9. Corporate Governance: It is important to promote a culture centered on transparency and accountability by implementing sound corporate governance practices amongst all stakeholders including the management and employees. Ensuring meticulous record keeping, conducting frequent board and team meetings can help uphold ethical standards to cultivate trust and enhance credibility.


It is crucial for startup companies to give priority to legal compliance and corporate governance in order to avoid regulatory pitfalls and sanctions. Through steadfast adherence to regulatory mandates, protection of intellectual property, and cultivation of transparency and accountability within their culture, startups can effectively mitigate risks, cultivate trust among stakeholders, and fortify their position for sustained growth and resilience amidst the ever-evolving business environment.

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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