Business licenses are compulsory licenses to be obtained by Nigerians and foreigners to operate a business legally in different sectors of the economy in Nigeria. They are permits issued by the government or through its agencies to individuals and companies to carry on business in Nigeria. The fundamental purpose of issuing business licenses to individuals and companies is to regulate the business activities of private and public organizations and to generate revenue for the government.
Every sector of the economy have different activities that differ from each other, hence, there is no unified business license issued by the government as it varies from the different type and size of the business operated and the issuing authority or agency in charge of the industry. However, the first step to obtaining a business license in any sector is to register the business with the Corporate Affairs Commission (CAC).
Most of the permits and licenses are issued by the Federal Government through the Federal Ministry of Interior, Department of Citizenship and Business; however, there are other governmental agencies that issue business licenses in Nigeria.
Procedure to Obtain a Business License
- To obtain a business license, the first step is to determine the license required to be obtained to operate a particular business. An example of which is the obtainment of license from the Department of Petroleum Resources (DPR) to operate in the oil and gas industry as a service provider.
- The next step is to identify the relevant government authority office or its website for application if any, for the application of the business license for operation.
- Make payment for the prescribed fees.
- Provide the requisite documents and complete the stages required in the application.
- The license is obtained when the process is duly completed and the business becomes a legal entity that can operate in Nigeria.
Requirements to obtain a business permit in Nigeria are;
A business permit is an authorization granted to a foreigner to operate a business in Nigeria. A company wholly owned by foreigners must obtain the relevant permit from the Ministry of Interior to operate in Nigeria.
There are documents required to be submitted for an application for a business permit in Nigeria, these are;
- An application letter addressed to the Permanent Secretary of the Federal Ministry of Interior.
- A certificate of incorporation issued by the Corporate Affairs Commission (CAC).
- CAC Form 1.1 showing the statement of share capital, particulars of shareholders, and directors of the company.
- Memorandum and articles of association of the company.
- Tax clearance certificate of the company.
- Evidence of acquisition of business premises.
- Feasibility report and project implementation programme, which is a business plan which must be certified or registered with the CAC.
- Where applicable, a joint venture agreement for partnership ventures between a Nigerian company and a foreign company.
- The shareholding structure of the joint venture.
- Evidence of capital importation for wholly-owned foreign companies.
- Approval issued by the Local Content Board (NCDMB) for a company participating in the upstream sector.
A business permit is required where the company is wholly owned by foreigners while a business license is applicable to both foreign and locally owned companies which are also dependent on the nature and type of business the company intends to operate.
Business licenses are licenses to be obtained before a company can carry on business in the particular sector of the economy the company relates to, hence it should not be confused with a business permit which is applied for by wholly foreign-owned companies intending to transact in Nigeria.