INTRODUCTION:

Establishing a holding company, consortium, or group of companies in Nigeria involves navigating specific legal frameworks set out by the Companies and Allied Matters Act (CAMA) 2020. Each structure serves distinct purposes, and understanding the requirements and procedures is essential for compliance and operational success.

SETTING UP A HOLDING COMPANY

Definition of a Holding Company

A holding company, as defined in the Companies and Allied Matters Act (CAMA) 2020, is a parent company that holds more than 50% of the shares in another business, known as a subsidiary. A holding company’s primary goal is to control and manage its subsidiaries’ affairs without becoming engaged in their day-to-day operations. This structure allows the holding company to acquire equity in other companies, which varies from just acquiring stock in that it involves ownership even if the subsidiary does not issue shares.

Benefits of Holding Companies

  • Risk minimization: Holding companies can successfully manage the financial risk associated with subsidiary businesses. If a subsidiary suffers bankruptcy or legal issues, creditors can only seek the assets of that specific subsidiary, shielding the parent company and its other subsidiaries from financial accountability.
  • Asset Protection: Businesses can protect significant assets, such as real estate or intellectual property, by transferring them to a holding company and shielding them from potential claims by operational subsidiaries. This division guarantees that significant resources remain intact even if one section of the firm faces challenges.
  • Tax Benefits: Holding companies can improve tax efficiency by allowing income and assets to be transferred between subsidiaries without incurring immediate tax liabilities. Dividends paid by subsidiaries to the parent company are generally tax-free, allowing for improved cash flow management and reinvestment possibilities. Furthermore, efficient structure can result in lowering total tax burdens through careful planning around capital gains and income distribution.
  • Centralised Management: A holding company enables centralized management over several subsidiaries, which can lead to more efficient operations and cost savings through common administrative responsibilities. This structure improves resource allocation and managerial supervision while allowing each subsidiary to focus on its primary business activity.
  • Flexible Investment Strategies: Holding companies provide the flexibility to explore riskier opportunities for investing without risking the entire firm. This structure enables testing in new markets or technology while isolating possible losses within individual subsidiaries.
  • Improved Succession Planning: A holding company can make succession planning easier by allowing owners to transfer ownership of the trading firm while maintaining control of significant assets housed inside the holding company. This segmentation may assist smoother transitions after ownership changes.
  • Potential for Growth: Businesses that use a holding company structure can more quickly buy new subsidiaries or dispose existing ones, improving their capacity to adjust to market changes and pursue strategic development possibilities.

Procedure for Forming a Holding Company

Step 1: Choose a Company Name

  • Select Two Proposed Names: Choose two suitable names for your holding company.
  • Name Availability Check: Conduct a name availability check with the Corporate Affairs Commission (CAC) to ensure the names are not already in use.

Step 2: Obtain Consent for Name

  • Application for Consent: If the name includes “Holding,” a formal application to the Registrar General of CAC for consent to use this term must be submitted.

Step 3: Prepare Required Documentation

  • Objectives of the Company: Clearly define the objectives of the holding company.
  • Registered Address: Provide the registered principal address of the holding company.
  • Details of Shareholders: Include particulars of at least two shareholders, as Nigerian law requires a minimum of two for incorporation.
  • Share Capital Information: Specify the share capital and shareholding structure among shareholders.
  • Directors’ Details: Provide particulars of at least two directors, including identification documents (e.g., international passport or driver’s license).
  • Company Secretary Information: Include details about the appointed company secretary.
  • Resolution from Parent Company: If applicable, provide a resolution from the parent company authorizing the establishment of the holding company.
  • Memorandum and Articles of Association: Draft these documents, ideally with professional legal assistance.

Step 4: File with CAC

  • Submit Documentation: Complete and submit all required documents along with evidence of payment for filing fees and stamp duties to CAC.
  • Filing Fees: The fees are typically calculated based on the minimum issued share capital.

Step 5: Obtain Certificate of Incorporation

  • CAC Verification: The CAC will review all submitted documents. If everything is in order, they will issue a Certificate of Incorporation, officially establishing your holding company as a legal entity.

Step 6: Register with Tax Authorities

  • Tax Identification Number (TIN): After incorporation, register with the Federal Inland Revenue Service (FIRS) to obtain a Tax Identification Number, which is necessary for tax purposes.

Step 7: Compliance and Reporting

  • Annual Returns: Ensure compliance with ongoing obligations such as filing annual returns and maintaining good standing with CAC.
  • Maintain Records: Keep accurate records of all transactions and corporate activities as required by law.

SETTING UP A CONSORTIUM

Definition of a Consortium

Consortium is a combination of different companies formed to undertake a specific enterprise or project that exceeds the resources of any single member. Each member retains its independence while contributing to the consortium’s objectives, which are typically outlined in a consortium agreement.

Benefits of consortium

  • Resource Sharing: Consortia allow members to share resources, including technology, knowledge, and finance. This pooling can result in considerable cost savings, especially through group purchasing agreements for products and services. Members have access to a greater range of resources than they would individually, which is especially useful for smaller groups.
  • Enhanced Advocacy:  Consortium members may jointly argue for their interests more effectively than individually. This single voice may influence policy choices and negotiate better terms with vendors and funders, improving the total effect of their projects.
  • Improved Capacity and Expertise: Consortia frequently provide professional development opportunities for its members, which help them improve their skills and knowledge base. This collaborative approach encourages learning and innovation, allowing members to benefit from one another’s experiences and best practices.
  • Cost Efficiency: Consortia can negotiate better price and conditions with suppliers, lowering costs for all members. This efficiency is especially visible in areas like education and libraries, where collaborative purchasing may drastically cut costs for resources such as databases and technology.
  • Networking Opportunities: Consortia provide networking opportunities among members, allowing the formation of new partnerships and collaborations. These links can result in creative ideas and efforts that individual businesses may not be able to pursue.
  • Specialised Initiatives: Consortia members can collaborate on specialized initiatives to solve shared aims and issues. For example, they may work together on research projects or technological implementations that would be too resource-intensive for any one member to undertake alone.
  • Flexibility and Autonomy: Consortia promote collaboration, but members maintain autonomy in daily operations. This balance enables them to benefit from collaborative efforts while maintaining their own identities and operational autonomy.

Procedure for Forming a Consortium

Step 1: Define the Consortium Objectives

  • Establish Common Goals: All participating companies should agree on the specific objectives of the consortium, such as project execution, resource sharing, or joint ventures.

Step 2: Choose Consortium Members

  • Minimum Requirement: Ensure that at least three companies are willing to collaborate to form the consortium.
  • Select Diverse Entities: Choose companies with complementary strengths and resources to enhance the consortium’s effectiveness.

Step 3: Prepare Required Documentation

  • Resolution of Consent: Each company must pass a resolution indicating their consent to form the consortium and stating its objectives.
  • Memorandum of Association: Draft a memorandum that outlines the objects of the consortium.
  • Articles of Association: Include a clause for winding up the consortium upon completion of its objectives.

Step 4: Obtain Consent from CAC

  • Application for Consent: Submit a formal application to the Corporate Affairs Commission (CAC) for permission to use the term “Consortium” in the name.
  • Payment of Fees: Pay any required non-refundable application fees as stipulated by CAC.

Step 5: Evidence of Registration

  • Registration Documents: If any member is a foreign company, provide evidence of its registration in its home country.
  • Updated Annual Returns: Ensure that all component companies have filed their annual returns with CAC.

Step 6: Statutory Declaration

  • Winding Up Declaration: Prepare a statutory declaration stating that the consortium will wind up in accordance with CAMA provisions upon achieving its objectives.

Step 7: Submit Application to CAC

  • Filing with CAC: Compile all documents, including resolutions, memoranda, articles, and evidence of payment, and submit them to CAC for registration.

Step 8: Obtain Certificate of Registration

  • CAC Review: Wait for CAC to review the submitted documents. If approved, they will issue a Certificate of Registration for the consortium.

Step 9: Compliance and Reporting

  • Ongoing Obligations: Maintain compliance with CAMA regulations, including filing annual returns and other necessary documentation as required by law.

SETTING UP GROUP OF COMPANIES

Definition of Group of Companies

A group of companies is defined as a collection of three or more associated companies that share common shareholders or ownership. These companies operate under a single umbrella, typically with one company acting as the parent or holding company, which manages the affairs of its subsidiaries. Each company within the group operates as a separate legal entity, but they are connected through ownership and control by the parent company. The parent company does not engage in direct business operations but holds shares and assets in its subsidiaries, thereby controlling them.

Benefits of group of Companies

  • Diversification: Having many subsidiaries in diverse areas helps organizations lessen reliance on a single market. This diversity can result in more potential for development and innovation while distributing risk across several company activities.
  • Economies of Scale: Sharing resources including infrastructure, technology, and services may result in considerable cost savings for enterprises within a group, known as economies of scale. This pooling of resources allows for more efficient operations and can result in cheaper operating expenses than separate businesses.
  • Centralized Management: A group structure allows for centralized control over subsidiaries, improving coordination and decision-making processes. This concentration can improve operational efficiency and streamline management procedures throughout the business.
  • Risk Mitigation: Separating corporate operations into subsidiaries reduces risk exposure. If one subsidiary experiences financial troubles or legal challenges, the parent firm and other subsidiaries are usually unaffected, therefore safeguarding the group’s assets.
  • Tax Benefits: Group arrangements provide tax benefits, including the opportunity to credit losses from one company against earnings from another. Furthermore, assets may often be transferred across group firms without incurring tax liabilities, allowing for more efficient financial administration.
  • Access to Capital: Group companies may benefit from the parent company’s power and reputation, making it simpler to get finance. This increased access to cash can fund growth plans or new projects that would be difficult for solo businesses.
  • Improved Asset Protection: Improved Asset Protection: Separating precious assets into subsidiary firms protects them against claims from other elements of the business. This structure is especially useful in businesses that have higher risks or possible liabilities.
  • Flexibility in Business Operations: Group structures provide greater flexibility for entering new markets and introducing new goods. Subsidiaries can function autonomously while retaining the parent company’s backing and resources, allowing for innovation without endangering existing operations.

Procedure for Forming a Group of Companies

Step 1: Define the Structure

  • Identify Associate Companies: Ensure that you have at least three associated companies that will form the group. These companies must be registered as Limited Liability Companies (LLCs) and have common shareholders or ownership.

Step 2: Obtain Consent for Name

  • Application for Consent: Submit a formal application to the Registrar General of the Corporate Affairs Commission (CAC) to obtain consent to use the word “Group” in your company name. This is a legal requirement, as certain terms are restricted under CAMA

Step 3: Prepare Required Documentation

  • Evidence of Associate Companies: Provide documentation showing that the three or more associate companies exist and are registered.
  • Common Membership: Include evidence that all directors, secretaries, and shareholders across the associate companies are the same.
  • Written Resolutions: Each company must pass a resolution indicating their consent to form a group company.
  • Share Capital Statement: Prepare a statement from the majority of directors stating that the share capital of the new group company will not be less than the highest share capital among the associate companies.

Step 4: Ensure Compliance

  • Annual Returns: Ensure that all associate companies have filed their annual returns with CAC up to date.
  • Company Secretary Evidence: Provide evidence of the appointment of a company secretary for each associate company.

Step 5: Submit Application to CAC

  • Filing Documents: Compile all required documents, including resolutions, evidence of share capital, and annual returns, and submit them to CAC along with proof of payment for any applicable fees.

Step 6: Obtain Certificate of Registration

  • CAC Review: Wait for CAC to review your application. If everything is in order, they will issue a Certificate of Registration for your group of companies, officially recognizing it as a legal entity.

Step 7: Register with Tax Authorities

  • Tax Identification Number (TIN): After registration, obtain a TIN from the Federal Inland Revenue Service (FIRS) for tax purposes.

Step 8: Compliance and Reporting

  • Ongoing Obligations: Maintain compliance with CAMA regulations, including filing annual returns for both the group and its associate companies as required by law.

CONCLUSION

Setting up a holding company, consortium, or group of companies in Nigeria requires careful planning and adherence to legal requirements set forth by CAMA. Each structure serves distinct purposes—holding companies focus on asset management and control, consortia facilitate collaboration for specific projects, and groups enhance operational efficiency through shared ownership. It is essential to engage legal professionals to navigate the complexities of incorporation and ensure compliance with all regulatory requirements.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co.; a top corporate and commercial law firm in Nigeria provides help and offers advisory to both local and foreign clients on company formation and operational related matters in Nigeria. 

To see our service offerings, please contact us at [email protected] or visit www.adeolaoyinlade.com

Mobile: +234 803 826 7683 / +234 802 686 0247

Introduction

Mergers and acquisitions (M&A) are critical strategies employed by companies to enhance their market position, achieve economies of scale, and diversify their operations. In Nigeria, these transactions have gained traction as businesses seek to navigate a competitive environment and maximize operational efficiencies. Historically, M&A activities have evolved from being predominantly foreign-driven to increasingly involving local entities.

The earliest recorded M&A activity in Nigeria dates back to 1912 with the acquisition of the Anglo African Bank by the British Bank of West Africa, leading to the establishment of First Bank of Nigeria Plc. Notable instances of M&A include the 2005 banking sector consolidation mandated by the Central Bank of Nigeria (CBN), which required banks to increase their capital base significantly. This consolidation aimed to strengthen financial institutions and enhance their capacity to support economic development.

Meaning of Merger and Acquisition

Merger

A merger means any amalgamation of the undertakings or any part of the undertakings or interest of two or more companies or the undertakings or part of the undertakings of one or more companies and one or more bodies corporate. It follows therefore that a merger is a joinder, fusion or bringing together of the businesses, clients, capital, debts and other undertakings of two or more companies. This process often involves the dissolution of the original companies, with their assets and liabilities transferred to the newly created entity. Mergers can occur on equal terms (merger of equals) or involve one company absorbing another.

Acquisition

An acquisition, on the other hand, refers to one company purchasing most or all of another company’s shares or assets, thereby gaining control over that company. Unlike mergers, acquisitions do not necessarily result in the formation of a new entity; instead, the acquired company may continue to operate as a subsidiary or be fully integrated into the acquiring firm.

Legal Framework

The legal framework governing M&A in Nigeria include:

  • Companies and Allied Matters Act (CAMA) 2020: This Act outlines the procedures for mergers and requires court approval.
  • Federal Competition and Consumer Protection Act (FCCPA) 2018: This Act regulates mergers to prevent anti-competitive practices and establishes the Federal Competition and Consumer Protection Commission (FCCPC) as the primary regulatory authority.
  • Investment and Securities Act (ISA) 2007: Previously governed M&A activities but has been largely superseded by the FCCPA.

Regulatory Bodies

  • Securities and Exchange Commission (SEC): Oversees public M&A transactions and ensures compliance with capital market regulations. 
  • Federal Competition and Consumer Protection Commission (FCCPC): Regulates competition-related aspects of mergers, ensuring they do not substantially lessen competition.
  • Corporate Affairs Commission (CAC): Handles company registrations and compliance matters related to mergers.
  • Federal Inland Revenue Service (FIRS): Ensures tax compliance regarding capital gains tax during mergers.

Benefits of Mergers and Acquisitions

  • Market Consolidation: M&A activities drive market consolidation, leading to stronger and more competitive industries. By merging or acquiring, companies can eliminate competition, increase market share, and enhance their bargaining power within the industry. This consolidation is particularly evident in sectors such as banking and telecommunications, where fewer, larger players dominate the market.
  • Access to new technologies and expertise: Foreign investors frequently contribute new technology, knowledge, and global best practices to local firms when they acquire them. This transfer of information may boost operational efficiency and creativity inside Nigerian companies, allowing them to compete more successfully on both local and international levels.
  • Increased Foreign Direct Investment (FDI): M&A transactions can boost foreign direct investment in Nigeria, therefore contributing to economic development and diversification. Foreign firms entering the Nigerian market through acquisitions provide capital investment, which can lead to job creation and infrastructural development.
  • Risk Diversification: By merging with or acquiring other firms, companies can diversify their portfolios and spread risk across different markets or sectors. This is particularly important in a dynamic economy like Nigeria, where fluctuations in specific industries can pose significant risks.
  • Enhanced Financial Performance: Mergers and acquisitions can enhance financial performance by reducing costs and increasing revenue. By merging activities, businesses may decrease redundancies, maximize resources, and obtain economies of scale, eventually increasing profitability.
  • Opportunities for Strategic Growth: M&A provides organizations with strategic growth prospects that would be difficult to achieve organically. Firms can swiftly obtain access to new markets, client bases, or product lines through acquisitions, allowing for speedier expansion than constructing from the bottom up.

Types of Mergers

  • Horizontal Mergers: A horizontal merger occurs between companies that operate in the same industry and are direct competitors. The primary goal is to increase market share, reduce competition, and achieve economies of scale. Mergers in the banking sector, such as the merger between Access Bank and Diamond Bank, which aimed to consolidate their positions in the financial market is an example of horizontal merger.
  • Vertical Mergers: Vertical mergers involve companies at different stages of the production or distribution process within the same industry. These mergers aim to enhance supply chain efficiency, reduce costs, and improve product delivery. For instance, a manufacturer acquiring a supplier or distributor, common in industries such as oil and gas or manufacturing
  • Conglomerate Mergers: Conglomerate mergers occur between companies that operate in unrelated industries. The objective is to diversify business operations and reduce risk by entering new markets. For example, companies seeking to expand their portfolios by merging with firms outside their primary business areas
  • Concentric Mergers: Concentric mergers involve companies that are related by technology or market but do not directly compete with each other. These mergers aim to leverage complementary resources and capabilities to enhance product offerings. For instance, a technology firm merging with a company that provides complementary services or products.

Types of Acquisitions

  • Stock Acquisition: This involves purchasing a controlling interest (typically 51% or more) of another company’s shares. It can be friendly (agreed upon by both parties) or hostile (where the acquiring company seeks to take over without consent).
  • Asset Acquisition: In this type, one company acquires the assets of another company rather than its shares. This method allows the acquirer to choose specific assets while leaving behind unwanted liabilities.

Procedures for Mergers

  1. Initial Planning and Strategy Development
  • Define Objectives: Identify the strategic reasons for the merger, such as market expansion or operational efficiencies.
  • Select Target Companies: Research and identify potential merger candidates that align with your business goals.
  1. Due Diligence
  • Conduct Comprehensive Due Diligence: Assess the financial, legal, and operational aspects of the target company to identify risks and synergies. This includes reviewing financial statements, contracts, and compliance with regulations.
  1.  Documents Required
  • Merger Plan: A comprehensive document detailing the rationale for the merger, including expected benefits, market analysis, and strategic goals.
  • Minutes of Meetings: Minutes from board meetings or shareholders’ meetings where the merger was discussed. These should reflect the decision-making process and any resolutions passed.
  • Business Plans: The most recent business plans of both merging parties, outlining their operational strategies and financial forecasts.
  • Financial Statements: Audited financial statements for the last two years for both companies to provide a clear picture of their financial health.
  • Market Analysis Reports> Reports, surveys, or studies conducted within the last two years assessing market conditions, competitive landscape, and potential for sales growth.
  • Legal Documents: Copies of relevant legal documents such as:
  • Memorandum and Articles of Association (Memart)
  • Certificates of incorporation
  • Any agreements related to the merger (e.g., heads of terms, memorandums of understanding).
  1. Determine Merger Category
  • Classify the Merger: Based on combined annual turnover, determine if the merger is a:
  • Small Merger: Below the threshold stipulated by the FCCPC.
  • Large Merger: Above the threshold (typically one billion naira).
  1. Notify the Federal Competition and Consumer Protection Commission (FCCPC)
  • Notification Requirement: For large mergers, submit a merger notification to the FCCPC before implementation. This includes:
  • FCCPC Form 1 (Notice of Merger)
  • A non-confidential executive summary of the merger.
  • Details of the merging parties, including their ownership structures and control.
  • The nature of the merger and its strategic rationale.
  • Relevant financial documents.
  • Information on how the merger will affect competition in the market.
  • The annual turnover of the merging entities
  • Public companies must also notify the Securities and Exchange Commission (SEC).
  • Thresholds for Notification:
  • A merger is considered a large merger if the combined annual turnover of the acquiring and target companies exceeds ₦1 billion or if the target’s annual turnover exceeds ₦500 million in the financial year preceding the merger.
  1. Public Consultation
  • Engage Stakeholders: The FCCPC may publish the proposed merger in the Federal Gazette and invite public comments. This allows stakeholders to express their views on potential competitive impacts.
  1. FCCPC Review Process
  • Assessment of Competition Impact: The FCCPC reviews the merger to determine if it may substantially prevent or lessen competition.
  • Approval or Conditions: The FCCPC can approve the merger with or without conditions or prohibit it based on its findings.
  1. Approval Notification
  • Issuance of Approval Certificate: If approved, the FCCPC issues a certificate indicating approval, which may include specific conditions.
  • Publication of Decision: The decision is published in at least two national newspapers and in the Federal Government Gazette.
  1. Implementation of Merger
  • Execute Merger Agreement: Upon receiving approval, proceed with executing the merger agreement and integrating operations.
  • Compliance with Conditions: Ensure compliance with any conditions imposed by the FCCPC during implementation.
  1. Post-Merger Compliance
  • File Post-Merger Documents: Within two weeks of completion, submit necessary documents to the FCCPC, including:
  • A copy of the court order sanctioning the scheme (if applicable).
  • Evidence of compliance with any conditions set forth by the FCCPC.
  • Reports on employee arrangements and financial adjustments.
  1. Monitoring and Inspection
  • Post-Merger Inspection: The FCCPC may conduct inspections within three months after approval to ensure compliance with regulatory requirements and assess how well the new entity is performing.

Procedures for Acquisitions

  • Preliminary Assessment
  • Conduct a thorough analysis of the target company, including financial health, market position, and potential synergies.
  • Identify strategic objectives for the acquisition.
  • Engagement of Advisors
  • It is important to hire financial advisors, legal counsel, and consultants to assist in due diligence and negotiations.
  • Due Diligence
  • Perform detailed investigations into the target’s financial records, legal obligations, operational capabilities, and market conditions.
  • Assess any potential liabilities or risks involved with the acquisition.
  • Valuation
  • Determine the fair value of the target company using various valuation methods (e.g., discounted cash flow analysis).
  • Negotiation
  • Initiate discussions with the target company regarding terms of the acquisition.
  • Draft a Letter of Intent (LOI) outlining preliminary terms and conditions.
  • Documentation
  • Prepare necessary legal documents, including:
  • Share Purchase Agreement (SPA)
  • Disclosure schedules
  • Regulatory filings
  • Ensure compliance with relevant laws and regulations.
  • Regulatory Approval
  • Submit required documents to regulatory bodies such as the Federal Competition and Consumer Protection Commission (FCCPC) for approval.
  • Address any concerns raised by regulators during this process.
  • Closing the Deal
  • Finalize all agreements and complete the transaction.
  • Conduct a closing meeting to execute documents and transfer ownership.
  • Post-Acquisition Integration
  • Implement strategies to integrate operations, cultures, and systems of both companies.
  • Monitor performance and address any challenges that arise during integration.

CONCLUSION

Mergers and acquisitions are important to the economy’s proper functioning. They enable firms to gain efficiencies like economies of scale or scope, diversify risk across several activities. They also offer a means for replacing the managers of underperforming companies. 

The Federal Competition and Consumer Protection Act (FCCPA) of 2018 oversees Nigerian merger and acquisition proceedings. The Act mandates that all large mergers must be notified to the FCCPC before implementation. This requirement ensures that potential anti-competitive effects are assessed prior to any merger taking place.

The FCCPC is the primary regulatory body overseeing mergers and acquisitions, replacing the Securities and Exchange Commission (SEC) for this purpose. This shift centralizes regulatory oversight, enhancing efficiency in the review process.

Companies should engage legal and financial advisors early in the M&A process to navigate regulatory complexities effectively and ensure compliance with all requirements under the FCCPA.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co.; a top corporate and commercial law firm in Nigeria provides help and offers advisory to both local and foreign clients on mergers and acquisitions related matters in Nigeria. 

To see our service offerings, please contact us at [email protected] or visit www.adeolaoyinlade.com

Mobile: +234 803 826 7683 / +234 802 686 0247

Introduction

Debt recovery refers to the process of collecting money owed by individuals or corporations. It is crucial for maintaining financial health and has direct implications for credit ratings. The process typically follows a structured approach, ensuring compliance with legal frameworks.

Definition of Concepts 

Debt

A debt is liability on a claim; a specific sum of money due by agreement or otherwise. It is the aggregate of all existing claims against a person, entity, or State, a non-monetary thing that one person owes another, such as goods or services.” Per JOSEPH TINE TUR, JCA (Pp 60 – 60 Paras E – F). See Ekaete v. UBN Plc (2014) LPELR-23111(CA). The Black’s Law Dictionary defines “debt” as a specific sum of money due by agreement or otherwise. For a claim to be classified as a debt, it must meet certain criteria:

  • The amount owed must be a certain, fixed, or liquidated sum.
  • There must be a due date that has passed.
  • The obligation arises from an agreement between the parties involved, namely the debtor (the person who owes the debt) and the creditor (the person entitled to recover the debt).

Debt Recovery

Debt recovery refers to the systematic process undertaken by creditors to collect unpaid debts from debtors. This process becomes necessary when a debtor fails to fulfill their financial obligations within the agreed timeframe. The primary goal is to secure payment for outstanding debts, which can involve various methods such as direct communication, negotiation and legal action.

Legal Framework for Debt Recovery in Nigeria

  • Common Law and Statutory Law

Nigeria’s legal system is influenced by English common law, and many principles of contract law are derived from this heritage. These statutes include:

  • Sale of Goods Act: Governs sales contracts and related obligations.
  • Bills of Exchange Act: Regulates negotiable instruments.
  • Carriage of Goods by Sea Act: Addresses liabilities in shipping.
  • Hire Purchase Act: Governs hire purchase agreements.
  • Sheriff and Civil Process Act: Provides mechanisms for enforcing court judgments.
  • Constitutional Framework

While the 1999 Nigerian Constitution does not explicitly address debt recovery, it serves as the supreme law, ensuring that any conflicting laws are rendered void under Section 1(3). This establishes a foundational legal context for all debt recovery efforts.

  • Civil Procedure Rules

Each state in Nigeria has its own Civil Procedure Rules, which outline the procedures for initiating debt recovery actions, including filing claims, presenting evidence, and obtaining judgments.

  • Bankruptcy and Insolvency Laws

The Bankruptcy Act and the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act provide frameworks for dealing with insolvent debtors, allowing creditors to recover debts through structured processes.

  • Companies and Allied Matters Act (CAMA)

CAMA includes provisions that protect creditors’ rights and outline procedures for recovering debts owed to companies, including the registration of charges over debtor assets.

  • Central Bank of Nigeria Guidelines

The Central Bank issues regulations that guide financial institutions on best practices for debt recovery, particularly concerning non-performing loans.

  • Customary and Sharia Law

In certain regions, especially rural areas, customary law may influence debt recovery practices. Sharia law may also apply in specific contexts involving Islamic finance.

Regulatory Bodies

  • Central Bank of Nigeria (CBN)

The CBN regulates financial institutions and implements policies to enhance loan recovery processes. It introduced the Global Standing Instruction (GSI), allowing banks to recover debts directly from borrowers’ accounts across multiple banks, thereby streamlining the debt recovery process for financial institutions.

  • Asset Management Corporation of Nigeria (AMCON)

AMCON is tasked with acquiring non-performing loans from banks and managing distressed assets. It plays a pivotal role in stabilizing the banking sector by recovering toxic debts through legal means, thus reducing financial risks and enhancing overall financial stability in Nigeria.

  • Nigeria Deposit Insurance Corporation (NDIC)

The NDIC oversees the resolution of failed banks and manages the recovery of outstanding loans owed to these institutions. It ensures compliance with proper lending practices and assists in recovering debts when a bank’s license has been revoked.

  • Corporate Affairs Commission (CAC)

The CAC regulates corporate entities and provides legal frameworks for creditors to register charges over debtors’ assets. This registration helps creditors secure their interests and facilitates debt recovery when corporate debtors default

  • Federal Competition and Consumer Protection Commission (FCCPC)

While primarily focused on consumer protection, the FCCPC can address unfair practices related to debt collection, ensuring that creditors adhere to ethical standards during recovery efforts.

Effective Strategies and Stages for Debt Recovery

  1. Amicable Settlement: Attempt to resolve the issue directly with the debtor to maintain relationships. This can involve informal discussions or negotiations to agree on repayment terms.
  1. Engagement of Professionals: If initial attempts fail, consult a lawyer or a debt collection agency. Provide necessary documentation, such as invoices and agreements, to support your claim.
  1. Demand Letter: If initial attempts fail, send a formal demand letter outlining the amount owed and payment expectations. This letter serves as a legal notice and can prompt payment before further action is taken.
  1. Mediation and Arbitration: If there is a mediation clause in the agreement, attempt mediation before filing a lawsuit. This can often lead to quicker resolutions without court involvement.
  1. Legal Action: If the debtor remains indifferent, file a suit in the appropriate court (Magistrate Court, State High Court, or Federal High Court) using fast-track procedures like the Undefended List or Summary Judgment Procedure.
  1. Enforcement of Judgment: Once a judgment is obtained, enforcement can be pursued through mechanisms such as garnishee orders or writs of execution.

Legal Considerations

There is a six-year statute of limitations for recovering debts arising from contracts in Nigeria, meaning claims must be initiated within this timeframe

Challenges in Debt Recovery

  • Procedural Delays: Court proceedings may be lengthy and complex, affecting the timely collection of debts.
  • Lack of Documentation: Inadequate documentation of loan agreements and transactions might hinder creditors’ ability to substantiate obligations and take legal action.
  • Debtor Insolvency: If a debtor declares insolvency or lacks the resources to repay their obligations, creditors may struggle to retrieve owing payments through legal procedures.

Using Law Enforcement Agents to Recover Debt

The law is that a party cannot resort to the use of the Police or any law enforcement agency, to pursue recovery of debt. The primary duty of the Police by Section 4 of the police Act is the prevention of crime, investigation and detection of crime and the prosecution of offenders. The Police is not a debt recovery agency and has no business to dabble into contractual disputes between parties arising from purely civil transactions.  When a purely civil matter is reported to the Police, such a person cannot go scot-free as the report ought not to have been made at all since it is not within the purview of Police duties. It is a report made malafide and he will be equally liable for the action taken by the Police irrespective of whether he actively instigated them or not, since he had no business involving the Police in a purely civil matter in the first place. See Madaki & Anor v. GTB & Anor (2022) LPELR-57419(CA).

Conclusions

The nature of debt recovery can vary significantly based on factors such as the amount owed, the debtor’s willingness to cooperate, and the legal framework governing debt collection in a specific jurisdiction. By following these structured strategies and stages, creditors can improve their chances of successfully recovering debts in Nigeria while adhering to legal requirements.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co.; a leading full-service law firm in Nigeria provides help and offers advisory to both local and foreign clients on debt recovery related matters in Nigeria. 

To see our service offerings, please contact us at [email protected] or visit www.adeolaoyinlade.com

Mobile: +234 803 826 7683 / +234 802 686 0247

Introduction

The mining industry in Nigeria is a significant contributor to the country’s GDP, with various players operating in this space. To engage in any mineral resource activities, companies or individuals must obtain the proper licenses and permits from the government. 

Meaning of Mining License

A mining license is an official document or certificate granted by a government agency that allows a company or individual to engage in mining activities such as extracting, processing, and trading mineral resources.

The mining license specifies the minerals, geographic area, and duration for which the holder is permitted to perform mining operations.

Legal and Regulatory Framework of Mining in Nigeria

The primary legislation regulating mining in Nigeria include the Nigerian Minerals and Mining Act 2007, National Minerals and Metals Policy 2008, and Nigerian Minerals and Mining Regulations 2011.

Other legislations that are important in the regulation of the mineral mining industry include the Nigerian Investment Promotion Commission (NIPC) Act1, the Companies and Allied Matters Act, 2020, the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, and tax laws.

The regulatory bodies are the Ministry of Mines and Steel Development (MMSD) and the Mining Cadastre Office (MCO). Engaging in any mineral resource activities without the proper licenses is considered an offense in Nigeria.

Types of mining licenses

There are various types of mining licenses, such as Exploration License, Mining Lease, Small Scale Mining Lease, Possess or Purchase License, Mineral Buying Center License, and Mineral Export Permit, each with their own set of requirements.

Exploration License

The Exploration License is the first step in the process of obtaining mining rights in Nigeria. It grants the holder the right to explore and assess the viability of mineral deposits within a specified area. It is valid for an initial period and can be renewed based on performance.

Once the exploration phase is successful and the presence of commercially viable mineral deposits is established, the holder of the Exploration License can then apply for an Exclusive Prospecting License (EPL) and eventually a Mining Lease.

The key requirements for obtaining an Exploration License in Nigeria are:

Certified true copy of company certificate and other incorporation documents

  • Completed application forms
  • Pre-Feasibility Report
  • Prospecting plan
  • Payment of processing fee
  • Evidence of financial capability
  • Evidence of technical competence or COMEG accredited geologist
  • Irrevocable consent from the landowner(s) and/or occupier(s) to the applicant
  • Attestation of non-conviction of criminal offences under the Act by a Lawyer

Mining Lease

A mining lease is awarded for a surface area without a prior exploration license or small-scale mining lease, unless the applicant already has one over the same region. The lease is for a maximum of 50km². The mining lease grants the holder the exclusive right to use and extract minerals within the lease area. The mining lease holder has the right to market, sell, export, and dispose of mineral products produced during mining activities. Mining leases are awarded for 25 years and renewed every 24 years, provided certain conditions are met.

The key requirements for obtaining a Mining Lease in Nigeria:

  1. The applicant must be a holder of a valid Exploration License, which allows them to explore and assess the viability of mineral deposits within a stated area.
  1. The following documents must be submitted by the applicant:
  • Certified true copy of company incorporation documents
  • Completed application forms
  • Pre-Feasibility Report
  • Prospecting plan
  • Payment of processing fee
  • Evidence of financial capability
  • Evidence of technical competence or COMEG accredited geologist
  • Irrevocable consent from the landowner(s) and/or occupier(s)
  • Attestation of non-conviction of criminal offences under the Act by a Lawyer
  1. The applicant must show that a commercial quantity of mineral resources exists in the region for which the lease is requested.
  1. The applicant must have met all of the conditions of the Exploration License for the area in question.
  1. The applicant must give proof of sufficient operating capital for the proposed mining operations and demonstrate technical competence in carrying out the proposed mining activities.

Small Scale Mining Lease

The small-scale mining lease has a smaller geographic area and is intended for artisanal, alluvial, and other small-scale mining operations. The license is valid for 5 years and can be renewed for up to 5 more years.

The key requirements for obtaining a Small-Scale Mining Lease (SSML) in Nigeria are:

  1. The applicant must be a Nigerian citizen or a company incorporated in Nigeria.
  1. The proposed mining area must not exceed 3 km2 (15 cadastral units).
  1. The applicant must submit the following documents:
  • Completed application forms
  • Certificate of incorporation and other company documents
  • Evidence of technical competence, such as a COMEG accredited geologist
  • Evidence of financial capability to carry out the proposed mining operations
  • Irrevocable consent from the landowner(s) and/or occupier(s)
  • Attestation of non-conviction for criminal offenses under the Act
  1. The applicant must demonstrate that the proposed mining operations will be conducted using low-level technology and methods that do not require substantial capital expenditure.
  1. The applicant must pay the prescribed application and processing fees.

Possess or Purchase License

The Possess or Purchase License is required for companies seeking to deal in mineral resources. This license enables an entity that does not own or possess a mining lease to operate directly in mineral trading or exporting. The license is valid for one year and can be renewed.

The key requirements for obtaining Possess or Purchase License include:

  • Certificate of incorporation and other company documents
  • Application letter stating the minerals to be possessed or purchased
  • Evidence of a technically competent person like a geologist with COMEG accreditation
  • Tax clearance certificate
  • Attestation of non-conviction for a criminal offense by a Legal Practitioner
  • Banker’s reference letter
  • Letter of consent from a mineral title holder
  • Payment of the prescribed fees

Mineral Buying Centre License

The Mineral Buying Centre License is specifically authorises the holder to operate a facility for processing, warehousing, and trading of mineral resources. 

The key requirements for obtaining a Mineral Buying Centre License (MBC) in Nigeria are:

  1. The applicant must be a company incorporated in Nigeria. Foreign companies must incorporate a local Nigerian subsidiary to be eligible.
  1. The applicant must have an established warehouse facility that will be used to process, store, or trade mineral resources. This warehouse facility will be inspected as part of the application process.
  1. The applicant must submit similar documents as required for the Possess or Purchase License, including:
  • Certificate of incorporation and other company documents
  • Application letter stating the minerals to be traded
  • Tax clearance certificate
  • Attestation of non-conviction for a criminal offense
  • Banker’s reference letter
  • Letter of consent from a mineral title holder
  1. The applicant must demonstrate technical competence, such as having a geologist with COMEG accreditation on staff.
  1. The applicant must pay the prescribed application fees for the Mineral Buying Centre License.

Mineral Export Permit

The Mineral Export Permit is issued by the Ministry of Mines and Steel Development and is required each time mineral resources are to be exported out of Nigeria. This permit ensures compliance with export regulations and facilitates the legal exportation of minerals.

The key requirements for obtaining a Mineral Export Permit in Nigeria are:

  1. Possess or Purchase License:
  • The applicant must already hold a valid Possess or Purchase License, which allows them to deal in the specific mineral resources they want to export.
  1. Export Certificate:
  • The applicant must obtain an Export Certificate from the Ministry of Mines and Steel Development, which certifies the mineral resources are legally sourced and ready for export.
  1. Evidence of Royalty Payment:
  • The applicant must provide proof that the required royalties have been paid to the government for the mineral resources being exported.
  1. Prescribed Fees:
  • The applicant must pay the prescribed fees set by the government for the Mineral Export Permit.

Incentives available for participants in the Nigerian Mining Industry

The incentives provided by the Nigerian government to support the mining industry include:

  • Allow for a 75% depreciation or capital allowance on verified true capital expenditure in the first year of investment and 50% in subsequent years.
  • There is a 5% investment allowance and the ability to capitalize any prospecting expenses.
  • Approved plant, machinery, equipment, and accessories imported for mining activities are exempt from customs and import charges.
  •  Approved expatriate personnel of the operation are exempt from expat quotas and residency permits.
  • Expatriate personnel have a personal remittance quota and are not subject to any taxation for transferring foreign currency out of Nigeria.
  • Tax exemption for the first three years of operation. The minister might extend the period for another two years if the operator meets certain conditions.
  • Foreign investors are protected from nationalization and expropriation of their mining titles, unless the acquisition was conducted in the national interest or for public purpose and under a legislation that includes compensation and access to court.

Conclusion

In Nigeria, it is illegal to engage in any mineral resource operations without the required license. It is strongly encouraged to consult with a legal professional to ensure that the application procedure is completed correctly and that all regulatory criteria are met. This is important in order to prevent any legal concerns or penalties for operating without the proper licenses in Nigeria’s mining industry.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co.; a leading full-service law firm in Nigeria provides help and offers advisory to both local and foreign clients in the Nigerian mining sector. 

Need help? Kindly contact us using the details below:

Email: [email protected]

Mobile: +234 803 826 7683 / +234 802 686 0247

Introduction

An oil and gas company is a business entity involved in the exploration, extraction, production, refining, and distribution of oil and gas resources. These companies play a crucial role in the global energy sector and can be categorised into different segments based on their operations.

To start an oil and gas company in Nigeria, several critical steps must be followed, given the industry’s regulatory environment and the necessity for substantial capital investment. This article provides a comprehensive overview of the steps involved. 

Types of Oil and Gas Companies

  1. Integrated Oil and Gas Companies

These companies work in all phases of the oil and gas industry, including upstream (exploration and production), midstream (transportation and storage), and downstream (refining and commercialization). ExxonMobil and Chevron are two major firms that serve as examples. Their comprehensive strategy enables them to manage the whole supply chain, increasing efficiency and risk mitigation. 

  1. Upstream Companies

These firms often known as Exploration and Production (E&P) companies, specialise in the exploration and extraction of oil and natural gas. They carry out high-risk operations to identify and drill wells for hydrocarbon production. 

  1. Midstream Companies

Midstream companies transport and store crude oil and natural gas. They run pipelines, shipping and storage facilities, which connect upstream production to downstream refining processes. This sector often has smaller risks than upstream activities.

  1. Downstream Companies

These companies refine crude oil into finished goods like gasoline, diesel, and heating oil. They also handle the delivery of these products to customers using retail outlets Downstream operations are focused on marketing and selling refined products. 

  1. Oilfield Service Companies

These businesses provide necessary services and equipment to support oil and gas extraction and production, such as drilling, well construction, and maintenance. They do not actively participate in the production of oil and gas, but they are essential to the operational success of E&P firms.

Steps to Starting an Oil and Gas Company in Nigeria

  1. Company Registration

The first step is to get your firm registered with the Corporate Affairs Commission (CAC). The Companies and Allied Matters Act of 2020 (CAMA), governs the establishment of this entity. Only Nigerian-incorporated companies are permitted to operate in the exploration, production, and distribution of oil and gas in the Nigerian petroleum industry. Every foreign firm wishing to provide oil services in Nigeria must register in Nigeria, unless the Federal Government has exempted it under CAMA regulations.

  1. Tax Clearance and Compliance

You must first register with the Federal Inland Revenue Service to collect a Tax Clearance Certificate (TCC). This certificate indicates that your company completed its tax requirements for the previous year, which is required for different permits in the oil and gas sector.

  1. National Investment Promotion Commission (NIPC) Registration

In order to comply with the National Investment Promotion Commission Act, which controls foreign investments in Nigeria, your company must first register with the NIPC before incorporating with the CAC.

  1. Social Insurance and Pension Registration

Register with the Nigerian Social Insurance Trust Fund (NSITF) to ensure compliance with employee welfare laws. This registration is required for getting operational licenses. Furthermore, if your company has five or more employees, you must register with the National Pension Commission (PENCOM).

  1. Obtaining Necessary Licenses and Permits

You will need several permits to operate in the oil and gas sector:

  • Department of Petroleum Resources (DPR) Permit: Required for all oil and gas operations. The DPR grants various types of permits depending on the nature of your business activity.
  • Nigerian Content Development and Monitoring Board (NCDMB) License: This license confirms compliance with local content laws and is necessary for companies intending to operate in Nigeria’s oil and gas sector.
  • Industrial Training Fund (ITF) Certificate: This certification is necessary for organizations with a minimum turnover and is intended to promote skill acquisition in the industry.
  1. Developing a Business Plan: A comprehensive business plan is essential for laying out your company’s goals, operational strategy, financial projections, and market analysis. This document will direct your business operations and is frequently necessary to secure funding.
  1. Funding and Capital Requirements: Starting an oil and gas company demands a large investment, particularly for exploration and drilling operations. To reduce financial risks, make sure you have enough funds or try forming partnerships.
  1. Exploration & Operations: If you intend to engage in oil drilling and exploration, you will require an Oil Prospecting License (OPL). This is a highly regulated industry, which requires significant investment in equipment and technological competence.
  1. Consider Alternative Business Models: If capital is limited, consider beginning with less capital-intensive initiatives in the oil and gas sector, such as:
  • Equipment leasing
  • Oil and gas consulting
  • Brokerage for petroleum products
  • Retail of cooking gas or lubricants

Conclusion

Nigeria’s oil and gas industry is highly profitable, but establishing a company requires mastering technical regulatory frameworks, obtaining permits, and guaranteeing legal compliance, regardless of the country’s capital requirements.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co.; a leading full-service law firm in Nigeria provides help and offers advisory to both local and foreign clients on oil and gas related matters in Nigeria. 

Need help? Kindly contact us using the details below:

Email: [email protected]

Mobile: +234 803 826 7683 / +234 802 686 0247

Introduction

Repatriation is the process of returning people, money, or heritage items to their home country or culture. In the financial sector, repatriation refers to the conversion or exchange of foreign currency into one’s native currency. Repatriation occurs when a taxpaying entity returns money generated abroad to its home nation. 

This can apply to a firm that earns money through a foreign subsidiary or an individual who has investments, earned income, or money gained while traveling overseas. Foreign investors in Nigeria need guarantee that their funds can be easily repatriated at any time. This article offers assistance for foreign investors seeking to repatriate funds in Nigeria.

Legal Framework Governing Repatriation of Funds in Nigeria

  1. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act: This act regulates foreign exchange transactions in Nigeria and outlines the procedures for repatriating funds. It ensures that foreign investors can freely transfer their capital and profits, provided they comply with the established guidelines.
  1. Nigerian Investment Promotion Commission (NIPC) Act: The NIPC Act promotes and protects foreign investments in Nigeria. It guarantees the right of foreign investors to repatriate their capital and profits, enhancing investor confidence.
  1. Central Bank of Nigeria (CBN) Regulations: The CBN oversees the foreign exchange market and regulates the repatriation process. It has established guidelines that banks must follow when processing requests for capital outflows, ensuring compliance with monetary policies and foreign exchange controls.

Procedures for Repatriation of Funds from Nigeria by Foreign Investors

Foreign investors looking to repatriate capital and profits from Nigeria must adhere to specific procedures governed by Nigerian law. 

Here is a detailed overview of the process:

  1. Obtain a Certificate of Capital Importation (CCI)

The CCI is a document issued by an authorized dealer (usually a Nigerian commercial bank) on behalf of the Central Bank of Nigeria. It serves as proof that foreign capital has been brought into Nigeria for investment purposes.

Requirements for Obtaining a CCI

  • Capital Inflow: The capital must be imported into Nigeria in the form of cash, debt, equity, or goods. This includes cash investments, loans, purchase of equipment or raw materials.
  • Authorised Dealer: The CCI must be obtained from an authorized dealer, which is a commercial bank operating in Nigeria. The bank is required to issue the CCI within 24 hours of the capital inflow.
  • Documentation: The following documents are required to obtain a CCI:
  • Application Letter: A formal request for the issuance of the CCI.
  • Board Resolution: A resolution from the investor’s board authorising the investment.
  • Certificate of Incorporation: Proof of the investor’s registration in Nigeria.
  • Evidence of Capital Importation: This could be a telegraphic transfer receipt, bank statements, or other proof of the capital being brought into Nigeria.
  • Filing with the CBN: The authorised dealer must file returns with the Central Bank of Nigeria within 48 hours of issuing the CCI.
  • Electronic Certificates of Capital Importation (e-CCI): The CBN has introduced e-CCIs to streamline the process of capital importation and repatriation. These electronic certificates are managed through an online platform, reducing the risk of loss or misplacement of documents.

Once the CCI is obtained, the investor can proceed with the repatriation of funds. The process includes:

  • Tax Compliance: Ensure all applicable taxes (e.g., withholding tax on dividends) are paid. A tax clearance certificate may be required for the repatriation of profits.
  • Request for Repatriation: Investors must submit a request to the authorised dealer for the transfer of funds, accompanied by the CCI and any other required documentation.
  • Currency Conversion: The repatriation can be done in any convertible currency, as long as the investment was documented under a CCI.

The following can be repatriated without hindrance:

  • Dividends, Rent, Royalties, Profits (net of taxes) attributable to the investment. Dividend payments are subject to withholding tax at 10% as final tax (7.5% for qualifying recipients in a treaty country).
  • Payment of interest and capital on foreign loans. A tax clearance certificate is required to remit dividend and interest out of the country.
  • The remittance of proceeds (net of taxes) and other obligations in the event of a sale or liquidation of the enterprise or any interest attributable to the investment.

There is currently no limit on profits that can be distributed as dividends, as long as they come from profits rather than capital and there are no reasonable grounds to believe that the company is or will be insolvent after the payment.

  1. Use of Technology Transfer Agreements (TTA)

Foreign investors can also repatriate funds through TTAs, which involve the transfer of technology, trademarks, or technical expertise to a Nigerian company. To repatriate funds from Nigeria through a Technology Transfer Agreement, foreign investors must follow specific requirements and provide necessary documents to the National Office for Technology Acquisition and Promotion (NOTAP). 

Here are the steps:

The TTA must be registered with the National Office for Technology Acquisition and Promotion (NOTAP)

Requirements for Registering a TTA with NOTAP

  • The purpose of the TTA must be for the use of trademarks, patented inventions, supply of technical expertise, basic/detailed engineering, machinery and plant, operating staff or managerial assistance, and training of personnel.
  • The TTA should include provisions that give the Nigerian recipient explicit rights to use and exploit the technology, including the duration.
  • Capacity building must be included, with details of Nigerians understudying the experts.
  • The TTA should make provision for deduction of appropriate local taxes.
  • Research carried out should be incorporated in the agreement.
  • The scope of services and the services to be rendered by the transferor should be clearly stated.
  • The TTA should state the methods for the domestication of technology, local raw material development, and skills acquisition.

Required Documents for Registering a TTA

  • Completed Application Form, NOTAP Questionnaire, and TAA Pre-Qualification Form
  • Draft Copy of the Technology Transfer Agreement to be Registered
  • Company’s Memorandum and Article of Association
  • Certificate of Incorporation
  • Annual Report
  • Tax Clearance Certificate and Tax Identification Number (TIN)
  • Engineering Drawings, Feasibility Study, Report where applicable
  • Approval/Licenses Obtained from Appropriate Authorities and Bodies
  • Transferor/Licensor Profile

Once the TTA is registered with NOTAP and all applicable taxes are paid, the foreign investor can repatriate funds through the authorised dealer that issued the Certificate of Capital Importation (CCI) for the investment. The CCI serves as proof of the capital inflow and enables unrestricted repatriation of profits and capital.

Conclusion:

The repatriation of funds and capital in Nigeria is facilitated through a structured process that includes obtaining a CCI, ensuring tax compliance, and possibly utilising technology transfer agreements. The legal framework, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act and the NIPC Act, supports these processes, providing foreign investors with the assurance that they can freely transfer their investments and profits out of Nigeria.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co.; a leading full-service law firm in Nigeria provides help and offers advisory to both local and foreign clients on corporate and commercial law related matters in Nigeria. 

Need help? Kindly contact us using the details below:

Email: [email protected]

Mobile: +234 803 826 7683 / +234 802 686 0247

Introduction

Intellectual property (IP) rights are exclusive proprietary rights granted by law to the owners of innovative creations, such as inventions, literary/artistic works, and distinctive business identifiers. These rights provide legal protection against unauthorised use or exploitation of the IP.

However, IP infringement remains a significant challenge in Nigeria, with widespread violations of copyrights, trademarks, and patents. To address this, the Nigerian legal system offers both civil and criminal remedies to rights holders whose IP has been infringed upon.

Clarification of Concepts

Intellectual Property is defined by World Intellectual Property Organization (WIPO) as the creations of the mind, such as inventions, literary and artistic works, designs, symbols, names and images used in commerce.

Intellectual property (IP) infringement means an unauthorised use or exploitation of intellectual property rights, such as copyrights, patents, trademarks, and industrial designs. It occurs when someone uses a protected work without the permission of the rights holder.

Some common examples of IP infringement include:

  • Copying and distributing copyrighted works like books, music, or films without permission
  • Using a registered trademark or a confusingly similar mark on competing goods or services
  • Manufacturing and selling patented inventions without the patent owner’s consent
  • Reproducing and selling products with counterfeit trademarks
  • Importing infringing copies of copyrighted works or patented products

IP infringement can occur both offline and online. The rise of digital technologies has made it easier to reproduce and distribute protected works, leading to increased infringement.

IP infringement harms rights holders by depriving them of the economic benefits of their creations. It also discourages innovation and investment by making it harder for creators to profit from their work. Consumers may also be harmed by the sale of counterfeit goods that are of inferior quality or even dangerous

Legal Framework for Intellectual Property Protection in Nigeria

The main laws governing intellectual property (IP) rights in Nigeria are:

  • Copyright Act: Protects original literary, artistic, musical, audiovisual, sound recordings, broadcasts and other creative works. Administered by the Nigerian Copyright Commission. The Act grants exclusive rights to copyright owners, including reproduction, publication, performance, adaptation, and distribution of their works. It establishes the Nigerian Copyright Commission (NCC) as the regulatory body responsible for administering and enforcing copyright in Nigeria.
  • Patents and Designs Act: It provides for registration and protection for inventions, industrial designs, and utility models, as well as remedies for infringement. The Act is administered by the Registrar of Patents and Designs under the Federal Ministry of Industry, Trade and Investment.
  • Trademarks Act: The Act provides for the registration and protection of trademarks, as well as remedies for trademark infringement. It is administered by the Trademarks, Patents and Designs Registry under the Federal Ministry of Trade and Investment.
  • Merchandise Marks Act: Prohibits the application of false trade descriptions to goods and services. It aims to protect consumers from being misled about the nature, quality, or origin of products they purchase. The Act empowers the courts to order the forfeiture and destruction of goods bearing false trade descriptions.

The Act is enforced by the Standards Organisation of Nigeria (SON) and the Nigeria Customs Service. SON inspectors have the power to enter premises, inspect goods, and seize suspected counterfeit products.

  • Plant Variety Protection Act: The Act provides for the protection of new plant varieties, encourage investment in plant breeding and crop variety development, and establish a Plant Variety Protection Office under the National Agricultural Seeds Council to administer the law. The Office is responsible for granting breeders’ rights, maintaining a registry, and facilitating transfer/licensing of rights.
  • Integrated Circuits Topographies Act: The Act provides for the protection of original layout-designs (topographies) of integrated circuits. It aims to encourage investment and innovation in the semiconductor industry by granting exclusive rights to creators of original integrated circuit designs. The Act establishes a registry for integrated circuits topographies and empowers the Registrar to administer the law.

Enforcement of intellectual property rights

The Federal High Court has exclusive jurisdiction over intellectual property concerns under section 251 (1)(f) of the Federal Republic of Nigeria’s 1999 Constitution (as amended).

Intellectual property rights can be enforced by Alternative Dispute Resolution, criminal and civil action in courts or by competent organisations such as the Nigerian Copyright Commission, trademark, patent, and design registry.

Legal Remedies Against Intellectual Property Infringement

Here are the legal remedies against intellectual property infringement in Nigeria:

Civil remedies:

  • Damages: The court can award compensatory damages to the intellectual property rights (IPR) owner to cover the monetary value of the harm done and lost profits due to the infringement. It aims to put the rights holder in the position they would have been in had the infringement not occurred.

The amount of damages is assessed based on factors like the extent of the infringement, the profits made by the infringer, and the harm caused to the rights holder’s business. Damages can be enhanced for willful or flagrant infringement to serve as a deterrent.

The Copyright Act prescribes statutory damages ranging from ₦10,000 to ₦1,000,000 per infringement for copyright.

  • Account for profit: The court can order the infringer to account for and surrender any unjust profits gained from the infringement. This remedy prevents the infringer from being unjustly enriched by their wrongful acts. The rights holder must prove the infringer’s profits, while the infringer can deduct legitimate expenses
  • Injunctions: Courts can issue injunctions to prevent the infringer from engaging in further infringing activities.
  • Delivery up for destruction: Courts can order the delivery and destruction of infringing products, molds, and manufacturing devices to prevent further infringement.
  • Award of costs: The successful party in an infringement case may be awarded court fees, legal fees, and other administrative costs.

Criminal remedies:

  • Fines and imprisonment: The Trademarks Act imposes criminal penalties of fines and imprisonment for trademark infringement.
  • False entries in the register: Section 60 of the Trademarks Act criminalizes making false entries in the trademark registry, punishable by up to 7 years imprisonment

Conclusion

The Nigerian legal system provides both civil and criminal remedies to address intellectual property infringement. The civil remedies include damages, injunctions, delivery up for destruction, cost awards, and account of profits. Criminal penalties such as fines and imprisonment are also available, particularly for trademark and copyright infringement. These legal remedies aim to compensate rights holders, prevent further infringement, and deter future violations of intellectual property rights.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co.; a leading full-service law firm in Nigeria provides help and offers advisory to both local and foreign clients on intellectual property related matters including trademark, patent, copyright and industrial design in Nigeria. 

Need help? Kindly contact us using the details below:

Email: [email protected]

Mobile: +234 803 826 7683 / +234 802 686 0247

International Money Transfer Operator (IMTO) License in Nigeria: Procedure and Requirements under the Updated Guidelines

Introduction

An International Money Transfer Operator (IMTO) is a Central Bank of Nigeria (CBN)-approved firm that facilitates the transfer of monies from persons or entities residing outside of Nigeria to Nigerian nationals. IMTOs are in charge of receiving funds from other countries and transferring it to Nigerian citizens.

The International Money Transfer Operator (IMTO) license is a necessary requirement for running a lawful money transfer business in Nigeria. To operate as an IMTO in Nigeria, a business must first get a CBN license by submitting an application to the Director of the Trade and Exchange Department. This article examines the procedure for obtaining an International Money Transfer Operator License in Nigeria.

Definition of International Money Transfer Operator

The Central bank of Nigeria Guidelines on International Money Transfer Services in Nigeria, 2024 defines International Money Transfer Operators as companies approved by the CBN to facilitate the transfer of funds from individuals or entities residing abroad to recipients in Nigeria, and the payment of a corresponding sum to a beneficiary through a clearing network to the IMTO belongs.

Requirements for obtaining an International Money Transfer Services in Nigeria

The application for approval to carry on business of international money transfer services shall be submitted to the Director, Trade and Exchange Department, Central Bank of Nigeria, Abuja.

No person or institution shall operate International Money Transfer Services unless such person/institution has been duly approved by the CBN.

Any financial product involving international money transfer by any person or institution that is not duly registered with the CBN is illegal.

The applicants must comply with the requirements of the CBN Guidelines for licensing of banks and other financial institutions in Nigeria on Anti money Laundering, Combating the financing of Terrorism and Countering Proliferation of weapons of Mass Destruction. 

The approval process shall be in two phases namely, Approval-in-Principle and Final Approval.

Documents Required by an International Money Transfer Operator (Approval-in-Principle)

Any International Money Transfer Operator willing to operate in Nigeria shall submit the following documents in support of the application to the Director, Trade and Exchange Department of the CBN:

  • A non-refundable application fee of N10,000,000 (Ten Million Naira) or such other amount as may be specified by CBN from time to time, payable through electronic transfer or bank draft.
  • Approval to operate in other jurisdictions or agency agreement (for all IMTOs)
  • Evidence of tax clearance and incorporation documents in Nigeria (for indigenous IMTOs) to include Certified True Copy of MEMART, with the primary object clause indicating the provision of money transfer services
  • The ownership structure of the IMTO
  • Board of Directors approval to operate international money transfer service
  • CAC Form C02 (Return of Shares) and C07 (Particulars of Directors)
  • Profile of the company to include Curriculum vitae/bio data, contact and email address, telephone numbers of the Board and Management of the company.
  • Information on the beneficial owners of the company (where applicable)
  • Credit reports from a licensed credit bureau for the shareholders and key officers of the IMTO
  • Minimum share capital of US$ 1 million for foreign IMTOs and the equivalent for indigenous IMTOs
  • Any other information, document, or report as CBN may from time to time specify.

After complying with the above requirements and receiving favorable consideration, an IMTO can open a bank account and begin pre-operational processes. It’s important to note that the Approval-In-Principle application does not grant the IMTO the right to start operations, also Approval-in-Principle may be withdrawn if the IMTO does not meet with the requirements stated above.

Documents Required by an International Money Transfer Operator for Final Approval

The IMTO shall submit an application for final approval to CBN within three (3) months of receiving the Approval-In-Principle from CBN, subject to the following requirements:

  • Names of authorised dealer bank(s) to serve as local agent(s) and copy of agency agreement
  • Submission of a detailed business plan to the CBN which shall include:
  1. Nature of the business
  2. Internal control systems and monitoring procedures
  3. Security features for IMTOs with offices in Nigeria
  4. Three (3) years of financial projection/market analysis for the company
  5. Transaction and other charges that will be borne by the customers
  6. Diagrammatic illustration of transaction flows
  7. Consumer protection and dispute resolution mechanisms
  8. Information technology policy of the company including:
  1. Privacy policy
  2. Information ownership/disclosure/loss policy
  3. Backup and restore policy
  4. Network security policy
  5. Encryption policy
  6. Confidential data policy
  7. Password policy
  8. Third-party connection policy
  9. Incidence response policy
  10. Physical security policy
  1. Enterprise risk management framework
  2. Contingency and disaster recovery plan/business continuity plan
  3. Draft agreements with the participating parties
  4. Project deployment plan (time, location, operation, etc)
  5. Any other information as may be required by CBN from time to time

Overseas partnership requirements 

An indigenous IMTO who wishes to engage a foreign technical partner shall obtain the prior approval of the CBN. The following conditions shall apply to the technical partner:

  • The technical partner must be a registered entity, licensed in its home country to carry on money transfer activities.
  • The overseas technical partner should be well established in the money transfer business, with a track record of operations. 
  • Have a minimum net worth of US$1 million, as per the latest audited financial statement, or as may be determined by the CBN from time to time. 
  • There should be a Memorandum of Understanding that clearly defines liabilities in the event of disputes and/or process failures. 
  • The CBN will further conduct appropriate due diligence on the promoters, directors, and key officers of the proposed money transfer operator.

Annual Renewal of License

IMTOs must renew their licenses annually for an annual fee of N10,000,000 (Ten Million Naira), which must be paid by January 31 of each year. The renewal must also take place within the first quarter of the year.

Failure by an IMTO to provide a copy of the CBN renewal approval to its agent bank(s) within the first quarter of the year shall be grounds for such agent bank(s) to discontinue any further transactions with the IMTO concerned.

Permissible Activities of an IMTO License Holder

The permissible activities of international money transfer operator shall include inbound money transfer only. The transactions shall be limited to the following operations:

  • The acceptance of money for the purpose of transmitting it to a person resident in Nigeria or another country. 
  • Cross-border personal money transfer services, such as money transfer services for family maintenance and money transfer services in favour foreign tourists visiting Nigeria, shall be allowed under this arrangement.
  • The money transfer services shall target individual customers and the transactions shall be on a “person to person”, “business to person“and business to business” transfer basis which may be reviewed by the CBN from time to time.

Non-Permissible Activities

The following activities are not permissible by IMTOs:

  • An IMTO shall not engage in any other business other than those stipulated above.
  • An IMTO shall not engage in any outbound transaction.
  • Buy foreign exchange from the domestic foreign exchange market for settlement

Prohibition of Banks and Financial Technology Companies

All banks and financial technology firms are prohibited from becoming IMTOs. Banks may, however, act as IMTOS agents. Persons prohibited from working in banks under the BOFIA, 2020, are also prohibited from becoming IMTOs.

Conclusion

The International Money Transfer Operator license is indispensable for running a reputable money transfer business in Nigeria. It is issued by the Central Bank of Nigeria (CBN) to organisations requiring to provide cross-border money transfer services. 

To receive an IMTO license in Nigeria, an organization must submit an application to the Director of the CBN’s Trade and Exchange Department. Once the application is approved, the IMTO can open a bank account and commence pre-operational procedures.

However, the award of approval-in-principle does not authorise the IMTO to begin activities. IMTOs must follow the CBN’s requirements on anti-money laundering and combating terrorist financing. They must keep accurate records of all transactions, issue receipts to clients, and submit returns to the CBN. 

Obtaining an IMTO license increases money transfer operators’ credibility and trustworthiness, allowing them to participate in Nigeria’s enormous and developing remittance sector. The license signifies compliance with regulatory prerequisites, fosters openness, and instills trust in the security and dependability of the services offered.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co.; a leading full-service law firm in Nigeria provides help and offers advisory to both local and foreign clients on finance and banking related matters including how to process financial and banking licenses in Nigeria. 

Need help? Kindly contact us using the details below:

Email: [email protected]

Mobile: +234 803 826 7683 / +234 802 686 0247

Introduction

A bank license is a legal document that authorises a financial institution to operate as a bank and conduct banking activities. The bank license shows that the financial institution has met government regulations and requirements to protect its customers’ money and data. It indicates that the bank is safe and secure for customers to use. 

To receive a bank license, a financial institution must file an application with the appropriate regulatory authorities, such as the Central Bank. This usually includes completing capital requirements, demonstrating operational preparedness, and passing “fit and proper” assessments on the management team.

Legal Framework Governing Banking License

  • The Central Bank of Nigeria Act 2007: It established the Central Bank of Nigeria as the regulating body responsible for providing banking licences in Nigeria. 
  • he Banks and Other Financial Institutions Act (“BOFIA”) requires all banks in Nigeria to have a valid license to do banking operations. 
  • The Central Bank of Nigeria’s (“CBN”) Regulations on Scope of Banking Activities and Ancillary Matters, No. 3, 2010: It enhanced the scope and framework for banking business in Nigeria.
  • Companies and Allied Matters Act (“CAMA”): Banks in Nigeria must comply with the Companies and Allied Matters Act (“CAMA”) and be incorporated as companies.

Types of Banking License

The Central Bank of Nigeria (CBN) issues key categories of banking licenses, including:

  1. Commercial Banking License:
  • Allows banks to receive deposits, make loans, and provide a variety of financial services.
  • National commercial banks must have a minimum paid-up capital of ₦25 billion, while regional banks must have ₦10 billion and international commercial banks need ₦50 billion.
  • Commercial banks can operate in all states of Nigeria or in a specific region, depending on the licensing type.
  1. Merchant Banking License:
  • Allows banks to offer firms specific financial services such as advising, underwriting, and corporate restructuring.
  • The minimum amount of paid-up capital is ₦15 billion.
  • Certain retail banking practices are restricted for merchant banks, such as accepting deposits that can be withdrawn by cheque.
  1. Specialized Banking License:
  • It includes non-interest banks, microfinance banks, development banks, mortgage banks, and other CBN-designated institutions.
  • Minimum paid-up capital varies by institution type, from ₦5 billion to ₦10 billion.
  • These specialised banks focus on providing financial services for certain sectors or segments of the population.

How to Obtain a Commercial Bank License

The key steps to obtain a commercial bank license in Nigeria are:

  1. Grant of Approva in Principle
  2. Grant of Final License
  3. Pre-Commencement of Operations Requirements
  1. Requirements for Grant of Approval-in-Principle (AIP)
  • Submit a formal application to the Governor of the Central Bank of Nigeria (CBN) for a banking license.
  • The application must include a feasibility report, draft Memorandum and Articles of Association, list of shareholders/directors/officers, non-refundable application fee of ₦500,000.00 and any other required documents.
  • The applicant must deposit the minimum paid-up capital of ₦25 billion with the CBN.
  • The CBN will review the application and may issue an Approval in Principle with or without conditions or refuse to issue the license.
  1. Requirements for Grant of Final License
  • Within 6 months of receiving the Approval in Principle, the applicant must submit an application for the final banking license.

The documents required include:

  • Non-refundable licensing fee of N5,000,000 in bank draft payable to CBN.
  • 3 copies each of: Certified true copy (CTC) of Certificate of Incorporation of the bank, CTC of MEMART, CTC of Forms CO2 (Allotment of shares) and CO7 (particulars of directors).
  • Evidence of location of Head Office/Branch Building (rented or owned) for the take-off of banking business.
  • Changes (if any) in the Board, Management and Shareholding should be clearly stated for necessary appraisal.
  • Evidence of strongroom, loading bay and Banking Hall Facilities.
  • Bullion lorries with necessary security gadgets.
  • Evidence of installation I.T. facilities/computerization.
  • Copies of letters of offer and acceptance of employment in respect of the Management Team. 
  • The CBN will review the application and may issue the final banking license
  1. Pre-Commencement of Operations Requirements
  • Before commencing operations, the bank must submit additional documents to the CBN, such as:
  • Evidence of admission into the clearing house.
  • Copy of shareholders register
  • Copy of share certificate issued to each investor.
  • Draft copy of opening statement of affairs signed by directors and auditors.
  • Evidence of insurance coverage for cash such as Cash-In-Transit (CIT), Cash on Counter, Strong room/ Vault, etc, insurance policies.
  • Manual of Operation.
  • Evidence of readiness of cheques and other security documents.
  • Minutes of Pre-Commencement Board Meeting.
  • Evidence of adequate security arrangements – physical and logical such as:
  1. Uniformed and/or plain cloth policemen
  2. Uniformed security guards
  3. CCTV especially in the banking hall, strong room and loading bay areas
  4. Raid alarm (especially foot operated type) inside the teller cubicles, and fire alarms at strategic points within the premises
  5. Regiscope camera
  6. Cash movement & escort vans fitted with communication equipment
  • The CBN will review the documents and grant approval to commence banking business.

Conclusion

A bank license is a fundamental regulatory approval that permits a financial institution to operate as a genuine bank and provide banking services to customers while under the supervision and protection of the appropriate authorities.

The key steps to obtain commercial bank license are to submit an initial application for Approval in Principle, then apply for the final banking license, and finally meet the pre-commencement requirements before commencing operations.

Note: The content of this article is anticipated to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstance.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co.; a full-service law firm in Nigeria provides help and offers advisory to both local and foreign clients on banking related matters including how to process banking licenses in Nigeria. 

Need help? Kindly contact us using the details below:

Email: [email protected]

Mobile: +234 803 826 7683 / +234 802 686 0247

Introduction

Telecommunication licenses are indispensable for any entity wishing to provide communication services in Nigeria. The NCC is responsible for issuing these licenses, ensuring that operators comply with legal and regulatory standards. The licensing framework is designed to promote fair competition, protect consumers, and enhance the quality of telecommunication services. This article summaries the procedure and requirements for obtaining a telecommunication license in Nigeria.

Meaning of Telecommunication License

A telecommunication license is a legal authorisation granted by the Nigerian Communications Commission (NCC) that permits individuals or companies to operate telecommunication services within Nigeria. The license is governed by the Nigerian Communications Act of 2003, which establishes the NCC as the regulatory authority responsible for overseeing the communications sector.

There are various types of licenses, including:

  • Individual License: This is a type of approval in which the terms, conditions and obligations, scope and limitations are specific to the service being provided. The process of licensing can take the form of auctions, tenders, fixed prices or a standard administrative procedure, etc.
  • Class License: This is a type of general approval in which the terms and conditions/obligations are common to all license holders. It requires only registration with the Commission for applicants to commence operation.
  • Unified License: Allows the provision of multiple telecommunication services under one license.
  • Value Added Service License: Permits the provision of additional services such as internet and content services, often relying on existing network infrastructure.

Importance of Telecommunication License

  1. Legal Compliance: Operating without a license is illegal and may result in significant fines and penalties. The NCC requires that all telecommunication services be licensed to ensure adherence with national regulations.
  1. Consumer Protection: Licensing helps safeguard consumer interests by ensuring that service providers meet certain standards and obligations, thereby enhancing service quality and reliability.
  1. Market Regulation: Licenses enable the NCC to regulate the telecommunication market effectively, ensuring fair competition and preventing monopolistic practices.
  1. Quality Assurance: The licensing process includes assessments of technical capabilities and financial viability, which helps maintain high service standards across the industry.
  1. Revenue Generation: Licensing fees contribute to the government’s revenue, which can be reinvested into the telecommunications infrastructure and other public services.
  1. Support for Development: By regulating the sector, the NCC can foster growth and innovation in telecommunications, which is crucial for economic development and digital inclusion in Nigeria.

Conditions for obtaining a telecommunication license in Nigeria

To obtain a telecommunication license in Nigeria, applicants must meet several conditions set by the Nigerian Communications Commission (NCC). These conditions ensure that only qualified entities can provide telecommunication services, thereby maintaining industry standards and protecting consumers. These conditions include:

  • The applicant must be a corporate body registered under Nigerian law. This includes compliance with the Companies and Allied Matters Act.
  • The applicant must meet the NCC’s technical requirements for operating the specific service for which the license is sought. This may involve demonstrating technical expertise and infrastructure capability.
  • The applicant must possess sufficient financial resources to provide long-term services. This requirement ensures that the entity can sustain operations and meet service obligations.
  • For services that depend on specific resources, such as spectrum or numbering, the NCC must confirm the availability of these resources. The applicant must secure a reservation or assignment of such resources before applying.
  • The NCC may impose other conditions as deemed necessary for the specific service being provided. This can include compliance with industry regulations and standards.
  • Applicants must provide various documents, including incorporation documents, tax clearance certificates, feasibility reports, and evidence of funding.
  • Payment of a non-refundable administrative charge, typically 5% of the relevant license fee, is required upon submission of the application.

Application Process

To obtain a telecommunication license in Nigeria, the following procedure and requirements must be met:

Requirements for Individual License 

  • Sign up on eservices.ncc.gov.ng and click on Licensing Application Management System to apply.
  • Fill the form and upload the relevant documents listed below:
  • Certificate of Incorporation.
  • Tax Clearance Certificate.
  • Certified True Copy (CTC) of Articles & Memorandum of Association.
  • Feasibility report of proposed service.
  • Soft Copy of Passport photographs of authorized representative.
  • Certificates of qualified technical staff (where applicable).
  • Certified True Copy (CTC) of Form CO7 (List of Company Directors).
  • Soft Copy of Passport photographs of Directors of the company.
  • Certified True Copy (CTC) of Company’s Registered Address.
  • Utility bill of the official address of the Company.
  • Evidence of funding for the project.
  • The amount budgeted for the project i.e. estimated funding for the deployment of the proposed service.
  • Applications should be submitted when all documents above have been uploaded.
  • On submission of the application, a non-refundable administrative charge, which is 5% of the relevant license fee would be paid via the Licensing Application Management System.
  • License fee is payable on approval of application.
  • All Automated Vehicle Tracking Service (AVTS) applicants henceforth must obtain a security clearance from the State Security Service (SSS) for the proposed service before applying for the license, as a condition precedent for the grant of license by the Commission. The Personal History Statement Form (PHS) for the company and its Directors will be provided by the Commission for completion by applicants.
  • All VAS (Content Service using Short Code) applicant (s) must present:
  • Evidence of an Agreement or a Memorandum of Understanding (MOU) entered between the company and any of the VAS Aggregators.
  • Alternatively, the company should provide a copy of License duly issued to it by the Central Bank of Nigeria (CBN) for Mobile Money Services or from the National Lottery Regulatory Commission (NLRC) for lottery services.

Requirements for Class License

  • Sign up on eservices.ncc.gov.ng and click on Licensing Application Management System to apply.
  • Fill the form and upload the relevant documents listed below:
  • Certificate of Incorporation or Registered Business Name.
  • Tax Clearance Certificate.
  • Certified true copy of Articles & Memorandum of Association to include telecommunication as an object clause that allows the Company to provide telecommunication service in Nigeria
  • CAC Status Report
  • Soft Copy of Passport photographs of authorized representative.
  • Certificate of qualified technical staff
  • Details of proposed service
  • Soft Copy of Passport photographs of Directors of the Company/Sole Proprietorship.
  • Applications should be submitted when all documents above have been uploaded.
  • On submission of the application, a License fee of Ten Thousand Naira (₦10,000.00) only, is payable via the Licensing Application Management System.

Additional License & Renewal Application Requirements

Existing licensees wishing to apply for additional license(s) or renew their current licenses must be up to date on their existing licensing obligations. These obligations include but are not limited to the following:

  • Payment of Annual Operating Levy (AOL): the company is required to submit Audited Accounts (Management Accounts are to be submitted if Audited Accounts are not yet available) for assessment of the AOL payable to the Commission. Note that Non-Operational Licensees are also required to pay AOL.
  • Submission of Year End Questionnaire/Information
  • Submission of Individual Consumer Code of Practice
  • Type approval of equipment in use on network
  • Payment of Spectrum and National Numbering Plan (NNP) fees (where applicable)
  • Obtaining prior approval from the Commission before change in shareholdings above 10%.
  • Notification on change of address, business name etc.
  • Obtaining approval before license transfer
  • Requirement to roll-out service / commence operation etc.
  • Submission of Annual Ownership Report not later than 31st March every year (Corporate Affairs Documents).
  • Current Tax Clearance Certificate
  • Licensees seeking renewal must make their applications at least six (6) months before expiration.

Conclusion

Obtaining a telecommunication license in Nigeria involves a detailed process with specific requirements that must be met to ensure compliance with regulatory standards set by the Nigerian Communications Commission. Failure to obtain a valid license can result in substantial penalties, stressing the importance of meeting these standards. As a result, potential operators should get competent legal advice to effectively handle the licensing procedure.

By Adeola Oyinlade & Co.

Adeola Oyinlade & Co.; a leading full-service law firm in Nigeria provides help and offers advisory to both local and foreign clients in the Nigerian telecommunication sector including assisting clients in obtaining licenses in Nigeria. 

Need help? Kindly contact us using the details below:

Email: [email protected]

Mobile: +234 803 826 7683 / +234 802 686 0247

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