Doing Business In Nigeria – Shareholders

1. Legal framework

1.1 Does your jurisdiction have a civil law system, a
common law system or a hybrid system?

Nigeria operates the English common law system, which can be
traced back to its colonial history. Nigeria was colonised by
Britain and the common law system is a legacy of English
colonialism.

1.2 Which legislative and regulatory provisions
primarily govern the establishment and operation of enterprises in
your jurisdiction?

• Companies and Allied Matters Act, 2020 (CAMA): This is the
  principal law that governs the registration, incorporation,
  management, compliance and winding up of enterprises in Nigeria. It
  provides for the establishment of various types of enterprises,
  including:




• • sole proprietorships;

  
  

  • partnerships;

  
  

  • private and public limited liability companies; and

  
  

  • not-for-profit entities.




• Business Facilitation (Miscellaneous Provisions) Act 2023
  (BFA): This law is a legislative intervention by the Presidential
  Enabling Business Environment Council (PEBEC) aimed at enhancing
  the ease of doing business in Nigeria. It amends 21
  business-related laws and removes bureaucratic constraints to doing
  business in Nigeria.




• Companies Income Tax Act (Cap C21 Laws of the Federal Republic
  of Nigeria (LFN) 2004): This law regulates the taxation of
  companies in Nigeria.




• Consolidated Rules and Regulations of the Securities and
  Exchange Commission (SEC) 2013 (as amended): These rules provide
  supportive and additional legislation for capital markets operators
  in Nigeria on their operations in the Nigerian capital
  markets.




• Copyright Act, 2022: This law regulates the protection and
  exploitation of copyrightable works in Nigeria.




• Federal Competition and Consumer Protection Act, 2018: This is
  the principal law governing consumer protection and competition
  regulation in Nigeria.




• Investment and Securities Act, 2007: This law establishes the
  Nigerian SEC to regulate the issuance of securities and the
  Nigerian capital markets for the protection of investors.




• Labour Act (Cap L1, LFN 2004): This law regulates the
  relationship between employers and employees in Nigeria and sets
  out the minimum terms and conditions of employment.




• Nigerian Investment Promotion Commission (NIPC) Act (Cap N117,
  LFN 2004): This law establishes the NIPC and regulates the
  promotion and facilitation of foreign investments in Nigeria.




• National Office for Technology Acquisition and Promotion Act
  (Cap N62, LFN 2004): This law regulates the transfer of technology
  to Nigeria.




• Nigeria Startup Act, 2022: This law provides for the creation
  and development of an enabling environment for technology-enabled
  start-ups in Nigeria.




• Patents and Design Act (Cap P2, LFN 2004): This law regulates
  the registration and proprietorship of patents and designs in
  Nigeria.




• Trade Marks Act (Cap T13, LFN 2004): This law regulates the
  registration and protection of trademarks in Nigeria.

1.3 Which bodies are responsible for drafting and
enforcing these provisions? What powers do they have?

The body responsible for drafting laws in Nigeria is the
legislature, comprising the Senate and the House of
Representatives. The following regulatory authorities are
responsible for enforcing compliance with the laws on the
establishment and operations of enterprises in Nigeria:

• Corporate Affairs Commission (CAC): The CAC enforces the CAMA.
  The CAC oversees the registration, regulation, formation,
  incorporation, management and winding up of companies, business
  names and incorporated trustees.




• PEBEC: This is a specialised agency set up by the president of
  Nigeria to promote the ease of doing business in Nigeria through
  legislative reforms and policies. The BFA is a legislative
  intervention of PEBEC.




• Federal Inland Revenue Service (FIRS): The FIRS ensures
  compliance with the Companies Income Tax Act. The FIRS primarily
  assesses, collects, accounts and enforces the payment of taxes as
  may be due to the federal government or any of its agencies.




• SEC: The SEC enforces:




• • the Investments and Securities Act 2007; and

  
  

  • the Consolidated Rules and Regulations of the SEC 2013.




• It regulates investments and securities
  business in Nigeria – particularly all offers of securities
  by public companies and registers – and regulates corporate
  and individual capital markets operators in Nigeria.




• Nigerian Copyright Commission (NCC): The NCC regulates,
  administers and enforces copyright matters under the Copyright Act
  2023.




• Federal Competition and Consumer Protection Commission (FCCPC):
  The FCCPC is responsible for consumer protection in Nigeria. It
  enforces the Federal Competition and Consumer Protection Act, 2018.
  It protects consumers from:




• • unfair trade practices;

  
  

  • false or misleading advertising; and

  
  

  • substandard goods and services.




• The FCCPC also reviews and approves
  M&A transactions to ensure that they do not result in a
  concentration of market power that could harm competition or
  consumers.




• Federal Ministry of Labour and Employment: This ministry is
  responsible for the formulation, implementation and enforcement of
  policies and regulations relating to labour and employment in
  Nigeria.




• NIPC: The NIPC enforces the Nigerian Investment Promotion
  Commission Act. The NIPC’s primary function is to encourage,
  promote and coordinate investment in the Nigerian economy.




• National Office for Technology Acquisition and Promotion
  (NOTAP): The NOTAP enforces the NOTAP Act. Its primary function in
  Nigeria is to regulate, promote and coordinate the acquisition,
  development and transfer of foreign technology to Nigeria.




• National Council for Digital Innovation and Entrepreneurship
  (NCDIE): The NCDIE enforces the Nigeria Start-up Act 2022. It has
  the power to formulate policies for the implementation of the
  Nigeria Start-up Act and reviews policies of ministries,
  departments and agencies relating to start-ups.




• Trade Marks, Patents and Designs Registry: This registry is
  responsible for enforcing the Trade Marks Act and the Patents and
  Designs Act.

2. Types of business structures

2.1 What are the main types of business structures in
your jurisdiction and what are their key features?

The main types of business structures in Nigeria are private
companies and public companies. These businesses are further
divided into:

• private companies limited by shares;




• private companies limited by guarantee;




• private unlimited companies;




• public companies limited by shares;




• public companies limited by guarantee; and




• public unlimited companies.

The key features of private companies are as follows:

• The members do not exceed 50, except members who are in
  bona fide employment by the company;




• They do not invite members of the public to buy their
  shares;




• The minimum issued share capital is NGN 100,000;




• They can hold their general meeting electronically
  (virtually);




• They can be formed by a minimum of one person;




• The appointment of a company secretary is not mandatory;
  and




• They are not mandated to keep statutory books.

The key features of public companies are as follows:

• The number of persons who can be members of the company is
  unlimited;




• They invite members of the public to subscribe to their
  shares;




• The minimum issued share capital is NGN 2 million;




• They cannot hold their general meeting electronically;




• They can be formed by a minimum of two persons;




• The appointment of a company secretary is mandatory; and




• They are mandated to keep statutory books.

2.2 What capital requirements apply to these different
types of business structures?

The minimum issued share capital for a private company is NGN
100,000. The minimum issued share capital for a public company is
NGN 2 million.

2.3 What is the process for establishing these different
types of business structures? What procedural and substantive
requirements apply in this regard? What is the typical timeline for
their establishment?

The process for establishing private or public companies in
Nigeria is as follows:

• Conduct a name search and reservation: The person intending to
  register a company must provide two proposed names and search for
  their availability on the Corporate Affairs Commission (CAC)
  portal. If either of the names is available, it will be reserved by
  the CAC for a 60-day period.




• Complete the relevant incorporation documents: These
  include:




• • the particulars of directors and shareholders;

  
  

  • the objects of the company;

  
  

  • the share capital; and

  
  

  • other required documents.




• Pay filing fees and stamp duty.




• Submit the application for registration.




• Await the approval of the CAC.

The registration process can take between one and two weeks,
provided that all necessary documentation is in order and there are
no complications.

At the conclusion of the registration process, the following
documents will be issued by the CAC:

• a certificate of incorporation;




• the memorandum and articles of association; and




• a status report.

2.4 What requirements and restrictions apply to foreign
players that wish to establish a business directly in your
jurisdiction?

The requirements for foreign players to be able to do business
in Nigeria are as follows:

• Company incorporation: According to the Companies and Allied
  Matters Act (CAMA), any foreign company intending to conduct
  business in Nigeria must incorporate a company in Nigeria. The
  following foreign companies are not required to incorporate a
  company in Nigeria before they conduct business, but must obtain an
  exemption from the minister of trade and investment:




• • foreign companies that are invited into Nigeria by or with the
    approval of the federal government to execute a specified
    individual project;

  
  

  • foreign companies which are in Nigeria to execute a loan
    project on behalf of a donor country or international
    organisation;

  
  

  • foreign-government owned companies engaged solely in
    export-promotion activities; and

  
  

  • engineering consultants and technical experts who contract with
    any of the governments of the federation or any of their agencies
    – or with any body or person, provided that such contract has
    been approved by the federal government – to engage in an
    individual specialist project.




• Registration with the Nigerian Investment Promotion Commission
  (NIPC): Upon incorporation of a company in Nigeria, the company
  should register with the NIPC.




• Permit from the Ministry of Interior: A business permit should
  be obtained from the Ministry of Interior. If the company intends
  to employ foreigners in Nigeria, it is necessary to obtain an
  expatriate quota from the Ministry of Interior. A Combined
  Expatriate Residence Permit and Aliens Card is issued to permit
  foreign employees to live and work in Nigeria.




• Certificate of capital importation: Further to the Foreign
  Exchange (Monitoring and Miscellaneous Provisions) Act (Cap F34,
  Laws of the Federal Republic of Nigeria 2004), a registered company
  should also obtain a certificate of capital importation from an
  authorised dealer as evidence of capital importation.

Restrictions on businesses to be engaged in by foreign
players: Generally, in Nigeria, there are no restrictions
on foreigners wholly owning and operating companies in the country,
save in a few sectors. However, a company with foreign shareholders
cannot be a small company and as such must have a minimum share
capital of NGN 10 million.

Nigerians and foreigners are prohibited from engaging in
businesses listed on the negative list outlined in the Nigerian
Investment Promotion Commission Act. The prohibited business
activities include:

• the production of arms and ammunition;




• the production of and dealing in narcotic drugs and
  psychotropic substances;




• the production of military and para-military wear and
  accoutrements, including those of the Police and the Customs,
  Immigration and Prison Services; and




• such other business activity as the Federal Executive Council
  may, from time to time, determine.

2.5 What other opportunities, using people/entities not
connected with the main person, are there to do business in your
jurisdiction (eg, agency, resale); and what requirements and
restrictions apply in this regard?

Business name: A business name need not be
registered, except where:

• in the case of a firm, the name does not consist of the true
  surnames of all partners without any addition other than the true
  first names of the individual partners or the initials of such
  first names;




• in the case of an individual, the name does not consist of his
  or her true surname without any addition other than his or her true
  first name or the initials; or




• in the case of a company, whether or not registered under CAMA,
  the name does not consist of its corporate name without any
  addition.

A foreign company may not register as a business name, as a
business name does not possess separate legal personality.

Franchising: This involves licensing a business
model and brand to local operators to run a franchise business in
Nigeria. The requirements and restrictions for franchising in
Nigeria usually depend on the specific terms of the franchise
agreement and applicable laws and regulations.

Free trade zones: Companies operating in free
trade zones in Nigeria are not required to incorporate a company
with the CAC. However, such companies must obtain an operating
licence from the Nigeria Export Processing Zones Authority.

Joint ventures: Foreign companies can enter
into joint ventures with Nigerian companies to pursue business
opportunities in the country. This allows for the sharing of
resources, expertise and risks. The requirements and restrictions
for joint ventures will depend on the specific terms of the joint
venture agreement and applicable laws and regulations.

Partnerships (limited partnerships; limited liability
partnerships): Through a limited partnership or a limited
liability partnership, foreign companies can:

• conduct business in Nigeria; and




• invest in other companies.

A limited partnership has at least one general partner and at
least one limited partner. A limited liability partnership is a
hybrid business form that combines two types of structures:

• a partnership; and




• a limited liability company.

3. Directors and management

3.1 How is management typically organised in the
different types of business structures in your
jurisdiction?

The management structure of different types of business
structures in Nigeria can vary depending on the specific business
and its legal form:

• Sole proprietorship: In a sole proprietorship, the owner or the
  proprietor:




• • is typically the only one involved in the management of the
    business; and

  
  

  • is responsible for making all business decisions and, in most
    cases, handling all aspects of the business.




• Partnership: In a partnership, the management structure can be
  either equal or hierarchical, depending on:




• • the terms of the partnership agreement; and

  
  

  • the type of partnership.




• If the partners have equal ownership
  and decision-making power, they may jointly manage the business. If
  one partner has a greater share of ownership, such partner may act
  as the managing partner, having more decision-making power and
  taking a more dominant role in managing the business.




• Company: A private and public limited liability company is
  usually managed by a board of directors, its shareholders and
  executive officers. The board of directors is responsible for
  setting the overall strategy and direction of the company; while
  the executive officers are responsible for implementing the
  strategy and managing the day-to-day operations of the company. The
  shareholders of a company have the right to participate in the
  management of the company by attending general meetings and
  expressing their opinions on matters affecting the company.

3.2 Is the establishment of specialist committees
recommended or mandated for certain types of enterprises? If so,
which areas should they cover?

Other than sector-mandated committees for certain regulated
entities, depending on the sector in which an enterprise operates,
the establishment of specialist committees is not mandated but
recommended for all types of enterprises (ie, private and public
companies) under the Nigerian Code of Corporate Governance (NCCG),
2018. Under Principle 11 of the NCCG, the committees are as
follows:

• Nomination and governance committee: This committee nominates
  members to the board and performs oversight functions on governance
  matters.




• Remuneration committee: This committee is charged with
  responsibility for:




• • determination of the remuneration policy and its application to
    executive management;

  
  

  • performance evaluation;

  
  

  • the adoption of incentive plans; and

  
  

  • various governance responsibilities related to
    remuneration.




• Audit committee: This committee performs audit functions.




• Risk management committee: This committee performs an oversight
  role on matters relating to risk management.

Certain sectors have regulator-mandated committees, the most
prominent of which is the financial sector, whose regulators
include:

• the Central Bank of Nigeria;




• the Nigerian Securities and Exchange Commission;




• the National Insurance Commission; and




• the National Pension Commission.

The mandated committees typically include those recommended
under the NCCG.

3.3. Is the appointment of corporate directors permitted
in your jurisdiction?

In Nigeria, a company cannot appoint a corporate director to its
board of directors, as a corporation is disqualified from being a
director of a company. The Companies and Allied Matters Act (CAMA),
however, permits a corporation to designate its representative to
serve on the board of another company for a given term.

3.4 What requirements and restrictions apply to the
appointment of directors, in terms of factors such as number,
residence, independence, diversity etc?

The following are recommended practices by the CAMA and the NCCG
on the appointment of directors.

Number of board members: According to the CAMA,
every company, except a small company, must have at least two
directors. The following factors should be considered in
determining the requisite number of the board members:

• knowledge, skills and experience, including the business,
  commercial and industry experience needed to govern a company;




• a combination of executive, non-executive and independent
  non-executive members such that a majority of the board are
  non-executive directors. It is desirable that some of the
  non-executive directors be independent. The amendments introduced
  by the Business Facilitation (Miscellaneous Provisions) Act to the
  independent director provisions of the CAMA require public
  companies to have a number of independent directors equivalent to
  one-third of the total number of directors;




• the need for a sufficient number of members that qualify to
  serve on the committees of the board; and




• applicable laws and regulations.

Diversity: The board should promote diversity
in its membership across a variety of attributes relevant for
promoting better decision making and effective governance. These
attributes include:

• knowledge, skills and experience; and




• age, culture and gender.

Competence and skill: The board should approve
the criteria for appointing directors, as recommended by the
committee responsible for nomination and governance.

Independence: No individual or small group of
individuals should dominate the board’s decision making. It is
also not recommended for persons who are not directors to exercise
control over members of the board. Additionally, an independent
non-executive director must be truly independent.

3.5 How are directors selected, appointed and removed?
Do any restrictions or recommendations apply to their
tenure?

The appointment of directors can be categorised as follows:

• Appointment of first directors: First directors are appointed
  as directors at the incorporation of the company. They are
  appointed by the subscribers to the memorandum of association.
  Their names are contained in the memorandum of association or in
  the articles of association.




• Appointment of subsequent directors: Subsequent directors are
  appointed after incorporation. They are appointed by members at the
  annual general meeting (AGM) of the company.




• Appointment of directors to fill a casual vacancy: A casual
  vacancy occurs when a director dies, resigns, retires or is
  removed. In this instance, the board of directors appoints a new
  director, who is approved at the next AGM.

For public companies, a director who is 70 years old or more who
is to be appointed or has been appointed must disclose his or her
age to the shareholders. A director with multiple directorships in
other public companies must also disclose this fact.

Removal of directors: A company can, through an
ordinary resolution, remove a director before the expiration of his
or her office.

Tenure of directors: Except as otherwise stated
in a company’s articles of association, the CAMA requires all
directors of a company to retire at a company’s first AGM. At
subsequent AGMs of a company, the rotation of directors principle
is employed, where one-third of the company’s directors are
required to retire at such meetings. To determine the directors to
retire every year, the longest-serving directors since the last
election are required to retire.

3.6 What are the directors’ primary roles and
responsibilities, and how are these exercised?

Based on the provisions of CAMA, the primary roles and
responsibilities of directors in Nigeria are:

• to act in the best interests of the company and its
  stakeholders;




• to oversee the management of the company;




• to ensure compliance with applicable laws and regulations;
  and




• to provide strategic guidance and direction to the
  company.

Directors exercise these responsibilities through:

• attending regular board and committee meetings;




• actively engaging in the affairs of the company; and




• reviewing periodic management and financial reports of the
  company to ascertain its performance.

3.7 Are the roles of individual directors restricted? Is
this common in practice?

Directors may be subject to certain restrictions imposed by a
company’s governing documents (i.e., its articles of
association or shareholders’ agreement).

It is common for directors to hold multiple directorships,
but:

• they must ensure that they can fulfil their fiduciary duties to
  each company they serve; and




• they may be held personally liable for any breach of their
  duties.

Additionally, the CAMA imposes a limit on multiple directorships
of public companies, stating that no person can be a director in
more than five public companies at the same time.

3.8 What are the legal duties of individual directors?
To whom are these duties owed?

According to CAMA, the directors of a company owe the following
duties to the company, its members and other stakeholders:

• a duty of utmost good faith towards the company in any
  transaction with the company or on its behalf;




• a duty to act in the best interests of the company in a manner
  that:




• • preserves the company’s assets; and

  
  

  • advances the business and the purpose for which the company was
    created;




• a duty to protect the interests of the company’s employees
  and its members;




• a duty to exercise power for the right purpose and not for
  collateral purposes;




• a duty not to fetter discretion to act in a particular
  way;




• a duty not to abdicate duty when a director delegates
  power;




• a duty not to make secret profit or gain from using company
  property; and




• a duty of care and skill.

3.9 To what civil and criminal liabilities are
individual directors primarily potentially subject?

The general rule is that:

• any act of the members in general meeting, the board of
  directors or a managing director, while carrying on the business of
  the company in the usual way, will be treated as an act of the
  company itself; and




• the company will be criminally and civilly liable to the same
  extent as if it were a natural person.

In this case, the director is not liable for acts done in the
usual course of business of the company.

However, the company will not incur civil liability to any
person if that person:

• had actual knowledge at the time of the transaction that the
  general meeting, board of directors or managing director;




• • had no power to act; or

  
  

  • had acted in an irregular manner; and




• by virtue of its relationship:




• • ought to have known that the managing director, board of
    directors or managing director had no power to act; or

  
  

  • knew about the irregularity.

Where a person not duly appointed as a director acts as such on
behalf of the company:

• his or her act does not bind the company; and




• he or she will be personally liable for such action.

However, where it is the company which holds him or her out as
director, the company is bound by his or her acts.

Additionally, where the directors receive secret profits, they
are bound to give account of the secret profits to the company.

4. Shareholders/members

4.1 What requirements and restrictions apply to
shareholders/members in your jurisdiction, in terms of factors such
as age, bankruptcy status etc?

In Nigeria, shareholders of a company can be:

• individuals;




• corporate bodies; or




• a combination of both.

While there is no express provision of the law that prevents
minors from being shareholders of a company, a person under the age
of 18 years shall not be counted for the purpose of determining the
legal minimum number of shareholders of a company.

The following persons do not have the capacity to be
shareholders of a company:

• a person of unsound mind who has been declared so by a court in
  Nigeria or elsewhere;




• an undischarged bankrupt; or




• a corporate body in liquidation.

The following restrictions may also apply to shareholders of a
company in Nigeria:

• Foreign ownership restrictions: Certain sectors in Nigeria
  – such as security services, media and broadcasting, aviation
  and telecommunications – have restrictions on the percentage
  of shareholding that a foreigner can have in companies operating
  within them. These restrictions aim to protect strategic sectors
  and promote local participation.




• Share transfer restrictions: Private companies in Nigeria have
  restrictions on the transfer of shares by their shareholders. These
  restrictions are usually specified in the company’s articles of
  association or in a shareholders’ agreement. Existing
  shareholders of a private company also have pre-emptive rights
  which give them the right to purchase shares for sale before they
  are offered to third parties.




• Insider trading restrictions: Shareholders that have access to
  non-public information about a public company may be restricted
  from trading shares based on that information. Insider trading
  regulations aim to prevent unfair advantages in the stock
  market.

4.2 What rights do shareholders/members enjoy with
regard to the company in which they have invested?

• Voting rights: Shareholders have the right to vote at general
  meetings of a company, including annual general meetings (AGMs) and
  extraordinary general meetings (EGMs).




• Right to receive dividends: Shareholders have the right to
  receive dividends declared by the company. Dividends are usually
  paid out of the company’s profits and are distributed to
  shareholders in proportion to their shareholdings when declared by
  the board of directors.




• Pre-emption rights: A shareholder of a private company that
  intends to transfer its shares to a third party must first offer
  the shares to the existing shareholders of the company.




• Information rights: Shareholders have the right to access
  information about a company, such as:




• • financial statements;

  
  

  • annual reports; and

  
  

  • other relevant information.




• The company must make this information
  available to shareholders upon request.




• Right to transfer shares: Shareholders have the right to
  transfer their shares to other parties, subject to any restrictions
  imposed by the company’s articles of association or other
  governing documents.




• Right to institute legal action: Shareholders have the right to
  bring legal action against the company or its directors where they
  believe that:




• • their rights have been violated; or

  
  

  • the company has engaged in wrongful conduct.




• Participation in management: Shareholders have the right to
  participate in the management of a company by attending general
  meetings and expressing their views on matters affecting the
  company.

4.3 How do shareholders/members exercise these rights?
Do they have a right to call shareholders’ meetings and, if so,
in what circumstances?

According to the Companies and Allied Matters Act (CAMA),
shareholders exercise their rights through voting rights exercised
at the meetings of a company.

Companies must hold an AGM once in every calendar year, and EGMs
may be called by the board of directors or on the request of
shareholders that hold at least 10% of the paid-up capital of the
company. The request must:

• be made in writing to the board of directors; and




• specify the purpose of the meeting.

If the board fails to convene the meeting within 21 days of
receiving the request, the shareholders may convene the meeting
themselves.

Additionally, shareholders in Nigeria may exercise their rights
by:

• proposing resolutions on certain matters;




• asking questions;




• voting; and




• making recommendations at general meetings.

4.4 What influence can shareholders/members exert on the
appointment and operations of the directors?

Shareholders in Nigeria can exert a significant degree of
influence on the appointment and operations of the directors of a
company in the following ways:

• Election of directors: Shareholders have the right to elect
  directors at general meetings of the company. Shareholders can
  propose candidates for appointment to a company’s board and can
  vote for or against the election of individual directors.




• Removal of directors: Through the passing of an ordinary
  resolution, shareholders have the right to remove directors from a
  company’s board before the expiration of their term of
  office.




• Approval of directors’ remuneration: Shareholders must
  approve the remuneration of the directors at the AGM.




• Approval of key decisions: Subject to applicable laws and a
  company’s governing documents, shareholders must approve
  certain key decisions made by the directors of a company as well as
  a company’s management, such as those relating to:




• • major capital expenditures;

  
  

  • mergers and acquisitions; and

  
  

  • the sale/transfer of intellectual property and other assets of
    a company.

4.5 What are the legal duties/responsibilities and
potential liabilities, if any, of
shareholders/members?

Some of the key duties and liabilities of shareholders in
Nigeria include the following:

• Payment for shares: Shareholders have a duty to pay for the
  shares they have subscribed to in the company. Failure to pay for
  the shares may result in the shares being forfeited.




• Duty to act in good faith: Shareholders have a duty to act in
  good faith and in the best interests of the company.




• Liability for company debts: In a company limited by shares,
  the liability of shareholders is limited to the extent of their
  shareholdings in a company. Shareholders of companies limited by
  guarantee may be liable for a fixed amount or for the full amount
  of the company’s debts.




• Liability for insider trading: Shareholders that engage in
  insider trading or other illegal activities related to their
  ownership of shares may be subject to civil or criminal
  penalties.

4.6 To what civil and criminal liabilities might
individual shareholders/members be subject?

The following are some of the civil and criminal liabilities to
which individual shareholders may be subject in Nigeria:

• Liability for company debts: For companies limited by shares,
  shareholders are generally liable only to the extent of their
  shareholdings; while shareholders of companies limited by guarantee
  may be liable for a fixed amount or for the full amount of the
  company’s debts.




• Liability for breach of fiduciary duties: Shareholders that are
  also directors or officers of the company may be held liable for
  breach of their fiduciary duties, including duties of loyalty, care
  and good faith. This may include liability for actions that harm
  the company, its shareholders or other stakeholders.




• Liability for insider trading: Shareholders that engage in
  insider trading or other illegal activities related to their
  ownership of shares may be subject to civil or criminal
  penalties.




• Liability for false statements: Shareholders that make false or
  misleading statements in connection with the sale or purchase of
  shares may be subject to civil or criminal liability.




• Liability for anti-competitive behaviour: Shareholders that
  engage in anti-competitive behaviour, such as price-fixing or
  market allocation, may be subject to civil or criminal penalties
  under Nigeria’s competition laws.

4.7 Are there rules governing the issuance of further
securities in a company? Do rights of pre-emption exist and, if so,
how do they operate? Can they be circumvented? If so, how and to
what extent?

The rules governing the issuance of further securities in a
company are set out in:

• the CAMA;




• the Investment and Securities Act 2007 (ISA); and




• the Rules and Regulations of the Nigerian Securities and
  Exchange Commission (SEC).

Under the CAMA, a company must obtain the shareholders’
approval for the issuance of new securities, which may include:

• shares;




• bonds;




• debentures; or




• other types of securities.

Shareholder approval is generally required at a general meeting
of the company and the terms of the securities being issued must be
disclosed to shareholders in advance.

Generally, under the CAMA, the ISA and the SEC rules, only a
public company can issue securities to the public or invite the
public to acquire its securities. Before doing this, a public
company must register with the SEC, providing the SEC and other
members of the public with a prospectus and information about the
offering. However, the recently passed Business Facilitation
(Miscellaneous Provisions) Act amends the ISA to provide that
private companies may allot shares to the public, subject to the
provisions of regulations to be issued by the SEC. Currently, the
SEC is yet to issue any such regulation.

The CAMA provides for pre-emption rights. These rights make it
compulsory for the company to give existing shareholders of a class
the opportunity to purchase any new securities being issued by the
company in that class before they are offered to third parties. The
pre-emption rights of shareholders are typically set out in the
articles of association and shareholders’ agreement, where one
exists.

The usual way in which pre-emption rights can be circumvented is
by obtaining the shareholders’ approval of the waiver of their
pre-emption rights during the issuance of securities to new
investors or other shareholders.

4.8 Are there any rules on the public disclosure of
levels of shareholding and/or stake building?

The rules on the public disclosure of levels of shareholding and
stake building in Nigeria are set out in the CAMA, the ISA and the
SEC rules.

Under the CAMA, substantial shareholders in public companies
that, either by themselves or by their nominees, hold shares
entitling them to at least 5% of the unrestricted voting rights at
any general meeting must notify such companies in writing within 14
days of becoming aware of their substantial shareholder status. A
public company must notify the Corporate Affairs Commission of a
substantial shareholder within 14 days of receiving notice of such
a shareholder.

Under the ISA, any person or group of persons that acquires a
certain percentage of shares in a public company must disclose the
acquisition to the SEC and the stock exchange on which the shares
are listed. The percentage threshold for disclosure is 5% or any
multiple of 5% thereafter. The disclosure must be made within 48
hours of the acquisition.

In addition, the SEC rules require public companies to disclose
the level of shareholding of their major shareholders in their
annual reports and other public disclosures. ‘Major
shareholders’ are defined as those holding 5% or more of the
company’s shares.

The SEC also requires any person that acquires 10% or more of
the shares of a public company to make a public announcement of the
acquisition within 14 days. The announcement must include
information on:

• the person’s identity;




• the number and percentage of shares acquired; and




• the purpose of the acquisition.

Failure to comply with the disclosure requirements may result in
penalties and other sanctions.

5. Operations

5.1 What are the main routes for obtaining working
capital in your jurisdiction? What are the advantages and
disadvantages of each?

The main routes for obtaining working capital in Nigeria include
the following:

• Shareholder capital: This is the common source of working
  capital in Nigeria, through which the shareholders of a company
  subscribe and purchase shares in a company.




• Bank loans: This form of working capital usually entails a
  straightforward process. Except where the loan requires collateral,
  individuals and companies need not necessarily exchange any asset
  or shares to obtain loans. Bank loans may have high interest rates,
  making them difficult to obtain for small and medium-sized
  enterprises, and may require collateral or a personal
  guarantee.




• Private investments: Companies usually raise this type of
  financing from:




• • family and friends;

  
  

  • angel investors;

  
  

  • venture capitalists; and

  
  

  • private equity firms.




• This type of financing in most cases
  requires companies to give a portion of their shares to the
  investors and may result in the dilution of the shares of the
  existing shareholders.




• Trade credit: This involves purchasing goods or services on
  credit from suppliers. The advantages of trade credit include
  flexibility and the ability to negotiate favourable terms. However,
  relying too heavily on trade credit can put a strain on supplier
  relationships and may lead to cash-flow issues if payments are
  delayed.




• Invoice financing: Invoice financing involves selling unpaid
  invoices to a third-party finance provider in exchange for
  immediate cash. The advantages of invoice financing include fast
  access to cash and no need for collateral. However, invoice
  financing can be expensive, with high interest rates and fees.




• Public markets: Companies listed on the Nigerian Exchange Group
  can raise capital through the sale of their securities to the
  public.

5.2 What are the main routes for the return of proceeds
in your jurisdiction? What are the advantages and disadvantages of
each?

The main routes for the return of proceeds in Nigeria include
the following:

• Capital appreciation: Through the increase in the value and
  market price of an asset (eg, shares, real property, intellectual
  property), companies, investors and other stakeholders can obtain a
  return on their investment from the sale of their asset.




• Dividends: Upon a company declaring dividends, shareholders can
  share in the profits of a company in proportion to their
  shareholding.




• Liquidation: Investors also repatriate funds through the
  liquidation of their investments. This involves selling off their
  investments in a company. This is usually a straightforward
  process. However, the disadvantage is that it may take longer and
  be more complex than other routes.




• Royalties on IP licensing: Through the licensing of
  intellectual property, companies and individual owners of
  intellectual property can commercially exploit their intellectual
  property and receive royalties from the licensees.

5.3 What requirements and restrictions apply to foreign
direct investment in your jurisdiction?

Some of the key requirements and restrictions include the
following:

• Company incorporation: Foreign direct investment usually
  involves:




• • establishing a business enterprise in Nigeria; or

  
  

  • owning substantial shares in a Nigerian company.




• Foreign companies intending to do
  business in Nigeria (except for exempted companies) must:




• • be incorporated as a separate entity in Nigeria; and

  
  

  • comply with any sector-specific capital requirements.




• Registration with the Nigerian Investment Promotion Commission
  (NIPC): All companies with foreign equity participation in Nigeria
  must be registered with the NIPC. The registration process is
  designed to encourage transparency and facilitate the monitoring of
  foreign investment inflows.




• Registration with regulatory bodies: A foreign company
  establishing a company in Nigeria may, depending on the nature of
  its business, require business licences from certain regulatory
  bodies such as:




• • the Central Bank of Nigeria (CBN);

  
  

  • the National Agency for Food and Drug Administration and
    Control; or

  
  

  • the Nigerian Communications Commission.




• Sector restrictions on foreign ownership: While foreign
  ownership of companies is allowed in all industries in Nigeria,
  some share acquisition restrictions apply in certain sectors.
  Foreign investors must comply with restrictions on foreign
  ownership, which can include limits on the percentage of foreign
  ownership or bans on foreign ownership, some of which are listed
  below:




• • A licensed broadcasting company must be substantially owned and
    operated by Nigerians and show that it is not representing foreign
    interests.

  
  

  • Only advertising agencies where Nigerians own 74.9% equity can
    advertise in Nigeria.

  
  

  • A foreigner cannot hold equity in or be a director of a
    Nigerian private security guard company.




• Local content requirements: Foreign investors must comply with
  local content requirements for operating in certain sectors, such
  as oil and gas, which can include:




• • the use of local labour; and

  
  

  • the sourcing of goods and services locally.




• Exchange control regulations: Foreign investors must comply
  with any exchange regulations in place, for the time being.
  Currently, there are foreign currency control measures in place by
  the CBN due to inflation which include:




• • multiple exchange rates; and

  
  

  • a ban on importers of certain products from accessing dollars
    at the official CBN rate.

5.4 What exchange control requirements apply in your
jurisdiction?

Exchange control requirements in Nigeria are regulated by the
CBN and are designed to manage the inflow and outflow of foreign
currency. Some of the exchange control requirements in Nigeria
include the following:

• Foreign currency domiciliary accounts: Corporate bodies,
  individuals and firms can maintain and operate domiciliary accounts
  in any internationally convertible currency in any bank in
  Nigeria.




• Conducting transactions in Naira: The CBN Act:




• • recognises the naira as the legal tender in Nigeria; and

  
  

  • forbids anyone from refusing to accept the naira as a means of
    payment in Nigeria.




• Capital importation requirements: Foreign investors must:




• • register their investments with the NIPC; and

  
  

  • obtain a certificate of capital importation (CCI) from the CBN
    through authorised dealers. The CCI is required for the
    repatriation of both capital and profits.




• The NIPC Act guarantees foreign
  investors the unrestricted transferability of dividends or profits
  (net of tax) attributable to foreign investment in Nigeria and
  capital repatriation in the event of liquidation.




• Export proceeds: Exporters must repatriate at least 50% of
  their export proceeds within 90 days (for oil exports) or 180 days
  (for non-oil exports) of the shipment date. This requirement is
  designed to manage the inflow of foreign currency into
  Nigeria.




• Foreign exchange market: The CBN operates a foreign exchange
  market to manage the inflow and outflow of foreign currency. The
  market is subject to various controls and regulations,
  including:




• • multiple exchange rates (depending on the party conducting the
    exchange and purpose); and

  
  

  • restrictions on the amount of foreign currency that can be
    purchased and sold.

5.5 What role do stakeholders such as employees,
pensioners, creditors, customers and suppliers play in shaping
business operations in your jurisdiction? What other influence can
they exert on an enterprise?

Stakeholders such as employees, pensioners, creditors, customers
and suppliers play an important role in shaping business operations
in Nigeria. These stakeholders influence an enterprise in the
following ways:

• Employees: Employees provide labour, skills and expertise.
  They:




• • influence the workplace culture;

  
  

  • interface with and manage customers; and

  
  

  • provide feedback on business processes and practices.




• In certain business sectors, labour
  unions can exert significant influence on business operations
  through collective bargaining and strikes.




• Pensioners: Through retirement benefits, pensioners can exert
  influence on business operations. Pension funds are an important
  source of long-term capital for businesses, and pensioners can
  influence investment decisions and corporate governance through
  their voting rights as shareholders.




• Creditors: In Nigeria, banks and other financial institutions
  play a critical role in providing financing to businesses.
  Creditors influence business operations through:




• • the availability of credit; and

  
  

  • their participation in debt restructuring and other financial
    transactions.




• Customers: Customers keep a business viable and influence
  business operations through their purchasing decisions and
  feedback.




• Suppliers: Suppliers can influence business operations through
  the availability and cost of goods and services.

Other stakeholders that can influence enterprises in Nigeria
include:

• government agencies;




• regulatory bodies; and




• the media.

5.6 What key concerns and considerations should be borne
in mind with regard to general business operations in your
jurisdiction?

Key considerations include the following:

• General and sector-specific regulations: Business operations in
  Nigeria are regulated and the laws and regulations that apply to a
  business and its sector must be complied with in order to operate
  legally in Nigeria.




• Applicable taxes: Companies and their stakeholders are subject
  to corporate and individual taxes, including:




• • companies income tax;

  
  

  • personal income tax;

  
  

  • value-added tax; and

  
  

  • withholding tax.




• Local content requirements: Nigeria has local content
  requirements in various sectors, including oil and gas,
  telecommunications and construction. Companies operating in these
  sectors must comply with these requirements, which can impact their
  procurement processes and workforce composition.




• Corruption: Corruption is a challenge in Nigeria and can affect
  business operations in various ways, including:




• • regulatory compliance;

  
  

  • procurement processes; and

  
  

  • contract negotiations.




• Companies operating in Nigeria should
  have robust compliance programme and conduct due diligence on
  business partners to minimise corruption risks.




• Infrastructure: Nigeria’s infrastructure is inadequate in
  many areas, including power generation, transportation and
  telecommunications. Companies should plan for these infrastructure
  deficiencies and factor in the costs of providing their own
  infrastructure, such as backup power and transportation
  arrangements.

6. Accounting reporting

6.1 What primary accounting reporting obligations apply
in your jurisdiction?

The primary reporting obligations in Nigeria that apply to
different entities and industries include the following:

• Companies: Companies in Nigeria must prepare and file annual
  financial statements with the Corporate Affairs Commission (CAC)
  within 90 days of the end of their financial year. These financial
  statements must comply with the requirements of the Companies and
  Allied Matters Act (CAMA) and with International Financial
  Reporting Standards (IFRS). Additionally, companies must file their
  annual returns with the CAC to notify the CAC that their business
  is still a going concern.




• Taxpayers: Taxpayers in Nigeria must file various tax returns
  with the Federal Inland Revenue Service and applicable state
  internal revenue services on or before their due dates. These tax
  returns include:




• • value-added tax;

  
  

  • personal income tax; and

  
  

  • companies income tax.




• Securities and Exchange Commission (SEC): Companies that issue
  securities to the Nigerian public must make periodic disclosures to
  the SEC. These disclosures may include financial statements, annual
  reports, and interim reports.




• Central Bank of Nigeria (CBN): Banks and other financial
  institutions in Nigeria are required to submit various reports to
  the CBN, including:




• • monthly financial statements;

  
  

  • quarterly prudential reports; and

  
  

  • annual audited financial statements.




• Nigerian Exchange Group: Companies listed on the Nigerian
  Exchange Group must comply with the NSE’s listing rules, which
  include disclosure requirements such as:




• • financial statements;

  
  

  • annual reports; and

  
  

  • interim reports.




• Nigerian Financial Intelligence Unit (NFIU): Financial
  institutions and certain designated non-financial institutions are
  expected to make periodic reports on financial transactions to the
  NFIU for anti-money laundering purposes.

6.2 What role do the directors play in this
regard?

Generally, directors ensure that a company’s reporting
obligations are met and regulatory requirements are complied with.
The specific roles that directors play include:

• the preparation of financial statements (Section 377(1) of the
  CAMA);




• execution of a company’s annual returns (Section 421(1) of
  the CAMA); and




• recommendation of dividends to a company’s general meeting
  (Section 426(1) of the CAMA).

6.3 What role do accountants and auditors play in this
regard?

• Preparation of financial statements: Accountants are
  responsible for preparing accurate and reliable financial
  statements that comply with the relevant accounting standards and
  regulations. They must ensure that all financial transactions are
  properly recorded in a company’s financial statements. This is
  important because financial statements serve as the primary source
  of information for many of the reporting obligations in Nigeria.
  All companies must prepare their financial statements in accordance
  with the rules of the Financial Reporting Council of Nigeria, which
  are currently the IFRS Accounting Standards.




• Audit of financial statements: Auditors are responsible for
  reviewing and auditing the financial statements prepared by the
  accountants to ensure that they provide a true and fair statement
  of the financial position of the company. Companies with small
  company status are exempt from auditing their financial statements.
  A ‘small company’ is a company that meets the following
  criteria:




• • It is a private company with liability limited by shares;

  
  

  • It has a turnover that does not exceed NGN 120 million;

  
  

  • It has assets whose net value does not exceed NGN 60
    million;

  
  

  • It has no foreign shareholders;

  
  

  • It has no shareholders which are a government, a government
    agent or a government nominee as shareholder; and

  
  

  • Its directors hold at least 51% of the equity share
    capital.




• Compliance with tax regulations: Accountants and auditors play
  a crucial role in ensuring compliance with tax regulations in
  Nigeria. They must ensure that the company is correctly
  calculating, filing and paying all applicable taxes. Failure to
  comply with tax obligations can result in penalties for a
  company.




• Reporting to regulatory bodies: Accountants and auditors may be
  required to report to regulatory bodies such as:




• • the Corporate Affairs Commission;

  
  

  • the Securities and Exchange Commission; and

  
  

  • the Central Bank of Nigeria.

6.4 What key concerns and considerations should be borne
in mind with regard to accounting reporting in your
jurisdiction?

• Compliance with statutory reporting requirements;




• Knowledge of regulators and other key stakeholders in the
  industry;




• Engagement of skilled and competent professionals to manage the
  reporting activities of a company; and




• Timely and accurate reporting.

7. Executive performance and compensation

7.1 How is executive compensation regulated in your
jurisdiction?

The remuneration of directors is regulated by a range of general
and sector-specific laws which contain provisions for the
determination of the executive compensation of directors.

The key provisions on the regulation of executive compensation
are found in the following general and sector-specific
legislation:

• the Companies and Allied Matters Act 2020 (CAMA);




• the Nigerian Code of Corporate Governance, 2018;




• the Corporate Governance Guidelines for Commercial, Merchant,
  Non-Interest and Payment Services Banks;




• the Investment and Securities Act 2007;




• the Central Bank of Nigeria Code of Corporate Governance for
  Banks and Discount Houses, 2014;




• the National Pension Commission (PENCOM) Code of Corporate
  Governance for Licensed Pension Operators, 2008; and




• the National Insurance Commission (NAICOM) Code of Corporate
  Governance for the Insurance Industry in Nigeria, 2021.

7.2 How is executive compensation determined? Do any
disclosure requirements apply?

In Nigeria, executive compensation is determined by the
provisions of the laws which regulate businesses. The prominent
provisions in this regard are:

• the CAMA; and




• the Nigerian Code of Corporate Governance, 2018 (NCCG).

By virtue of the provisions of the CAMA, shareholders determine
the remuneration of the directors of the company. The CAMA provides
that directors of the company will determine the remuneration to be
received by the managing director. Additionally, companies must
disclose the details of the remuneration of directors in their
annual reports.

The NCCG requires companies to:

• disclose the remuneration policy; and




• make disclosures of the remuneration earned by directors in the
  annual report of the company.

The NCCG also recommends that executive compensation be linked
to performance, taking into account the company’s financial and
non-financial performance. It suggests that executive compensation
should include a mix of fixed and variable pay, with the variable
pay component tied to the achievement of performance targets.

7.3 How is executive performance monitored and
managed?

The regulations that legislate executive compensation also
contain provisions focused on ensuring compensation is
performance-based. The CAMA requires directors, ahead of their
reappointment, to make disclosures of their attendance at meetings
in the preceding year. The NCCG also provides that remuneration
should be linked to the company’s performance as well as the
individual performance of directors.

7.4 What key concerns and considerations should be borne
in mind with regard to executive performance and compensation in
your jurisdiction?

• Knowledge of the general and sector-specific requirements for
  determining executive compensation and the disclosure obligations
  to stakeholders and regulators.




• There should be a clear process for setting executive
  compensation, and the process should be overseen by a remuneration
  committee composed of independent directors. The committee should
  be accountable to shareholders and should ensure that executive
  compensation is reasonable and fair.




• Executive compensation should be balanced and include a mix of
  fixed and variable components, such as:




• • base salary;

  
  

  • short-term and long-term incentives; and

  
  

  • equity-based compensation.

8. Employment

8.1 What is the applicable employment regime in your
jurisdiction and what are its key features?

The employment regime in Nigeria is governed by various laws and
regulations, including:

• the Constitution of the Federal Republic of Nigeria, 1999 (as
  amended);




• the Labour Act (Cap L1, Laws of the Federal Republic of Nigeria
  2004);




• the National Health Insurance Scheme Act, 2004;




• the National Housing Fund Act, 2004;




• the Trade Unions Act, 2005 (as amended);




• the National Industrial Court Act, 2006;




• the Employee’s Compensation Act, 2010;




• the Personal Income Tax Act, 2011;




• the Industrial Training Fund Act, 2011 (as amended);




• the Pensions Reform Act, 2014;




• the HIV and AIDS (Anti-Discrimination) Act, 2014;




• the National Minimum Wage Act, 2019; and




• the Business Facilitation Act, 2023.

Under Nigerian law, employment is a contractual relationship
between an employer and an employee with terms and conditions
detailed in an employment contract. However, there are certain
minimum standards and requirements that must be met by employers in
Nigeria, which are outlined in the relevant laws and
regulations.

Some of the key features of the employment regime in Nigeria
include:

• Minimum wage: The minimum wage in Nigeria is set by the federal
  government and is currently set at NGN 30,000 per month.




• Working hours: The standard working hours in Nigeria are 8
  hours per day and 40 hours per week. However, some industries may
  have different working hour requirements.




• Leave: Employers must provide employees with paid annual leave,
  sick leave and maternity leave.




• Payment of employment benefits: This includes making pension
  contributions on behalf of a company’s employees.




• Health and safety: Employers must provide a safe and healthy
  working environment for employees and are liable for any injuries
  or illnesses that occur on the job.




• Termination of employment: Employers must follow certain
  procedures when terminating an employee and may be liable for
  severance pay in certain circumstances.

8.2 Are trade unions or other types of employee
representation recognised in your jurisdiction?

Trade unions and other forms of employee representation are
recognised in Nigeria.

The Trade Union Amendment Act of 2005 provides for the
registration of trade unions, which allows them to legally
represent workers in collective bargaining and other
employment-related matters. The major objective of the act is:

• the provision of democratisation and liberalisation of the
  unions and labour; and




• guarantee the freedom of association of workers in
  Nigeria.

Additionally, the Labour Act recognises other forms of employee
representation, such as workers’ committees and staff
associations. These employee associations can be formed in any
workplace with the aim of protecting workers’ interests and
promoting their welfare.

Several agencies and bodies also protect workers’ rights and
welfare, such as:

• the National Industrial Court of Nigeria;




• the National Salaries, Incomes and Wages Commission; and




• the National Pension Commission.

8.3 How are dismissals, both individual and collective,
governed in your jurisdiction? What is the process for effecting
dismissals?

Dismissals in Nigeria are governed by:

• the Labour Act;




• employment contracts; and




• other relevant laws and regulations.

The Labour Act provides for both individual and collective
dismissals and outlines the procedures that employers must follow
when effecting dismissals.

• Individual dismissals: Subject to an employee’s employment
  contract, an individual employee may be dismissed for just cause,
  such as misconduct or poor performance. In this instance, an
  employer must initially investigate and give the employee an
  opportunity to present a defence before dismissing him or her. The
  employee is entitled to a written notice of termination, in
  accordance with the terms of the agreed employment contract,
  specifying the reasons for the dismissal and the date on which it
  takes effect.




• Collective dismissals: In cases of collective dismissals, such
  as during redundancy, retrenchment or reorganisation, an employer
  must first notify the appropriate authorities, including:




• • the Ministry of Labour and Productivity; and

  
  

  • the trade unions (if any) representing the affected
    workers.




• The employer must also:




• • consult with the affected workers or their representatives;
    and

  
  

  • provide them with written notice of the proposed dismissals,
    the reasons for them and any compensation or benefits due to the
    affected workers.

Employers must ensure that they follow due procedure in handling
employee dismissals to prevent their employees from suing them for
wrongful dismissal. Aggrieved employees who are not satisfied with
their dismissals may refer the matter to the National Industrial
Court of Nigeria for resolution.

8.4 How can specialist talent be attracted from overseas
where necessary?

The Immigration Act 2015 provides that any company in Nigeria
seeking to employ a foreigner must seek the consent of the
comptroller general of the Nigerian Immigration Service (NIS) and
take the following steps:

• Obtain an expatriate quota: Any Nigerian company seeking to
  hire a foreigner must obtain an expatriate quota from the NIS. An
  expatriate quota permits companies to employ expatriates to
  approved job designations and specifies the duration of such
  employment. Exemptions from the expatriate quota requirement apply
  to:




• • government officials;

  
  

  • foreign students;

  
  

  • expatriate technical officials;

  
  

  • expatriates of international non-governmental organisations;
    and

  
  

  • expatriates of firms operating in free zones.




• Obtain a ‘Subject to Regularisation’ (STR) Visa: Upon a
  company receiving an expatriate quota from the NIS, it must apply
  to the Nigerian embassy situated in the resident country of the
  expatriate for an STR Visa. This visa is valid for 90 days and is
  granted to an expatriate pending the regularisation of the
  expatriate’s status in Nigeria.




• Apply for a Combined Expatriate Residence Permit and Alien Card
  (CERPAC): Expatriates who plan to live and work in Nigeria for a
  period exceeding 56 days must obtain a CERPAC. Upon the grant of an
  STR Visa, an application for a CERPAC can be made. Where an
  expatriate intends to work in Nigeria for a short period of time,
  he or she can obtain a temporary work permit, which is usually
  granted for three months and can be extended for an additional six
  months.

8.5 What key concerns and considerations should be borne
in mind with regard to employment in your
jurisdiction?

The key concerns and considerations to bear in mind regarding
employment in Nigeria include the following:

• Compliance with employment laws: Employers must ensure that
  they comply with Nigerian employment laws, which govern issues such
  as:




• • minimum wage;

  
  

  • working hours;

  
  

  • health and safety; and

  
  

  • employment contracts.




• Provision of employment contracts: Employment relationships are
  generally contractual in nature. It is therefore important that an
  employer execute an employment contract with each employee it
  engages, detailing the terms and conditions of his or her
  employment.




• Employee rights and benefits: Employers must provide employees
  with the rights and benefits outlined in the Labour Act,
  including:




• • paid annual leave;

  
  

  • sick leave;

  
  

  • maternity leave; and

  
  

  • severance pay.




• Employers should also ensure that employees are not subject to
  discrimination or harassment in the workplace.




• Deduction of taxes: Employers must ensure that they deduct,
  from their employees’ salaries, the personal income taxes of
  their employees on a Pay-As-You-Earn basis as required by
  applicable laws.




• Talent retention and development: Employers must invest in
  talent retention and development to retain their skilled workforce.
  This includes providing opportunities for:




• • career advancement;

  
  

  • training; and

  
  

  • professional development.




• Expatriate regulations: Employers must comply with the
  regulations governing the employment of expatriates in Nigeria.
  This includes:




• • obtaining the necessary work permits and visas;

  
  

  • complying with immigration and tax laws; and

  
  

  • providing expatriates with appropriate housing and other
    benefits.

9. Tax

9.1 What is the applicable tax regime in your
jurisdiction and what are its key features?

The tax regime in Nigeria is regulated by:

• the Federal Inland Revenue Service (FIRS);




• the inland revenue service of various states; and




• the tax laws.

The key features of the tax regime in Nigeria will depend on
whether an individual or a business is tax resident or non-tax
resident.

Individuals: Non-tax resident individuals who
are employees are not subject to pay any taxes. However,
tax-resident employees are subject to personal income tax and other
deductions, as follows:

• Personal income tax: This is a tax imposed on the income of
  individuals in Nigeria. The tax rate varies based on the
  individual’s income level and ranges from 7% to 24% at the
  following rates:.




• • Up to NGN 300,000: 7%.

  
  

  • Additional income of NGN 300,000 (making total income more than
    NGN 300,000 but less than NGN 600,000): 11%.

  
  

  • Additional income of NGN 500,000 (making total income more than
    NGN 600,000 but less than NGN 1.1 million): 15%.

  
  

  • Additional income of NGN 500,000 (making total income more than
    NGN 1.1 million but less than NGN 1.6 million): 19%.

  
  

  • Additional income of NGN 1.6 million (making total income more
    than NGN 1.6 million but less than NGN 3.2 million): 21%.

  
  

  • Any additional making total income more than NGN 3.2 million:
    24%.




• National Housing Fund: Public sector employees who earn the
  minimum wage or above must contribute 2.5% of their basic monthly
  income to the National Housing Fund. Employers must deduct this at
  source.




• Pension contributions. Every employee in an organisation that
  employs up to 15 persons must deduct and contribute up to 8% of
  each employee’s monthly salary into his or her retirement
  savings account, which is managed by a pension fund administrator
  (PFA) of their choice. The employer has a statutory obligation to
  deduct this contribution at source and remit it to the PFA on
  behalf of the employee.

An employee is deemed tax resident in Nigeria if the
employee:

• is domiciled in Nigeria;




• resides in Nigeria for up to 183 days in a 12-month period;
  and/or




• serves as a diplomat or diplomatic agent of Nigeria in another
  country.

Businesses: A Nigerian company is tax resident
in Nigeria when it has been incorporated in Nigeria. However, a
non-tax resident business is not incorporated in Nigeria.

Profits from a non-tax resident business (i.e., a non-resident
company (NRC)) are deemed to have been derived in Nigeria and
subject to tax if any of the following applies:

• The company has a fixed base of business in Nigeria;




• The company habitually operates a trade through an authorised
  person in Nigeria or carries out contracts in Nigeria; or




• An arm’s-length transaction takes place with a related
  company that the FIRS assesses to be artificial or fictitious,
  despite the company reporting that foreign transaction as an
  arm’s-length transaction.

Where an NRC is incorporated in a jurisdiction that has a double
taxation treaty (DTT) with Nigeria, the provisions of the treaty
will be relevant in determining the tax liability of the
vehicle.

The Finance Act expanded the basis for taxing NRCs with a
significant economic presence (SEP) in Nigeria to include digital
services and services rendered outside Nigeria to a Nigerian
beneficiary. NRCs that transmit, emit or receive signals, sounds,
messages, images or data of any kind to Nigeria in respect of any
activity – including electronic commerce, online ads, online
payments and so on – and have a SEP in Nigeria, will be taxed
on the profit attributable to such activity in Nigeria.

The taxes that apply to businesses in Nigeria include the
following.

Companies income tax (CIT): This is a tax
imposed on the profits of companies in Nigeria. Resident companies
are liable to CIT on their worldwide income while non-residents are
subject to CIT on their Nigeria-source income. The CIT rate is:

• 30% for large companies;




• 20% for medium companies; and




• 0% for small companies.

However, a small company is still required to register for CIT
and file the necessary returns required under the CIT Act.

Value-added tax (VAT): This is a consumption
tax imposed on the supply of goods and services in Nigeria. The
definition of goods and services that are subject to VAT was
expanded by the Finance Act to include intangibles such as IP
rights, shares and royalties. The current VAT rate in Nigeria is
7.5%.

Some goods and services are exempted from VAT. Exempted goods
include:

• medical and pharmaceutical products;




• basic food items;




• books;




• exports;




• brown and white bread;




• cereals including maize, rice, wheat, millet, barley and
  sorghum;




• fish of all kinds;




• flour and starch meals;




• fruits, nuts, pulses and vegetables of various kinds;




• roots such as yam, cocoyam, sweet potatoes and Irish
  potatoes;




• meat and poultry products including eggs;




• milk;




• salt and herbs of various kinds;




• natural water and table water;




• locally manufactured sanitary towels; and




• tuition.

Exempted services include:

• medical services;




• services provided by community banks;




• services rendered by microfinance banks;




• mortgage institutions; and




• all exported services.

Capital gains tax (CGT): This is a tax imposed
on the profit made from the disposal of capital assets, such as
land, buildings and shares. The tax rate is 10% of the gain
realised. The following are exempt from CGT:

• gains on a disposal of stocks, shares and other government
  securities such as treasury bonds, premium bonds and savings
  certificates;




• gains arising from acquisitions, mergers or takeovers, provided
  that no cash payment is made in respect of the shares acquired. In
  a related-party transaction, the Finance Act provides that the CGT
  exemption applies only where:




• • the related parties have been so related for at least 365 days
    before the acquisition, merger or takeover; and

  
  

  • the assets are not disposed of within 365 days of the merger;
    and




• gains made on any asset used for the purpose of a trade or
  business that are used for replacing old assets sold.

Withholding tax: This is a tax deducted at
source on payments made to non-residents and residents. The
withholding tax rate varies based on the type of payment and ranges
from 5% to 10%. Withholding tax on rents, dividends, royalties and
interest is 10% (reduced to 7.5% where the recipient is registered
in a country with which Nigeria has a DTT). Fees for management or
technical services are taxed at:

• 10% for companies; and




• 5% for individuals.

Contracts of supplies are taxed at 5%.

Tertiary education tax: This is a tax imposed
on the profits of companies in Nigeria. The tax rate is 2% of a
company’s assessable profits.

Stamp duty: This is a tax imposed on certain
types of transactions, such as:

• land and property transfers;




• loan agreements; and




• share transfers.

The tax rate varies based on the transaction and may be ad
valorem or a fixed rate.

Ad valorem rates range from 0.15% to 6%. The fixed rate
is currently:

• NGN 500 for the original document; and




• NGN 50 for counterparts.

Electronic transactions are liable to stamp duty under the
Finance Act. Transfers of shares, stock or securities by a lender
to its approved agent or a borrower in furtherance of a regulated
securities lending transaction are exempt from stamp duty.

Information Technology Development Levy:
Companies that conduct the following businesses with an annual
turnover of at least NGN 100 million must pay 1% of their profits
before tax to the FIRS:

• cyber companies and internet providers;




• pension managers and pension-related companies;




• banks and other financial institutions;




• insurance companies; and




• telecommunication companies.

National Cybersecurity Levy: Under the
Cybercrimes Act, 2015, the following companies must pay a levy of
0.005% on all electronic transactions into a fund held with the
Central Bank of Nigeria:

• telecommunications companies;




• internet service providers;




• banks and other financial institutions;




• insurance companies; and




• the Nigerian Exchange Group.

9.2 What taxes apply to capital inflows and
outflows?

The taxes that apply to capital inflows and outflows in Nigeria
include the following:

• foreign exchange transaction tax, which applies to all foreign
  exchange transactions that are conducted by banks and authorised
  foreign exchange dealers in Nigeria. The tax rate is 0.5% of the
  value of the transaction;




• capital gains tax;




• withholding tax;




• stamp duty; and




• VAT.

Dividends, interest and royalties on capital are taxed as
follows:

• Dividends: A 10% tax is withheld from dividends paid to all
  shareholders, 7.5% if a foreign shareholder is resident in a
  country with which Nigeria has a DTT. On the other hand, dividends
  derived from foreign companies by Nigerian residents (corporate and
  individuals) and brought into Nigeria through government-approved
  channels are exempt from tax.




• Interests: A 10% tax must be withheld on interest payments on
  all loans, except where the interest payments are specifically
  exempt from tax. If the lender is resident in a country that has a
  DTT with Nigeria, the rate is reduced to 7.5%. Tax on interest is
  further reduced for loans in foreign currency by a foreign lender
  as follows:




• • If the repayment period is less than two years, there is no
    exemption.

  
  

  • If the repayment period is two to four years (including a
    moratorium of at least one year), 40% tax is exempted.

  
  

  • If the repayment period is five to seven years (including a
    moratorium of at least 18 months), 70% tax is exempted.

  
  

  • If the repayment period is more than seven years (including a
    moratorium of at least two years), it is fully tax exempt.




• Royalties: Royalty payments on IP rights are taxed at the rate
  of 10%, reduced to 7.5% where the recipient is resident in a
  country with which Nigeria has a DTT.

9.3 What key exemptions and incentives are available to
encourage enterprises to do business in your
jurisdiction?

The Nigerian government provides various exemptions and
incentives to encourage enterprises to do business in Nigeria.
These include the following:

• Pioneer status: This incentive is granted in qualifying
  industries and exempts them from paying income tax for an initial
  period of up to five years, with an option to extend for another
  three years. To qualify, an industry must be new and must not have
  previously been operating in Nigeria.




• Start-up incentives: Various incentives are available to
  start-ups under the Nigeria Start-up Act, including:




• • access to finance from the Start-up Investment Seed Fund;
    and

  
  

  • exemption from the payment of companies income tax for a
    maximum of five years.




• Export expansion grant: This is a cash grant given to exporters
  in Nigeria to encourage the export of non-oil products.




• Tax holidays: These are incentives given to new industries that
  operate in designated rural areas or economically disadvantaged
  areas. The incentive grants the industry a tax holiday period of up
  to seven years from the start of business operations.




• Investment allowance: This incentive provides an additional tax
  deduction for companies that invest in new assets, such as plant
  and machinery. The investment allowance is 10% of the cost of the
  asset and can be claimed in the year in which the asset is
  purchased.




• Free trade zones: These are designated areas in Nigeria where
  companies can operate without paying customs duties, taxes or other
  tariffs.

9.4 What key concerns and considerations should be borne
in mind with regard to tax in your jurisdiction?

Key considerations include:

• compliance with the applicable tax laws and regulations;




• tax rates for the various taxes;




• tax planning;




• tax incentives and exemptions;




• transfer pricing; and




• dispute resolution mechanisms for tax disputes.

10. M&A

10.1 What provisions govern mergers and acquisitions in
your jurisdiction and what are their key features?

• The Federal Competition and Consumer Protection Act 2019
  (FCCPA);




• The Merger Review Regulations, 2021;




• The Merger Review Guidelines, 2019;




• The Companies and Allied Matters Act 2020;




• The Companies Regulations 2021;




• The Investments and Securities Act (ISA) 2007;




• The Rules and Regulations of the Securities and Exchange
  Commission; and




• The Nigerian Exchange Group Rulebook.

The key features of these provisions include the following:

• Regulatory approval: The Federal Competition and Consumer
  Protection Commission (FCCPC) is the regulator in charge of mergers
  and acquisitions in Nigeria. The FCCPC is tasked with authorising
  (with or without conditions), prohibiting and approving mergers or
  any acquisitions leading to a change of control.




• Disclosure requirements: Companies involved in M&A
  transactions must disclose information about the transaction to the
  public, including details of:




• • the parties involved;

  
  

  • the terms of the transaction; and

  
  

  • any potential impact on shareholders and other
    stakeholders.




• Fairness opinion: In some cases, companies involved in M&A
  transactions may be required to obtain a fairness opinion from an
  independent financial adviser. This opinion evaluates whether the
  terms of the transaction are fair to shareholders and other
  stakeholders.




• Shareholder approval: M&A transactions in Nigeria require
  approval from shareholders of the companies involved.




• Protection of minority shareholders: In cases where the
  majority shareholder seeks to acquire a minority shareholder’s
  shares, the minority shareholder has the right to demand a fair
  price for shares.




• Post-merger integration: After a merger or acquisition,
  companies must undertake post-merger integration to ensure a smooth
  transition and minimise disruption to the business. This may
  include:




• • integrating systems and processes;

  
  

  • reorganising staff; and

  
  

  • developing a new organisational structure.

10.2 How are mergers and acquisitions regulated from a
competition perspective in your jurisdiction?

Mergers and acquisitions in Nigeria are regulated from a
competition perspective by the FCCPC. The main legislation that
governs competition in Nigeria is the FCCPA. The competition
provisions in the FCCPA provide the regulatory framework for
ensuring that M&A transactions in Nigeria do not prevent,
lessen or block competition in relevant markets. The FCCPA also
provides for a mandatory notification requirement for certain
categories of mergers.

Under the FCCPA, parties to an M&A transaction must notify
the FCCPC of the proposed transaction if the following thresholds
are met:

• The combined annual turnover of the acquiring undertaking and
  target undertaking in, into or from Nigeria equals or exceeds NGN 1
  billion; or




• The annual turnover of the target undertaking in, into or from
  Nigeria in, into or from Nigeria equals or exceeds NGN 500
  million.

The notification must:

• be made prior to the implementation of the merger; and




• include detailed information about:




• • the transaction;

  
  

  • the rationale for the merger;

  
  

  • the impact on competition in the relevant market; and

  
  

  • any potential benefits to consumers.

10.3 How are mergers and acquisitions regulated from an
employment perspective in your jurisdiction?

Mergers and acquisitions in Nigeria are regulated from an
employment perspective by:

• the Labour Act;




• the Pension Reform Act; and




• other relevant employment laws and regulations.

Companies involved in M&A transactions must comply with the
Labour Act. In Nigeria, it appears that no special protection is
afforded to employees in a merger. The Labour Act essentially
caters for situations where employees are laid off because of
redundancy, which is often the case in a merger transaction. In
such cases, the companies must comply with the Labour Act and
provide appropriate payments to the affected employees.

Where employees are acquired by the acquirer during an M&A
transaction, the acquirer must continually comply with the Labour
Act.

Companies involved in M&A transactions must also comply with
the Pension Reform Act, which requires employers to make mandatory
contributions to their employees’ pension funds. The acquirer
must maintain the employees’ pension entitlements in accordance
with the Pension Reform Act.

10.4 What key concerns and considerations should be
borne in mind with regard to M&A activity in your
jurisdiction?

• Regulatory compliance: The various laws governing M&A
  transactions should be complied with to avoid any legal or
  regulatory issues. Companies should carefully navigate these
  regulations and ensure compliance to avoid any potential legal or
  regulatory sanctions.




• Due diligence: Proper due diligence is essential for any
  successful M&A transaction. Legal, financial and operational
  due diligence should be conducted on the target to identify any
  potential risks or liabilities.




• Human resources: M&A transactions often involve the
  transfer of employees from the target to the acquirer. Companies
  should be aware of the potential impact on employees, as well as
  any legal requirements for:




• • employee transfer;

  
  

  • severance pay; and

  
  

  • employee consultation.




• Valuation: This is an important part of M&A transactions,
  as it guides the buyer and seller to reach the final transaction
  price.




• Tax implications: Taxes including capital gains tax, stamp duty
  and value-added tax must usually be paid under an M&A
  transaction. Companies should consider the applicable taxes for any
  M&A transaction.

11. Financial crime

11.1 What provisions govern money laundering and other
forms of financial crime in your jurisdiction?

• The Money Laundering (Prohibition and Prevention) Act,
  2022;




• The Banks and Other Financial Institutions Act, 2020;




• The Nigerian Financial Intelligence Unit Act, 2018;




• The Central Bank of Nigeria Act, 2017;




• The Terrorism (Prevention) Act, 2011;




• The Economic and Financial Crimes Commission (Establishment)
  Act, 2004;




• The Terrorism Prevention (Freezing of International Terrorists
  Funds and Other Related Measures) Regulations, 2013;




• The Central Bank of Nigeria (Anti-Money Laundering, Combating
  the Financing of Terrorism and Countering Proliferation Financing
  of Weapons of Mass Destruction in Financial Institutions)
  Regulations 2022;




• The Guidance Note on Anti-Money Laundering and Combattng the
  Financing of Terrorism Regulations for Other Financial
  Institutions, 2022; and




• The Financial Action Task Force Recommendations and United
  Nations Security Council Resolutions.

11.2 What key concerns and considerations should be
borne in mind with regard to the prevention of financial crime in
your jurisdiction?

Companies and business organisations should bear the following
in mind regarding preventing financial crime in Nigeria:

• Develop and implement an effective anti-money laundering
  policy.




• Conduct due diligence to know the source of wealth and sources
  of fund of business partners and customers.




• Implement technologies, systems, processes and controls that
  prevent and detect financial crime.




• Comply with know-your-customer requirements when onboarding
  clients and customers.




• Liaise with regulators and law enforcement authorities to
  reduce and prevent financial crime.




• Have the right organisational structure and internal monitoring
  systems in place to combat financial crime.

12. Audits and auditors

12.1 When is an audit required in your jurisdiction?
What exemptions from the auditing requirements apply?

As a general rule, every company registered in Nigeria must have
its financial statements audited by a qualified external auditor on
an annual basis.

However, a company is exempt from the audit requirements for a
financial year where:

• it has not carried on any business since its incorporation;
  or

• it is categorised as a small company. A ‘small company’
  is a company that meets the following criteria:




• • It is a private company with liability limited by shares;

  
  

  • It has a turnover that does not exceed NGN 120 million;

  
  

  • It has assets whose net value does not exceed NGN 60
    million;

  
  

  • It has no foreign shareholders;

  
  

  • It has no shareholders which are a government, a government
    agent or a government nominee as shareholder; and

  
  

  • If it has a share capital, its directors hold at least 51% of
    the equity share capital.

Notwithstanding the exemptions stated above, banks and insurance
companies are not exempt from the audit requirements under the
Companies and Allied Matters Act, 2020 (CAMA) in any financial
year.

12.2 What rules relate to the appointment, tenure and
removal of auditors in your jurisdiction?

• The CAMA;




• The Nigerian Code of Corporate Governance, 2018 (NCCG);




• The Financial Reporting Council of Nigeria Act 2011; and




• The Corporate Governance Guidelines for Commercial, Merchant,
  Non-Interest and Payment Services Banks

The CAMA provides that the auditors may be appointed by the
members of the company at a general meeting and removed by an
ordinary resolution before the expiration of the auditors’
term.

The NCCG also recommends that where a company engages an
external auditor, the auditor should not serve in that capacity for
more than 10 years consecutively. The NCCG also recommends that
where an external auditor is engaged after serving for 10 years,
the auditor should not be engaged again until seven years have
lapsed from the year of disengagement.

The Financial Reporting Council of Nigeria Act makes provision
for the independence of auditors to the effect that a professional
accountant, in the exercise of his or her audit function:

• must carry out his or her function in full independently;
  and




• must not:




• • act in any manner that is contrary to the Code of Conduct and
    Ethics that may be made by the council or under any enactment in
    force; or

  
  

  • engage in any activity which is likely to impair his or her
    independence as a professional.

12.3 Are there any rules or recommendations that limit
the scope of services as regards the provision of non-audit
services by an auditor?

The rules and recommendations in Nigeria aim to ensure that
auditors maintain their independence and objectivity while
providing audit services to their clients.

The following laws provide for the scope of audit and non-audit
services to be performed by auditors:

• the Financial Reporting Council Act, 2011;




• the Financial Reporting Council Guidelines/Regulations for
  Inspection and Monitoring of Reporting Entities, 2014; and




• the Institute of Chartered Accountants of Nigeria (Scale of
  Professional Fees, Etc) Regulations, 2015.

The combined effect of the provisions of these laws is that
auditors may provide certain non-audit services such as:

• accounting and book-keeping services;




• taxation services;




• limited financial and investment advisory services; and




• IT services.

12.4 Are there any rules or recommendations which cap
the remuneration of an auditor as regards payment for the provision
of non-audit services?

The Institute of Chartered Accountants of Nigeria (Scale of
Professional Fees, Etc) Regulations (2015) outline a scale of fees
for audit and non-audit services but do not specify a maximum
remuneration for the performance of non-audit services.

13. Termination of activities

13.1 What are the main routes for terminating business
activities in your jurisdiction? What are the advantages and
disadvantages of each?

In Nigeria, business activities can be terminated for voluntary
and involuntary reasons.

Voluntary termination: Voluntary termination
usually involves the voluntary winding up of a company through:

• the sale of its assets;




• the settlement of outstanding obligations; and




• the submission of notification to the company’s
  regulators.

An upside of a voluntary winding up is the control the company
has over the winding up process. The directors and shareholders of
the company can:

• reach decisions on the course(s) of action that will best fit
  its interests; and




• ensure that the assets of the company are distributed fairly
  and subject to regulation.

Regardless of the voluntary nature of the winding-up process,
the company must appoint professionals who will be tasked with
coordinating the process; the company will need to pay certain
professional fees for this.

Additionally, where a company has outstanding debt obligations
at the time of the commencement of a winding up, the directors must
make a declaration of creditworthiness reflecting the company’s
willingness to offset its debt obligations within a 12-month
timeframe.

Involuntary termination: A business can be
terminated involuntarily for the following reasons:

• Bankruptcy: Where a business is unable to pay its debts, it may
  be declared bankrupt by a court of law and the liquidation of its
  assets may be ordered. Once a company is declared bankrupt, most of
  its unsecured creditors are unable to pursue further legal action
  against the company. As an alternative to winding up a company
  based on its insolvency, the Companies and Allied Matters Act
  introduced a compulsory voluntary arrangement (CVA). Through the
  CVA, a company can enter into a binding agreement with its
  unsecured creditors for the repayment of its debts.




• Compulsory winding up: If a business has engaged in fraudulent
  or illegal activities, or if it is carrying on business with the
  intent to defraud its creditors, a court may order the business to
  be wound up. Through this mode of business termination, creditors
  may in certain instances recover their investments in the business
  after selling the assets of the business.

13.2 What key concerns and considerations should be
borne in mind with regard to the termination of business activities
in your jurisdiction?

• The compliance obligations of the company to regulators at the
  time of the termination of business;




• The contractual obligations of the company to its
  customers;




• The outstanding assets and liabilities of the business, and its
  financial position;




• The management of employees of the company; and




• The financial and tax implications of the business
  termination.

14. Trends and predictions

14.1 How would you describe the current landscape for
doing business and prevailing trends in your jurisdiction? Are any
new developments anticipated in the next 12 months, including any
proposed legislative reforms?

The business landscape in Nigeria is governed by various
political, economic, legal and social factors that influence doing
business in Nigeria.

On the political front, following the election and swearing in
of the new president in May 2023, new reforms and policies have
been introduced and there are indications that there are more to
come. New ministers and officials have also been appointed to
supervise the ministries and agencies responsible for implementing
these policies and reforms. This transition is projected to have a
significant effect on the economy and businesses over the coming
months.

Nigeria has not escaped the high inflation experienced worldwide
following the COVID-19 business disruptions; in addition to other
circumstances specific to the Nigerian economy, this has resulted
in reduced investment activities. Businesses are exploring other
options to survive – including mergers and acquisitions,
which we anticipate will be on the increase for the time being.

While Nigeria has made progress in advancing reforms to
eliminate constraints to doing business – especially through
actions driven by the Presidential Enabling Business Environment
Council – certain issues remain, especially in terms of:

• attracting investments;




• providing an enabling environment for businesses to thrive and
  prosper; and




• resolving certain complexities in regulatory compliance,
  including the foreign exchange controls put in place by the Central
  Bank of Nigeria.

Recent legislative reforms aimed at improving the business
environment in Nigeria include:

• the Nigeria Start-up Act 2022; and




• the Business Facilitation Act 2023.

Within the next 12 months, necessary steps will be taken to
ensure the implementation of these laws.

15. Tips and traps

15.1 What are your top tips for doing business smoothly
in your jurisdiction and what potential sticking points would you
highlight?

Our top tips for doing business in Nigeria are as follows:

• Understand the applicable laws and regulations and develop
  internal systems to ensure compliance with the laws and
  regulations.




• Build strong relationships with customers, business partners,
  regulators, government officials and other stakeholders.




• Hire skilful and experienced talent as employees and service
  providers.




• Keep abreast of political, economic, social, technological,
  legal and environmental changes in Nigeria that could affect
  business operations in Nigeria.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.