How to Setup a Representative or Liaison Office in Nigeria

Introduction

Foreigners are free to either do business alone or in partnership with any other person in Nigeria. They are free to invest in any sector of the Nigerian economy except items listed on the negative list.[1] Generally it is provided in the Company and Allied Matters Act 2020 (CAMA), which is the law that regulate Nigeria’s corporate activities that every foreign company, incorporated outside Nigeria, intending to carry on business in Nigeria must take all necessary steps to obtain incorporation as a separate entity in Nigeria and until so incorporated, the foreign company shall not have a place of business in Nigeria for any purposes other than the receipt of notices and other documents as matters preliminary to incorporation.[2]   Where a company fails to comply with the provision of the law, it will amount to an offence, liable to prosecution. The company and every officer are liable to a penalty as may be specified by Corporate and Affairs Commission.[3] However a foreign company can register a Representative or Liaison office in lieu of incorporation of a company in Nigeria.

Understanding the concept of Representative or Liaison Office

A representative office or liaison office is an office established in a foreign country by a company or legal entity to carry out non-transactional operations.  It is used to create a relationship with prospective clients. What this means is that the principal activities of representative offices in Nigeria should be limited to marketing activities and acting as a liaison to help coordinate the exchange of information between the foreign parent company and local institutions/customers in Nigeria. It is usually established in a foreign jurisdiction where it has no license to operate business fully. It should be noted that this doesn’t amount to the incorporation of a company, hence the Representative or Liaison Office cannot be clothed with the powers of a duly incorporated company. The representative or liaison office of a foreign company in Nigeria must have a minimum share capital of ₦100 million.

 

CBN’s Guidelines for the regulation of Representative Offices of Foreign Banks in Nigeria

Foreign banks are permitted to establish representative offices in Nigeria subject to obtaining the prior approval of the Central Bank of Nigeria.[4] A bank representative office simply serves as a physical legal representative of a foreign bank in Nigeria rather than carrying out regular banking business such as taking deposits, providing loans and overdrafts.

Prior to October 2022, the CBN did not have any formal regulation relating to the licensing and regulation of bank representative offices in Nigeria. On 12th October 2022, the CBN released its first regulation titled “Guidelines for the Regulation of Representative Offices of Foreign Banks in Nigeria” to representative offices of foreign banks in Nigeria, stakeholders and the general public.

The CBN set out in the Guidelines the requirements for obtaining its approval to set up a representative office and guidance to stakeholder on the operational and management terms for representative offices. The CBN on March 5 2023, issued a revised guidelines for the regulation of representative offices of foreign banks in Nigeria.

 

Key Features of a Representative or Liaison Office

1. No Legal Status: A representative office has no independent legal status, making it unable to sue or be sued in its own name.
2. Temporary Arrangement: It’s often a temporary administrative setup, with liabilities extending to the parent foreign company.
3. Limited Activities: Allowed activities include market research, storage or display of goods, promotional work, and logistics support.
4. No Tax Liability: Representative offices aren’t subject to tax payments, as they can’t generate income, provided their objectives don’t trigger tax liability.
5. No Business Activities: They can’t engage in business, negotiate contracts, or conclude deals, serving only as liaison or promotional offices.
6. Funding: Expenses are covered by inflows from the foreign parent company.
7. Incorporation: Registration follows a similar process to a private limited company, with the same costs and timeline, but with distinct objectives and naming conventions.

 

Permissible Activities for Approved Representative or Liaison Offices 

They are permitted to carry out the following activities:

1. Marketing the products and services of its foreign parent or an affiliate of the foreign parent licensed and domiciled outside Nigeria.
2. Carrying out research activities in Nigeria on behalf of the foreign parent.
3. Serving as a liaison between the foreign parent and local private institutions within Nigeria and other customers of the foreign parent based in Nigeria.
4. Pursuing business opportunities for the foreign parent or affiliated institutions.
5. A Representative of a Foreign Bank can connect banks and other financial institutions to its foreign parent.
6. Assisting exporters in Nigeria with information related to the laws and markets of target countries in which the foreign parent or any of the Group’s affiliates has a subsidiary.
7. Facilitating seminars, forums and other activities within Nigeria through which a foreign parent may meet with and hold further discussions with existing or potential customers in Nigeria.
8. Collating and distributing economic and financial information or country reports to its foreign parent for use by customers of the foreign parent; and assisting customers of the foreign parents that desire to invest in Nigeria or do business with Nigerian companies subject to the extant Data Protection Regulations.
9. Connecting exporters in Nigeria with potential customers in jurisdictions where the parent company operates; and assisting Nigerian exporters with finding new markets through its international offices.

Approvals Required for a Representative Office

While a representative office in Nigeria may not require a business license, there are other compliance requirements to be met, including:

1. Registration with Corporate Affairs Commission (CAC)
2. Registration with the Nigerian Investment Promotion Commission (NIPC)
3. Obtaining work and residence permits for foreign employees Securing an expatriate quota for foreign staff from Nigerian Immigration Service (NIS)
4. Registration with the Special Control Unit against Money Laundering of the Economic and Financial Crimes Commission (EFCC)
5. Compliance with Central Bank of Nigeria (CBN) guidelines for representative offices of foreign banks in Nigeria (where applicable)

 

Requirements for Registration as a Representative Office

To register a Representative office in Nigeria, you’ll need to meet the following requirements:

1. Company Information
2. Company Name: Submit two alternative names for approval
3. Business Nature & Objectives: Describe the business activities the representative office will undertake

• Shareholding Structure: List of Shareholders and percentage held

1. Company’s Address
2. Company’s Directors, Secretary, Shareholders, and Witnesses Details
3. Full Name
4. Valid Means of Identification (e.g., Passport or National ID)

• Signature

1. Passport Photograph
2. Phone Number
3. Email Address

• Date of Birth
• Address (State, City, Street, LGA)

3. Other statutory documents may be required by the Corporate Affairs Commission (CAC) during the registration process

 

Conclusion

Foreign companies intending to have presence in Nigeria without having to incorporate a subsidiary in the country can register a representative office. Likewise, entities seeking to conduct market research before incorporation of subsidiaries can as well set up a liaison office in the country without any tax liability. Registered liaison offices are, however, advised not to act beyond their objectives as this will make them liable to hefty fines by the regulatory authority.

By Olamilekan C. Fayemi for Adeola Oyinlade & Co.

 

Adeola Oyinlade & Co is a top corporate and commercial law firm in Nigeria specializing in company incorporation and post incorporation compliance services to several local and foreign in diverse sectors of the Nigerian economy. Our services have earned us the Nigeria Law Firm of the Year Award at the Lawyers Global 2024 Annual Legal Awards and the prestigious International Law Firm of the Year in Nigeria of Corporate INTL Global Awards for the years 2022, 2023, 2024 and 2025 (4 years in a row) among others.

 

For consultation, further information on corporation and commercial law services in Nigeria, contact us at [email protected] or call +234 803 826 7683 / +234 802 686 0247.

[1] Section 20(4) of the Companies and Allied Matters Act 2020, section 17 of the Nigerian Investment Promotion Commission Act

[2] Section 78(1) of the Companies and Allied Matters Act, 2020.

[3] Section 79 of the Companies and Allied Matters Act, 2020.

[4] section 8 of the Bank and Other Financial Institutions Act 2020