Setting up Business in Nigeria - Incorporation Process, Entity Options & Investment Guide

Nigeria the Right Choice for your Business

Nigeria is one of the most promising business destinations for companies looking to enter the African market. For the new companies country offers a large consumer market, growing industries, and a government that is taking active and progressive steps to make it easier to operate.

Strategic Location in West Africa
With a population of over 200 million people, Nigeria is a key gateway to the West African region. As a part of the Economic Community of West African States, companies based in Nigeria can easily trade and expand into neighbouring markets and major cities such as Lagos and Abuja are well connected as well.

Reforming Business Environment
The Nigerian government has been working to simplify the process of doing business and has introduced the Companies and Allied Matters Act 2020 which has eventually made company registration and governance easier and more transparent.

Strong Economic Potential
Nigeria’s economy is growing rapidly majorly because of availability of natural resources, a young workforce, and rise in the digital and services sectors. Nigeria continues to promote investments by both local and foreign investors with continued reforms and favourable policies.

Process of Setting Up a Company in Switzerland

Setting up a business in Nigeria requires following a process regulated by the Corporate Affairs Commission (CAC) under the Companies and Allied Matters Act (CAMA) 2020.

1. Choose Legal Form and Business Name

• Decide whether to register as a Private Limited Company (Ltd), Public Limited Company (PLC), Limited Liability Partnership (LLP).
• Search on the appropriate names you wish to choose for the business and reserve it on the CAC online portal to ensure it is available.

2. Prepare Incorporation Documents

• Draft and prepare the required incorporation documents such as the Memorandum and Articles of Association, details of directors and shareholders, and the company’s registered office address.
• Other documents also might be required such as forms of consent to act as director, declaration of compliance, and share capital statements.

3. File for Company Registration

• Submit all prepared documents through the CAC online registration portal.
• The CAC reviews and approves the application once requirements are met, after which a Certificate of Incorporation is issued.

4. Obtain Tax Identification Number

• Once incorporation is completed, apply for a company Tax Identification Number through the Federal Inland Revenue Service (FIRS).
• The TIN is mandatory for tax filing, invoicing, and opening a corporate bank account.

5. Provide a Registered Office Address

• Every company in Nigeria must maintain a registered office address for legal and correspondence purposes.
• This address must be provided during registration and reflected in all company filings.

6. Open a Corporate Bank Account

• Use the Certificate of Incorporation, Memorandum and Articles, and TIN to open a company bank account in Nigeria.
• Banks may also require directors identification and proof of address for verification.

7. Register for Employment and Social Contributions

• Employers must register employees for pension under the National Pension Commission (PENCOM) and for social insurance under the Nigeria Social Insurance Trust Fund (NSITF).
• This ensures compliance with labour and employee protection laws.

 

Business Structures in Nigeria — Finding the Right Fit

Under the Companies and Allied Matters Act (CAMA) 2020, several business forms are recognized in Nigeria. Below are the most common available options for local and foreign investors.

1. Private Limited Company (Ltd)

• Minimum Shareholders: 1 (CAMA 2020 allows single-member companies).
• Liability: Limited to the value of shares owned by each shareholder.
• Governance: Must have at least one director (who can be a resident or non-resident).
• Capital Requirement: No fixed minimum capital requirement under CAMA, companies can decide based on their needs.

2. Public Limited Company (PLC)

• Minimum Shareholders: 2 or more, shares can be offered to the public.
• Liability: Limited to the amount unpaid on shares held.
• Governance: Must have at least two directors and a company secretary.
• Capital Requirement: Usually higher, as public companies must meet minimum share capital set by law for their sector.

3. Sole Proprietorship or Partnership

• Ownership: One person (sole proprietor) or two or more partners.
• Liability: Owners are personally liable for the debts of the business.
• Registration: Simpler and faster to register with the CAC under the Business Names Act.

4. Limited Liability Partnership (LLP)

• Structure: Combines features of a company and a partnership.
• Liability: Partners’ liability is limited to their contributions.
• Governance: Must have at least two designated partners.

5. Branch or Subsidiary of a Foreign Company

• Foreign companies intending to operate in Nigeria must incorporate a local subsidiary with the CAC before starting operations.
• Alternatively, a foreign branch can be approved temporarily if granted exemption by the Nigerian government (under Section 78 of CAMA).

Few Important Points to Consider

When setting up a business in Nigeria, there are additional points which needs to be considered.

1. Foreign Investment and Repatriation

• Foreign investors are allowed to own 100% of a Nigerian company in most sectors.
• To repatriate profits, dividends, or capital in foreign currency, investors must obtain a Certificate of Capital Importation (CCI) through an authorised Nigerian bank.
• This certificate also protects foreign ownership rights and facilitates the transfer of funds abroad.

2. Regulatory Approvals and Sector-Specific Licensing

• Different industries in Nigeria have their own regulations and licensing requirements such as NAFDAC is for companies dealing with food, cosmetics, and pharmaceuticals, CBN is for banking and financial services and many more.

3. Regional and Infrastructure Differences

• Nigeria’s business environment is different across its 36 states. But Lagos and Abuja remain the most developed commercial and administrative hubs.
• Companies should assess location-specific advantages and challenges before choosing an office or factory site.

 

How Our Firm Can Help You

With our extensive experience in helping international businesses, our firm is well-equipped to support your expansion plans in Nigeria. We can help you in:

Market Study & Feasibility: Assess opportunities and viability for your business in Nigeria and help you build a tailored market entry roadmap.

Partner & Investor Search: Identify local partners, distributors, or collaborators to accelerate growth.

Incorporation & Compliance: Assistance with setting up a subsidiary or branch, opening bank accounts, providing registered office and resident director services, VAT registration, bookkeeping, and statutory filings.

Tax & Regulatory Strategy: Choose the best canton, plan cross-border taxes efficiently, and obtain sector-specific regulatory approvals.

Ongoing Legal Support: From corporate governance, contracts, and dispute resolution to intellectual property protection, employment law, and immigration support, we ensure your business operates smoothly.

Nigeria offers a strategic location, favourable tax framework, and strong business ecosystem for international companies. Let’s explore how your company can succeed in Nigeria!