Doing Business in Nigeria: Foreign investment requirements and protections under the NIPC Act

Foreign investors planning to enter the Nigerian business space have received serious consideration from the federal government which has set up the Nigeria Investment Promotion Commission (NIPC). The NIPC is the federal government agency established by the NIPC Act N0. 16 of 1995 to promote, co-ordinate and monitor all investments in Nigeria; with basic functions and powers prescribed by Act 16 of 1995.

Amongst many functions, the NIPC has a One Stop Investment Centre, which serves as an investment facilitation mechanism, which brings relevant government agencies to one location, coordinated and streamlined, to provide efficient and transparent services to investors. It shortens and simplifies administrative procedures for the issuance of business approvals, permits and licenses and company incorporation thereby removing bottlenecks faced by investors in establishing and running business, and ultimately, reduces the cost of doing business in Nigeria.

In addition, the centre provides statistical data and information on the Nigerian economy, investment climate, legal and regulatory framework as well as sector and industry specific information to aid existing and prospective investors in making informed business decisions. Currently, the One Stop Investment Centre of the NIPC is in its second phase of integrating the services of 26 federal government agencies to create easy business facilitation for investors. Some participating agencies include Corporate Affairs Commission (CAC), Nigerian Immigration Services(NIS), Nigeria Customs Service(NCS), Federal Internal Revenue Service (FIRS), National Agency for Food and Drug Administration and Control (NAFDAC), Central Bank of Nigeria (CBN), and many more.

According to the NIPC Act No. 16 of 1995, there is an abolishment to any restrictions, in respect of the limits of foreign shareholding, in Nigeria registered/domiciled enterprises. Also, the Act makes provision as relating to investments made by non-Nigerians, stating that they may invest and participate in the operation of any enterprise in Nigeria. However, any enterprise, in which foreign participation is permitted, shall after its incorporation or registration, be registered with the NIPC.

The Act also allows a foreign enterprise to buy the shares of any Nigerian enterprise in any convertible foreign currency, noting that foreign investors in an approved enterprise are guaranteed unconditional and total repatriation of capital and profits including dividends. This also includes profit (net of taxes) attributable to the investment, payments in respect of loan servicing where a foreign loan has been obtained, the remittance of proceeds (net of all taxes) and other obligations in the event of sale or liquidation of the enterprise or any interest attributable to the investment.

Investment Protection Assurance

The Act has also has created legal protection to enterprises created wholly or in partnership with foreign investors from being nationalised or expropriated by any Government of the Federation (Federal or State). In addition, the Act states that there will be no acquisition of an enterprise by the federal government unless the acquisition is in the national interest or for a public purpose under a law which makes provision for:

(a)  payment of fair and adequate compensation, and

(b)  a right of access to the courts for the determination of the investor’s interest of right and the amount of compensation to which he is entitled.  

However, such compensation shall be paid without undue delay, and authorisation given for its repatriation in convertible currency where applicable.  

Conditions and basic requirements for registrations with the NIPC

To apply to NIPC as an wholly or partly owned foreign company, the company must:

1. Have its activity/product be listed among the prescribed activities.
2. Have a minimum of 10million share capital for foreign or joint venture company, noting that the requirement for local companies is one million ordinary shares.
3. Applied within the first year of commencement of operation.

The application form should be accompanied with

• Original copy of the duly completed NIPC Form;
• Original copy of the treasury receipt for the purchase of NIPC Form;
• A copy of the Tax Clearance Certificate of the applicant company;
• A copy of the Memorandum and Articles of Association;

• Evidence of acquisition and installation of plant and machinery;
• Operational Licenses for applicable activity;

• A copy of the Joint-Venture Agreement – UNLESS 100% foreign ownership is applicable.
  
  

Prescribed fees for NIPC business registration and pioneer status

S/N	Services	Fees
i	NIPC Business Registration fee	N15,000.00
ii	Application for Pioneer Status Form and Processing fee	N140,000.00
iii	Collection of Approval letter and Certificate	N60,000.00
iv	Application for extension of Pioneer Status	Free
v	Collection of approved Pioneer Status Extension	N50,000.00

Prescribed fees for quota and business permit

i	Grant of Establishment Quota (per slot)	N10,000.00
ii	Processing fee for Quota/Business Permit	N25,000.00
iii	On-line Registration Fee (automation)	N50,000.00
iv	Renewal of Quota position (per slot)	N5,000.00
v	Additional Quota (per slot)	N10,000.00
vi	Stay of Action	N5,000.00
vii	Grant of Business Permit	N50,000.00
viii	Amendment of Business Permit	N25,000.00
ix	Re-grading of Quota (per slot)	N10,000.00
x	Appeal Processing fee	N10,000.00
xi	Restoration of Lapsed quota	N55,000.00
xi	Upgrading of Quota to P.U.R (per slot)	$10,000.00
xiii	Re-designation of P.U.R. (per slot)	$10,000.00
xiv	De-tagging/Extension of Quota (per slot)	N10,000.00
xv	Re-validation of lapsed Quota (per slot)	N10,000.00
xvi	Penalty for late submission of renewal of private license	N150,000.00

Some prescribed fees by the Corporate Affairs Commission (CAC)

S/N	Services	Fees
i	Registration of public companies whose share capital does not exceed N1m Exceeds N1m	N20,000.00 for the first N1m and thereafter, N20,000.00 for every N1m or part thereof
ii	Registration of private company whose share capital does not exceed N1m Exceeds N1m	N10,000.00 for the first N1m and N10,000.00 for every N1m or part thereof
iii	Registration of company not having a share capital	N20,000.00
iv	Filing of notice of exemption by foreign companies	N30,000.00
v	Certified True Copy of: Memorandum and Articles of Association Certificate of incorporation CO2, CO6 and CO7	N3,000.00 N10,000.00 N2,000 each
vi	A set of Company Incorporation Form	N500.00
vii	Filling of Annual Returns	N2,000.00
viii	Filing of Annual Returns for a small company	N2,000.00
ix	Filing of Annual Return for Private company other than a small company	N3,000.00
x	Filing of Annual Return for Public company	N5,000.00
xi	Filing of Annual Return for company Limited by Guarantee	N5,000.00
xii	Filing of Annual Report by Foreign companies	N5,000.00