foreign participation in nigerian business sector

They are :

• a. Companies and Allied Matters Act, 2020.
• b. Nigerian Investment promotion Act, 2004.
• c. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act.
• d. Investments and Securities Act, 2007.
• e. Immigration Act, 2004.
• f. National Office for Technology Acquisition and Promotion Act, 2004.
• g. Industrial Inspectorate Act, 2004.
• h. Industrial Development (Income Tax Relief) Act, 2014.
• i. Pioneer Status Incentive Regulations 2014.
• j. Companies Income Tax Act, 2004.
• k. Personal Income Tax Act, 2004.

The categories of company which are exempted are:

• a. Foreign companies invited into Nigeria by or with the approval of the Federal Government to execute any specified individual project.
• b. Foreign companies which are in Nigeria for the execution of any specific individual loan project on behalf of a donor country or international organization.
• c. Foreign government-owned companies engaged solely in export promotion activities.
• d. Engineering consultants and technical experts engaged on any individual specialist projects under contract with any of their agencies or with any other body or person, where such contract has been approved by the Federal Government.

The application for exemption is to be addressed in writing to the Minister of Trade. Section 80 (2) CAMA, 2020.

An application for exemption under Section 80(2) of the Companies and Allied Matters Act is to be addressed to the Minister of Trade setting out the following:

• a. The name and place of business of the foreign company outside Nigeria.
• b. The name and place of business or the proposed name and place of business or the proposed name and place of business of the foreign company in Nigeria.
• c. The name and address of each director, partner or other principal officer of the foreign company.
• d. A certified copy of the charter, statutes, or memorandum and articles of association of the company, or other instrument constituting or defining the constitution of the company and if the instrument is not written in the English Language, a certified translation thereof.
• e. The names and addresses of one or more persons resident in Nigeria authorized to accept, on behalf of the foreign company, services of processes and any notices required to be served on the company.
• f. The business or proposed business in Nigeria of the foreign company and the duration of such business.
• g. Particulars of any project previously carried out by the company as an exempted foreign company.
• h. Such other particulars as may be required by the Minister or Secretary to the Government of the Federation.

According to Section 82 of the Companies and Allied Matters Act, the status of an exempted foreign company is that of an unregistered company and accordingly the provisions of the Companies and Allied Matters which apply to exempted companies applies to an exempted foreign company.

Messrs. Mel & Balor Inc. is not precluded from suing Citadel Limited for breach of contract. The fact that Messrs. Mel & Balor Inc. is an exempted company does not affect its liability to sue a Nigerian company in Nigeria or right to be sued by a Nigerian company in Nigeria. See Ritz Pumenfabrik GMBH & Co. KG v. Techno Continental Engineers Nig. Ltd. (1999) 4 NWLR (Pt. 598) 298.

By virtue of Section 80(5) of the Companies and Allied Matters Act, the Minister of Trade may revoke the exemption granted a foreign company if he is of the opinion that:

• a. The company has contravened any provision of Companies and Allied Matters Act.
• b. The Company has failed to meet any condition contained in the exemption order.
• c. There is good or sufficient reason.

Foreign Direct Investment is a measure of foreign ownership of productive assets, such as factories, mines and land while Foreign Portfolio Investment has to do with the entry of funds into a country where foreigners make purchases in the country’s stock and bond markets. Thus, if an alien wants to invest in the shares of a company, whether public or private, he can do so through Foreign Portfolio Investment.

The steps are as follows:

• a. Obtain from the Nigerian embassy, a cable visa subject to regularization for owners and officers of the company.
• b. Secure an address in Nigeria for service of documents and other pre-formation of the company.
• c. Prepare and execute Joint Venture agreement and other pre-incorporation contracts if in partnership with Nigerians.
• d. Incorporate the company with Corporate Affairs Commission and obtain original certificate of Incorporation and other documents.
• e. Importation of capital through an authorized dealer, which is an approved bank and obtain certificate of capital importation issued by the Central Bank of Nigeria.
• f. Register the company with Nigerian Investment Promotion Commission.
• g. Apply to the Securities and Exchange Commission (SEC) for registration of interest of the foreigner in the shares of the company.
• h. Obtain relevant permits from the relevant Regulatory Agencies.
• i. Apply to obtain relevant incentives and reliefs available for foreign investors in Nigeria.

Where any foreign company fails to comply with the requirements of Act on the registration of foreign companies in Nigeria, the company is liable to prosecution and such penalty as the Corporate Affairs Commission specifies by regulation. Also, every officer or agent of the company who authorized or permitted the default or failure to comply with the provisions of the Act, whether or not the company is convicted of any offence is liable on conviction to such penalty as the Corporate Affairs Commission shall specify by regulation. Where the offence is a continuing one, the company and every officer or agent of the company are liable to further penalty as the Corporate Affairs Commission shall specify by regulation for every day during which the default continues. Section 79 CAMA, 2020.

The permits which a foreign company in Nigeria must obtain are as follows:

• a. Business permit: A foreign company in Nigeria must obtain the written consent of the Minister of Internal Affairs in order to do business in Nigeria. Section (1) (b) Immigration Act.
• b. Expatriate quota: This is the permission given to a business concern to employ non-Nigerians in the numbers and capacities in the quota. Offence for failure to obtain the prior permission of Comptroller General attracts N1m fine or imprisonment of the officers of the company or both. A foreign company must seek and obtain along with the permit, an initial expatriate quota. There are two types of expatriate quota which are Permanent until reviewed which is usually for the post of chairman of the company’s board of directors or the managing director and temporary expatriate quota which is for directors and other employees of the company.
• c. Resident Permit: Any person who desires to enter Nigeria for the purpose of residence beyond three months must obtain a residence permit.

The incentives available to a foreign company doing business in Nigeria are:

• a. Labor Intensive Mode of Production: This has to do with tax concession for five years.
• b. Investment Tax Credit: Companies that are engaged in activities for commercialization are allowed 20% investment tax credit on their expenditure. A company, which purchases a locally manufactured machinery or equipment for use in its business, is allowed 15% investment tax credit on such fixed asset. Section 30 Companies Income Tax Act.
• c. Bonus for filing return on time: A company which files return within the time stipulated for filing is granted a bonus of one percent of the tax payable. Section 56 Companies Income Tax Act.
• d. Pioneer Status Certificate is issued by NIPC to the effect that the company is exempted from payment of tax for (3 years - 5 years)
• e. Petroleum investment allowance: A company in Production Sharing Contract with the NNPC is entitled to petroleum investment allowance – 50% of chargeable profit. Section 2 Petroleum Profits Tax Act.
• f. Export Free Zone: A free trade zone is an area within which goods may be landed, handled, and re-exported freely. The profit of a 100% export oriented undertaking established within and outside an Export Free Zone shall be exempt from tax for the first three consecutive assessment years.
• g. Tax Relief: This is for a company with minimum of 5 new employees which retains the employees for at least 2 years. There will be an exemption from Companies Income Tax of 5% of its assessable profits.
• h. Double Taxation Treaties Relief. If a Nigerian company that has paid or is, liable to pay tax, proves that it has paid the tax in a Commonwealth or another country that has double taxation agreement with Nigeria, then, such a company will be entitled to relief from tax paid or payable by it.
• i. ECOWAS Trade Liberalization Scheme-Treaty and Protocols: This involves total exemption of duties and taxes and the free movement of products and citizens.
• j. Duty Drawback/Suspension Scheme. Importers of Materials used in the manufacture of exported goods may claim repayment of import duties earlier paid in respect of the materials.

CERPAC means Combined Expatriate Residence Permit and Aliens Card. The combined Expatriate Residence Permit and Aliens Card was introduced in 2002, for foreigners excluding ECOWAS citizens, accredited diplomats and children below the age of 15 years. It provides a computerized unit at various points of entries like airports that is linked to a central center containing information on every foreigner residing in Nigeria. The residence permit allows a foreigner and his dependents or family to reside in Nigeria. Under the scheme, registration is valid for a year after which application for revalidation must be made and foreigners relocating to a different part of Nigeria must inform the nearest Aliens Office of the move. A foreigner leaving Nigeria permanently must hand over his card to the Aliens Office.