Investment Outlook Owing to its human and natural resource endowments, Nigeria has the potential to become a major player in the global economy. However, this potential has remained relatively untapped and the country has remained largely reliant on oil, which accounts for 70% of government revenue and 95% of its foreign exchange. Following a decade of uninterrupted economic growth, crude oil prices have been declining since mid-2014 and this has precipitated a period of recession which has lasted since the second quarter of 2016. This has been exacerbated by a failure to diversify its economy and challenges in the oil sector, such as sabotage of oil export terminals in the Niger Delta. However, since its inauguration in May 2015 the current administration has made a concerted effort to tackle the systemic and infrastructural challenges the country currently faces, whilst seeking to stimulate economic growth. The government has prioritised three policies: tackling corruption, improving security and re-building the economy. While there has been some visible success, more needs to be done to achieve sustainable accelerated growth. Industries showing significant growth opportunities in Nigeria include: • Infrastructure (in particular power and transportation); • Consumer goods and the retail industry; • Food and Agriculture; and • Information and Communication Technology; and • Real estate. Forms of Corporate Structure The Companies and Allied Matters Act of 2004 ( CAMA ) is the central company law in Nigeria. Similarly, the Companies Regulations of 2012 made pursuant to CAMA provide for rules to regulate the administration of business organisations in Nigeria. With limited exceptions relating to unique or specific projects authorised by the President, a foreign company seeking to carry on business in Nigeria must be incorporated in Nigeria as a separate Nigerian legal entity. The most commonly-used corporate entities in Nigeria are: • Limited Liability Company (Ltd) A limited liability company is a separate legal entity to its members. The liability of members is limited to the amount unpaid on the shares of the company held by
each member. A limited liability company may either be public or private. • Unlimited Liability Company As opposed to a limited liability company, the liability of members is, as the name suggests, unlimited. So although the company has a limited status, its members’ liabilities are not limited to the extent of their unpaid subscription upon winding up. • Incorporated Trustee A form of corporate entity used to set up not-for-profit organisations dedicated to the promotion of religious, educational, literary, scientific, social, developmental, cultural, sporting or charitable goals. These include trade unions, community based organisations, social clubs and Non-Governmental Organisations ( NGOs ). • Sole Proprietorship/Business Name A sole proprietorship is registrable under CAMA as a business name, which may be owned by one or more persons/companies. Business names do not require a share capital and are not separate legal entities to their owners. • Partnership Partnerships are formed and operated in accordance with the Partnership Act of 1890. For partnerships involving foreign investors, the partnership law of the investor’s state also applies (where that state has enacted one). CAMA permits the registration of partnerships as business names but limits membership to 20 persons. This limit does not apply to partnerships consisting of legal practitioners or accountants carrying on a legal or accountancy practice. Lagos State has a specific law on partnerships which, in addition to the general concept of a limited partnership under the Partnership Act 1890, is unique in making additional provision for a limited liability partnership ( LLP ). LLPs restrict the liability of partners when a partnership is sued in its own capacity. Further, a judgment against a partnership may not be satisfied from a partner’s asset unless there is also a judgment against the partner. LLPs therefore circumvent the regime of unlimited liability for partners in a partnership, which still applies outside Lagos. • Company Limited by Guarantee (Ltd/Gte) This is primarily used for non-profit organisations; income and property are to be applied solely to promote the company’s objects and the company may not be
54
Made with FlippingBook Online newsletter