registered with a share capital. The consent of the Attorney-General of the Federation is required to incorporate a company limited by Guarantee. This type of company is similar in certain respects to an incorporated trustee but the consent of the Attorney- General of the Federation is not required for a company limited by guarantee. Incorporation Procedure The cost and timeframes in the below table are based on typical experiences for the incorporation of limited liability companies. However, these will vary depending on the specifics of each incorporation and may not be relevant to companies in highly regulated sectors.
Therefore the tax relief period would not, in any event, extend beyond five years. This tax relief is granted to companies that operate within a determined list of industries available in the “Supplement to the List of 44 Pioneer Industries/Products Approved by the National Council of Ministers in 1989” and updated in the official gazette of 27 May 2015. The Nigerian Investment Promotion Commission (NIPC) was established to promote, co-ordinate and monitor foreign investment in Nigeria. The legislation governing the NIPC establishes a relatively liberal investment framework and allows 100% foreign ownership. However, in the oil & gas sector, foreign investment is limited to joint ventures or production-sharing agreements and local participation is a statutory requirement under the Nigerian Oil and Gas Industry Content Development Act. In addition, the Cabotage Act provides that only Nigerian-registered companies that are wholly-owned and operated by Nigerian citizens may engage in coastal trade or cabotage anywhere within the waters of the exclusive economic zone of Nigeria. The NIPC Act provides certain protections against unlawful expropriation and guarantees the free transfer of funds. Under Nigerian law, compulsory acquisition is permitted only where such acquisition is in the national interest or for a public purpose, and conducted pursuant to a law that ensures: (i) the payment of fair and adequate compensation, without undue delay; (ii) authorisation to repatriate the compensation amount in convertible currency; and (iii) a right of access to the courts for the determination of the investor’s interest, right, and amount of compensation to which he is entitled. The NIPC Act also provides for a range of tax incentives (as outlined in the Tax section below). Aside from the NIPC Act, there is legislation in Nigeria that incentivises investment in certain sectors. The Oil and Gas Export Free Zone Act established the Oil and Gas Export Free Zone (the Free Zone ) Authority to manage, control and co-ordinate all activities taking place within Free Zone. The Free Zone encompasses three oil and gas service centres around the ports of Onne (near Port Harcourt), Calabar and Warri. Incentives and fiscal measures approved by the Nigerian government that favour and encourage large investments in the Free Zone include: • Repatriation of foreign capital investment in the Free Zone at any time with capital appreciation of investments
Item
Time Approximate cost (USD equivalent)
1 Conduct a name
2 days.
USD 1.60
availability search and reserve a new name at the Corporate Affairs Commission ( CAC ).
2 Payment of stamp duties to the Federal Inland Revenue Service
The stamp duties payable by a company are dependent on the company’s proposed share capital. The cost of incorporation is dependent on the proposed share capital and type of company.
3 File an application
along with supporting documentation for the incorporation of the company at the CAC.
4 Companies with foreign ownership participation must obtain a business permit.The intending investor must file an application for a business permit through the Ministry of Internal Affairs.
8-12 weeks USD 600
Investment Promotion and Incentives Under the Industrial Development (Income Tax Relief) Act, the Nigerian government grants tax incentives to boost investment, which includes the grant of ‘pioneer status’, which is a tax holiday granted to qualified (or eligible) industries in Nigeria. When pioneer status is granted, the attendant tax relief period subsists for an initial period of three years, which may be extended by the President either (i) for one year and, upon expiry, for another final period of one year; or (ii) for two years.
Africa Investment Guide | 55
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