Nigeria is open to foreign investment, and in most sectors a foreign investor can own all the shares in a Nigerian company. But a foreign business cannot simply start trading in Nigeria. It must first set up a Nigerian company, and once that company is registered, there are further approvals before it can operate fully. This guide sets out the steps.
A foreign company must incorporate locally
Under section 78 of the Companies and Allied Matters Act 2020, a foreign company that intends to carry on business in Nigeria must take the steps needed to obtain incorporation as a separate entity in Nigeria. Until it does, it cannot carry on business here, and carrying on business without registration is an offence.
A limited number of foreign companies can apply to be exempted, such as those invited by the Federal Government to carry out specific projects, or those involved in certain government-backed and donor-funded projects. Most investors will incorporate a Nigerian subsidiary.
Can a foreigner own 100% of the company?
In most sectors, yes. Foreign investors may hold all the shares in a Nigerian company, except in a short negative list (arms and ammunition, narcotic drugs, and military and paramilitary apparel) and in sectors where specific laws require Nigerian ownership or control. These include parts of oil and gas, advertising, broadcasting, private security, aviation and coastal shipping. If your business touches any of these sectors, take advice before choosing your structure.
Choosing the right vehicle
Most foreign investors use a private company limited by shares. A private company may be formed with a single shareholder, but companies with foreign participation are usually expected to have at least two directors. The company must have a registered office address in Nigeria, and it must disclose its persons with significant control, meaning the individuals who ultimately own or control it.
Share capital
Companies with foreign participation are generally expected to have a minimum issued share capital of ₦100 million. This threshold comes from the immigration rules for business permits and expatriate quota, and the Corporate Affairs Commission's approach to applying it at incorporation has changed over time. We confirm the current position, and the capital that suits your plans, before we file.
Step by step
- Name reservation. We search and reserve the proposed company name with the Corporate Affairs Commission.
- Incorporation documents. We prepare the memorandum and articles of association and the registration forms. Shareholders and directors abroad sign them where they are, and documents signed outside Nigeria may need to be notarised and legalised.
- Registration. We file with the CAC, pay the filing fees and stamp duty, and obtain the certificate of incorporation.
- NIPC registration. A company with foreign participation registers with the Nigerian Investment Promotion Commission before it starts business.
- Bringing in capital. When foreign capital is brought in through a Nigerian bank, the bank issues a Certificate of Capital Importation. Keep it safe: it supports the later repatriation of dividends and capital.
- Business permit and expatriate quota. A business permit from the Federal Ministry of Interior is generally required for a foreign-owned company to operate, and expatriate quota is needed to employ foreign staff.
- Tax and sector licences. The company registers for tax and obtains any licence its sector requires before trading.
Can it be done without travelling to Nigeria?
Largely, yes. Name reservation, preparation of documents and CAC filing can all be handled by a Nigerian law firm on your behalf. You provide identification for the shareholders and directors and sign the documents where you are. Opening the company's bank account and some later approvals may need more involvement, and we will tell you in advance what is required.
How we help
Niger & Nile is accredited by the Corporate Affairs Commission to carry out registrations. We incorporate companies for foreign investors from start to finish, handle the post-incorporation filings and approvals, and remain on hand for corporate secretarial work and disputes once the business is running. Our office is in Lagos, and we serve clients in Lagos, Ogun, Oyo and Abuja.
This article is general information, not legal advice. The law and court practice change, so please take advice on your own circumstances.