Investor Presentaiton
2.3
The Country and its
institutions
Business Organisation Labour and Social
and Regulation
Security Regulations
The Nigerian Financial
Services Industry
Tax System
Foreign Exchange
Transactions
Investment in Nigeria
In a limited liability partnership, all the partners are legally capable of limiting
their liability in the event of the winding up of the partnership. Unlike a limited
partnership, there is no requirement for the limited liability partnership to have a
general partner. However, to ensure the protection of members of the public, all the
partners are required to take out indemnity bonds and maintain professional liability
insurance. The limited liability partnership was introduced in Lagos State in 2009 by
the Partnership (Amendment) Law of Lagos State.
A corporation may be a partner with other corporations or with individuals.
The maximum number of partners in every partnership is twenty (20), except
partnerships of legal practitioners or accountants. A partnership is terminated on
the death or resignation of a partner, to the extent of the liability of the deceased
or resigning partner, or on the admission of a new partner. However, in practice,
the partnership continues with the new partner becoming subject to the same or
any newly agreed terms and conditions of the partnership. Non-resident foreigners
may not be able to use a partnership as a vehicle for running a business in Nigeria.
Incorporated Companies
In Nigeria, the word "company" is used to describe a company incorporated
with limited or unlimited liability and registered under CAMA. Subject to certain
exceptions, CAMA provides that no foreign company shall carry on business in
Nigeria unless it is incorporated in Nigeria as a separate entity. Foreign companies
have a choice to set up wholly owned or partially owned subsidiaries or affiliates in
Nigeria.
CAMA generally regulates the affairs of companies in Nigeria and has ample
provisions dealing with such matters as formation, shareholding, directorships,
borrowing, book-keeping, auditing, management, meetings of the board of
directors and shareholders, administration and liquidation.
There are three primary types of incorporated companies - an unlimited liability
company, a company limited by guarantee and a company limited by shares.
An unlimited liability company has no limit on the liability of its members and,
therefore, has little attraction for investors. A company limited by guarantee limits
its members' liability to the amount of their respective guarantees. This type of
company is generally incorporated as a not-for-profit organisation for charitable
purposes.
By far the most common type of company is a company limited by shares. The
liability of the members of such a company is limited to the amount, if any, unpaid
on the shares respectively held by them.
2.4
Accounting and
Auditing Requirements
Importation of Goods Exportation of Goods
COVID-19 Economic
and Fiscal Measures
A limited liability company may be either privately or publicly owned. A private
company must have a minimum of two (2) 22 and a maximum of fifty (50) members,
excluding present and ex-employees. Furthermore, the right of a private company
to transfer its shares is restricted and the company is prohibited from inviting the
public to subscribe to any of its shares or debentures.
Private companies limited by shares are the most common form of business
organisation utilised by foreign investors in Nigeria.
A public company must also have a minimum of two (2) members but there is no
restriction on the maximum number of members or their right to transfer shares
freely. The public may be invited to subscribe to its capital and the shares may be
traded on the Stock Exchange. A public company becomes publicly quoted when it
is listed on the Stock Exchange.
Incorporation
Incorporation of companies is generally handled by lawyers, although this may also
be undertaken by accountants and chartered secretaries. The documents required
to be filed with the CAC include the following:
•
Memorandum of Association;
• Articles of Association;
•
Statement of Share Capital;
Declaration of Compliance with CAMA;
•
Notice of Situation of the Registered Office of the Company;
•
Return of Allotment of Shares; and
• Particulars of First Directors.
Stamp duty is payable on the authorised share capital at the rate of 0.75% of the
authorised share capital. Filing fees are also applicable.
"Subject to certain exceptions, CAMA
provides that no foreign company shall
carry on business in Nigeria unless it
is incorporated in Nigeria as a separate
entity."
25
Investment in Nigeria Guide - 8th Edition
22 CAMA exempts small companies from the requirement to have two directors.
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