A foreigner may invest and do business in Nigeria except those in the negative list. Foreign investments could be either in the form of foreign direct investment or through foreign Portfolio Investment. Foreign portfolio investments are investments by foreign institutional investors and foreign portfolio investors such as pension fund managers, unit trust investment managers, institutional portfolio managers registered in other countries, this type of investors buy into a Nigerian company without actual direct participation, they invest in financial assets like bonds and stocks, while foreign direct investment involves ownership of productive assets, in other words such investor has to registration of a company and also be involved in the direct day-to-day operations of such company in Nigeria.
Procedure for Foreign Investment in Nigeria
Portfolio investors subscribing in primary market securities in Nigeria are required to effect their transactions through capital market operators, while Portfolio investors transacting business in secondary market securities should effect their transactions through licensed brokers/dealers on the floor of a securities exchange.
A foreign direct investor must first register a company with the Corporate Affairs Commission as a separate legal entity to carry on business in Nigeria, he must do so with a minimum of N10, 000,000 authorized share capital this is by virtue of Section 78 of the Companies and Allied Matters Act 2020. Notwithstanding the above requirement, they are statutory exemptions that apply to companies formed to carry on specific government approved projects among a few others, such companies can apply for exemption from incorporating a local subsidiary if such a foreign company falls within indicated categories expressly stipulated in the Act.
The next step is for the foreign investor to register with the Nigeria Investment Promotion Council (NIPC) this is a prerequisite before the commencement of operations, this is by virtue of the provisions of Section 28 of the Nigerian Investment Promotion Act, Cap 115 LFN 2004.
Having submitted the documents to NIPC for registration, the foreign company must then import its foreign equity through an authorized bank and obtain a Certificate of Capital Importation (CCI).
Furthermore, a foreign investor is required to apply for and obtain a Business Permit from the Federal Ministry of Interior. A business permit serves as an authorization to start a business, Section 8 of the Immigration Act (2015), and Paragraph 4 of the Immigration Regulations (2017) makes it mandatory for foreign direct investors to obtain a business permit before commencing business in Nigeria
Where foreign investors are desirous of employing the services of qualified expatriates (foreigners) they would be required to apply for and be issued an Expatriate Quota. Currently, expatriate quotas are issued for a period of 3 years subject to renewal.
Where a foreign investor intends to live and work in Nigeria for a long period, in addition to the business permit and expatriate quota, he will require a residence permit usually issued in the form of Subject to Regularization (STR) visa (which has now been renamed Temporary Residence Visas) which is usually regularized into a Combined Expatriate Residency Permit and Alien Card. A foreign director who intends to become a signatory to a bank account in Nigeria must first obtain the Combined Expatriate Residence Permit and Aliens Card (CERPAC) before such a person can be allowed as a signatory to a bank account in Nigeria.
It is important to state at this point that the new policy introduces the ‘Investor Visa’ with various thresholds for small, medium, large, and ultra-large-scale investors. Investors are to have evidence of an amount (dependent on the class of investor) as importation and retention of capital, this type of Visa applies to specific individuals that intend to permanently reside in Nigeria.
Where a foreign company intends to transact in business that will require the transfer and acquisition of foreign technology, they would be required to register with the National Office for Technology Acquisition and Promotion (NOTAP) and obtain a certificate.
Foreign capital market operators wishing to carry on investment and securities business in Nigeria are required to register with the Security and Commission Exchange Commission (S.E.C.) before operating in the Nigerian capital market. Securities except those of private companies should also be registered with (S.E.C.).
In conclusion, apart from the requirement to register with CAC, they are other operating licenses a foreign company may be required to obtain in order to commerce business, they include for Banks (Central Bank of Nigeria license) an Insurance company (National Insurance Commission license) for Oil companies (oil exploration licenses, oil prospecting licenses and oil mining leases, etc.) These licenses are granted by the Department of Petroleum Resources, telecommunications sector will have to obtain licenses from the Nigerian Communications Commission, manufacturing Companies (Certification for their products from the Standards Organization of Nigeria (SON) where they manufacture and processing foods, drugs, and allied products they must obtain certification for their products and factory sites from relevant institutions such as NAFDAC, Pharmacists Council of Nigeria, etc.
Contributed by Benedette Bassey, Esq.