Foreign Participation in the Nigerian Business Sector

Flashcards about foreign participation in the Nigerian business sector.

What legal instruments outline any prohibitions on foreign participation in Nigerian businesses?

Section 18 of the NIPC Act and the Negative List of the NIPC Act

What efforts have been made to make the Nigerian economy conducive for foreign investment?

It repealed the Nigerian Enterprises Promotion Decree (NEPD) of 1972 and enacted the NIPC Act.

What are the key outcomes of the enactment of the NIPC Act?

Liberalization of the ownership structure of businesses in Nigeria and creation of the One-Stop Investment Centre (OSIC).

What is the One-Stop Investment Centre (OSIC)?

A mechanism that facilitates investment by bringing relevant government agencies together in one location, coordinated by the NIPC, to provide efficient services to investors.

How does the NIPC promote foreign investment through the OSIC?

Registration of business ventures involving alien participation, issuance of approval-in-principle business permits, and provision of investment information.

What are some of the benefits of the OSIC?

Tracking of FDI and investors, reducing the cost of doing business, simplifying procedural steps for approvals, and reducing service delivery time.

What is the process for registering a foreign enterprise with the NIPC?

An enterprise with foreign participation must apply for registration with the NIPC before commencing business.

Which form is completed to apply for Business permit and expatriate quota, Pioneer Status, Technical Assistance Agreement with the NIPC?

NIPC Form 1.

What are some of the attachments required for NIPC application?

Partnership (Joint venture) agreement where applicable, Certificate of Incorporation, The Memorandum and Articles of Association, Tax clearance certificate, etc.

What are the requirements for registration of contracts involving the transfer of foreign technology?

Every contract/agreement involving the transfer of foreign technology to Nigerian partners must be registered with NOTAP not later than 60 days from the execution of the agreement.

What types of agreements involve the transfer of technology?

Contracts involving use of trademarks, rights to patented inventions, supply of technical expertise, supply of basic detailed engineering, etc.

Under what conditions may the Director of NOTAP refuse an application for the registration of a contract?

Where the technology is freely available in Nigeria, the price is not commensurate with the technology, or the technology is obsolete.

What is the effect of non-registration of a contract for the transfer of technology?

It merely frustrates transfer of fees or payment due under the contract to the account of the aliens outside Nigeria.

What are the two primary ways a foreign company can participate in business ventures in Nigeria?

Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI).

What is the distinction between FDI and FPI?

FDI involves the formation/incorporation of a new company, while FPI is investment through the purchase of shares in Nigerian companies.

What is the procedure for FDI in Nigeria?

Prepare JVA and other necessary pre-incorporation contracts, form a company registered by the CAC, apply to the NIPC for registration, apply to the SEC for the registration of the security/ Investment, etc.

What are the types of Pre-incorporation contracts?

Shareholders Agreements, Joint Venture Agreements, Service Contracts, Memorandum of Understanding, Lease Agreement, Vendor/ Supplier Agreements.

How does FPI work in Nigeria?

A foreigner may buy shares in any Nigerian company in a convertible currency, with investment effected with foreign currency, imported freely into Nigeria through an Authorised dealer.

What is the procedure for FPI in Nigeria?

Application for shares by the alien to the Nigerian company, BOD of the company will pass a resolution, Applying to the SEC for registration of the security, Importation of capital through an authorised dealer

What are the effects of Non-incorporation of a foreign company in Nigeria?

The company shall not carry on business in Nigeria and shall not exercise the powers of a registered company

How to make an Application for Exemption?

Written application addressed to the Minister of Trade and Investment setting out the requirement in s. 80 (2) (a) – (h) CAMA.

What are the Permits and Approvals aimed at Encouraging Foreign Participation in Business

Visa, Business Permit, Residence Permit, Expatriate Quota & Work permit.

What are the Channels for the issuance of Nigerian Visas

Visa on arrival, Electronic Visa (e-visa), Visa at the embassy.

What is an Expatriate Quota?

It prescribes the quota (i.e. the number of foreigners that should be employed by the company

What are the Application requirements for the grant of Expatriate Quota?

Same as in business permit, plus the other documents as required by NIS.

How can Foreigners import capital in Nigeria for their businesses?

Through an authorised dealer; Through equipment; Debt conversion Programme.

What is the importance of the CCI (certificate of capital importation)?

Enables investor to open a special non-resident naira account. Buy shares in Nigerian companies out of naira account.

What are the Tax Reliefs Under CITA?

The Exemption of company profit from taxation, Relief in respect of interest on foreign bank loans, In-plant Training; Pioneer Status

What are the Conditions for the grant of Pioneer Status?

Must have incurred a capital expenditure of not less than N10 million; The application in respect of pioneer status must be submitted within one year of the commencement of commercial production

What are the various RELIEFS AND INCENTIVES available?

Tax holiday for Investment in Economically Disadvantaged Areas, Oil and Gas Free Zones, Nigeria Export Processing Zones

What Guarantees and Assurances are available to foreigners who invest in the Nigerian economy?

Freedom to do business alone or in partnership, Repatriation of capital and proceeds of business, protection against nationalisation of assets

What legal instruments outline any prohibitions on foreign participation in Nigerian businesses?

Section 18 of the NIPC Act and the Negative List of the NIPC Act

What efforts have been made to make the Nigerian economy conducive for foreign investment?

It repealed the Nigerian Enterprises Promotion Decree (NEPD) of 1972 and enacted the NIPC Act.

What are the key outcomes of the enactment of the NIPC Act?

Liberalization of the ownership structure of businesses in Nigeria and creation of the One-Stop Investment Centre (OSIC).

What is the One-Stop Investment Centre (OSIC)?

A mechanism that facilitates investment by bringing relevant government agencies together in one location, coordinated by the NIPC, to provide efficient services to investors.

How does the NIPC promote foreign investment through the OSIC?

Registration of business ventures involving alien participation, issuance of approval-in-principle business permits, and provision of investment information.

What are some of the benefits of the OSIC?

Tracking of FDI and investors, reducing the cost of doing business, simplifying procedural steps for approvals, and reducing service delivery time.

What is the process for registering a foreign enterprise with the NIPC?

An enterprise with foreign participation must apply for registration with the NIPC before commencing business.

Which form is completed to apply for Business permit and expatriate quota, Pioneer Status, Technical Assistance Agreement with the NIPC?

NIPC Form 1.

What are some of the attachments required for NIPC application?

Partnership (Joint venture) agreement where applicable, Certificate of Incorporation, The Memorandum and Articles of Association, Tax clearance certificate, etc.

What are the requirements for registration of contracts involving the transfer of foreign technology?

Every contract/agreement involving the transfer of foreign technology to Nigerian partners must be registered with NOTAP not later than 60 days from the execution of the agreement.

What types of agreements involve the transfer of technology?

Contracts involving use of trademarks, rights to patented inventions, supply of technical expertise, supply of basic detailed engineering, etc.

Under what conditions may the Director of NOTAP refuse an application for the registration of a contract?

Where the technology is freely available in Nigeria, the price is not commensurate with the technology, or the technology is obsolete.

What is the effect of non-registration of a contract for the transfer of technology?

It merely frustrates transfer of fees or payment due under the contract to the account of the aliens outside Nigeria.

What are the two primary ways a foreign company can participate in business ventures in Nigeria?

Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI).

What is the distinction between FDI and FPI?

FDI involves the formation/incorporation of a new company, while FPI is investment through the purchase of shares in Nigerian companies.

What is the procedure for FDI in Nigeria?

Prepare JVA and other necessary pre-incorporation contracts, form a company registered by the CAC, apply to the NIPC for registration, apply to the SEC for the registration of the security/ Investment, etc.

What are the types of Pre-incorporation contracts?

Shareholders Agreements, Joint Venture Agreements, Service Contracts, Memorandum of Understanding, Lease Agreement, Vendor/ Supplier Agreements.

How does FPI work in Nigeria?

A foreigner may buy shares in any Nigerian company in a convertible currency, with investment effected with foreign currency, imported freely into Nigeria through an Authorised dealer.

What is the procedure for FPI in Nigeria?

Application for shares by the alien to the Nigerian company, BOD of the company will pass a resolution, Applying to the SEC for registration of the security, Importation of capital through an authorised dealer

What are the effects of Non-incorporation of a foreign company in Nigeria?

The company shall not carry on business in Nigeria and shall not exercise the powers of a registered company

How to make an Application for Exemption?

Written application addressed to the Minister of Trade and Investment setting out the requirement in s. 80 (2) (a) – (h) CAMA.

What are the Permits and Approvals aimed at Encouraging Foreign Participation in Business

Visa, Business Permit, Residence Permit, Expatriate Quota & Work permit.

What are the Channels for the issuance of Nigerian Visas

Visa on arrival, Electronic Visa (e-visa), Visa at the embassy.

What is an Expatriate Quota?

It prescribes the quota (i.e. the number of foreigners that should be employed by the company

What are the Application requirements for the grant of Expatriate Quota?

Same as in business permit, plus the other documents as required by NIS.

How can Foreigners import capital in Nigeria for their businesses?

Through an authorised dealer; Through equipment; Debt conversion Programme.

What is the importance of the CCI (certificate of capital importation)?

Enables investor to open a special non-resident naira account. Buy shares in Nigerian companies out of naira account.

What are the Tax Reliefs Under CITA?

The Exemption of company profit from taxation, Relief in respect of interest on foreign bank loans, In-plant Training; Pioneer Status

What are the Conditions for the grant of Pioneer Status?

Must have incurred a capital expenditure of not less than N10 million; The application in respect of pioneer status must be submitted within one year of the commencement of commercial production

What are the various RELIEFS AND INCENTIVES available?

Tax holiday for Investment in Economically Disadvantaged Areas, Oil and Gas Free Zones, Nigeria Export Processing Zones

What Guarantees and Assurances are available to foreigners who invest in the Nigerian economy?

Freedom to do business alone or in partnership, Repatriation of capital and proceeds of business, protection against nationalisation of assets

What is Pioneer Status Incentive (PSI) in Nigeria?

A tax incentive that exempts companies making investments in particular sectors of the Nigerian economy from paying company income tax for a specific period. Requires application to the NIPC, demonstrating that the company is engaged in a promoted industry or product, has a capital investment of at least N150 million, and meets certain performance criteria.

What are Free Zones in Nigeria?

An area within Nigeria where special customs, fiscal, and regulatory regimes apply. These zones are designed to promote export-oriented activities by providing a business-friendly environment that includes tax holidays, simplified customs procedures, and duty-free import of raw materials and equipment.

What is NEPZA?

The Nigeria Export Processing Zones Authority. It regulates and manages the export processing zones in Nigeria, providing guidelines and incentives for companies operating within these zones.

What are Infrastructure Tax Reliefs?

Tax incentives that encourage companies to invest in the development of infrastructure such as roads, power, and water facilities in rural areas. These incentives typically allow companies to deduct a portion of the cost of providing these amenities from their taxable income.

What is the Research and Development (R&D) Tax Incentive?

A tax relief offered to companies making investments in research and development (R&D) activities. This incentive allows companies to deduct a certain percentage of their R&D expenditure from their taxable income, thereby encouraging innovation and technological advancement.

What is a Bonded Warehouse?

A facility or location where goods may be landed, stored, handled, manufactured, and undergo other operations without the payment of duties and taxes. These zones are typically located near ports or airports and are designed to facilitate international trade and investment.

What are Sector-Specific Incentives?

An initiative aimed at attracting foreign investors to specific sectors of the Nigerian economy through targeted incentives and support measures. These sectors are typically those with high growth potential or strategic importance to the country's development goals.

What is Investment Promotion and Protection Agreement (IPPA)?

Provides for the guarantee of investments against expropriation and nationalization. This agreement helps to reassure foreign investors that their investments will be protected from government interference.

What is Double Taxation Agreements (DTAs)?

Relief from double taxation, such as the avoidance taxes being taxed in two countries. Nigerian Government has Double Taxation Agreements with several countries

What is Repatriation Guarantee?

The repatriation of profits, dividends, and capital is guaranteed under the NIPC Act, ensuring that foreign investors can freely move their investment returns out of Nigeria, subject to applicable laws and regulations.

What is Guarantee Against Expropriation?

Guarantees that no enterprise shall be nationalized or expropriated by the government, providing legal protection for foreign investments in Nigeria.

What are 100% Ownership Rights?

Foreign investors are permitted to own 100% of their businesses in most sectors, fostering greater confidence and participation in the Nigerian economy. There are exceptions, such as those mentioned in the Negative List of the NIPC Act.

What are Commercial Courts?

Specialized courts that resolve commercial disputes efficiently. The establishment of these courts can expedite the resolution of business-related conflicts, reducing the time and cost associated with legal proceedings.

What is Equal Treatment Under the Law?

The NIPC Act and other laws ensure that foreign investors have the same legal rights and protections as local investors, creating a level playing field for all businesses operating in Nigeria.

Nigeria is