Nigeria 2015 (English & Chinese)

Tiwalola Okeyinka

ÆLEX

What are the key sectors in your jurisdiction that attract, or to which the government is seeking to attract, COI? Is the government generally supportive of COI? Which government, and regional, bodies are responsible for driving COI in your jurisdiction?

The Nigerian government is generally supportive of investments from China. In fact, Nigeria currently has several bilateral agreements and memoranda of understanding (MOU) with the People's Republic of China. The key sectors which are subjects of these agreements include infrastructure (public), oil and gas, power, agriculture, communications and tourism.

The bilateral relations between Nigeria and China are mostly facilitated by the Federal Government and the Ministry for Trade and Investment, with the President taking the lead and with support from states governors and relevant ministers.

Some of China's current investments in Nigeria include:

1. Development of 110 villas near the Lekki Free Trade Zone by the Chinese Civil Engineering Construction Corporation (CCECC). The project was announced in 2013, in addition to a further commitment of about US$1 billion for more projects in Nigeria.

2. In July 2013, the China Development Bank (CDB) signed a US$100 million facility agreement with the First Bank of Nigeria in order to boost lending to small and medium scale enterprises in the country and stimulate the Nigerian economy.

3. The Federal Ministry of Trade and Investment (Nigeria) and the Sanshui District Bureau of Economy, Science and Technology Development Promotion in China signed an MOU in 2013 to facilitate the transfer of skills and technologies, including a trade cooperation agreement between many of the factories in Nigeria and the industrial park within the Sanshui Economic Development Zones.

4. In 2013, Unicontinental International Engineering Company, a Chinese mining company, signed a multi-million dollar joint venture agreement with a Nigerian company, Multiverse plc to commence work on new mining projects in the country. The joint venture plans to build quarries that would supply granite and minerals to support infrastructure projects across the country.

5. In 2013, a US$20 billion MOU was signed between Power China and the Ministry of Power to generate 20,000 megawatts of electricity for Nigeria.

What are the most common legal entities and vehicles used for COI in your jurisdiction? How long do they take to become operational? What are the key requirements for establishment and operation of these vehicles which are relevant to COI (e.g. is there a requirement for local directors)?

If a foreign company wishes to do business in Nigeria directly, without investment in an existing entity, it is required by law to first incorporate a separate legal entity in Nigeria for that purpose, by registering with the Corporate Affairs Commission (CAC).

Certain categories of foreign companies may, however, apply to the President of Nigeria for exemption from local incorporation. These are:

(a) foreign companies invited to Nigeria by or with approval of the federal government to execute a specified individual project;

(b) foreign companies executing individual loan projects on behalf of donor countries or international organisations;

(c) foreign government-owned companies engaged solely in export promotion activities; and

(d) engineering consultants and technical experts engaged in any individual specialist projects under contract with any of the governments of the federation, their agencies or other bodies where the contract is approved by the federal government.

A company may be incorporated as either a private or a public company in any of the following forms:

(a) company limited by shares, which is a company having the liability of its members limited to the amount, if any, unpaid on the shares held by them;

(b) company limited by guarantee, which is a not-for-profit entity having the liability of its members limited to the amount that they have undertaken to contribute (or guarantee) in the event of the company being wound up; or

(c) unlimited company, which is a company not having any limit on the liability of its members.

For the purpose of registration with the CAC, there are no residency or nationality restrictions with respect to shareholders or directors of the company. As such, all of a company's shareholders and directors can be foreign persons or entities.

The registration of a company with the CAC will usually take about one to two weeks. Post-registration filings include:

Registration with the Nigerian Investment Promotion Commission

A company with foreign shareholding is required to register with the Nigerian Investment Promotion Commission (NIPC), especially where the company may in future seek pioneer status or require other services from the NIPC.

Business permit

A company with foreign shareholding is required to register with the Ministry of Interior and obtain a business permit. A business permit is a permanent approval granted to a company with foreign shareholders to carry on business in Nigeria. To qualify, the company must have a minimum share capital of NGN10 million (Rmb330,000).

Tax registration

All companies are expected to register at the relevant tax office for income tax purposes. They are also required to register for Pay as You Earn (PAYE) and value-added tax (VAT) purposes within six months of incorporation.

Upon registration, a tax identification number (TIN) and VAT registration number will be allocated to each registered company. These numbers must be inserted on all the company's invoices.

Registration for corporate tax and VAT may take up to two weeks and obtaining a Tax Clearance Certificate may take another two weeks.

Immigration

• Expatriate quota

An expatriate quota is the permit granted a company to employ expatriates to specifically approved positions. Companies wishing to obtain expatriate quota are required to apply to the Ministry of Interior in the prescribed form.

The quota may either be granted as “Permanent until Reviewed” (PUR) or for a renewable term, usually of two to three years at each instance. The PUR is usually granted with respect to the chief executive position in the company.

One of the functions of the Ministry of Interior is to monitor the execution of the quota positions granted in order to ensure effective transfer of technology to Nigerians and the eventual indigenisation of the positions occupied by the expatriates. Emphasis is therefore placed on employing Nigerians to understudy the foreign experts and acquire relevant skills for the eventual take-over of the expatriate quota positions.

Processing expatriate quota approvals can take about 10-12 weeks. The application is usually processed simultaneously with that of the business permit.

• STR visa and CERPAC

A foreigner who has been employed to take up an expatriate quota position would in the first instance require a Subject-to-Regularisation (STR) visa to enter Nigeria for the purpose of taking up the employment. An STR visa may be obtained from the Nigerian mission in the country where the applicant has been domiciled for at least six months.

A foreigner with an STR visa is required to regularise his stay in Nigeria by applying for and obtaining a Combined Expatriate Residence Permit and Alien Card (CERPAC) from the Nigerian Immigration Service within 90 days of his entry into Nigeria.

Once the CERPAC is issued, the expatriate will be expected to register his presence at the immigration office closest to his place of residence or occupation.

• Temporary Work Permit

Temporary Work Permits (TWPs) are usually issued to expatriates invited by corporate bodies to provide specialised services, such as after-sales installation, maintenance, repair of machines and equipment and other services that require special skills or expertise. It is issued by and obtainable only from the office of the Comptroller General of Immigration at the Nigeria Immigration Service Headquarters in Abuja.

The process may take between one and two weeks.