Berkeley Legal | Post Incorporation Requirements – Is your company compliant?
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07 Jan Post Incorporation Requirements – Is your company compliant?

Posted at 08:43h in Resources, Snippets by Berkeley Legal IT

Setting up an entity in Nigeria is fast becoming less onerous given the Corporate Affairs Commission’s (CAC) concerted effort to ensure the ease of doing business is Nigeria is seamless. It is however pertinent to note that upon incorporation of a new entity, there are various post-incorporation registrations which are mandatory from a regulatory perspective.

This report will seek to enlighten readers to ensure that they are aware and conversant with the differing post-incorporation certifications and the documentary requirements applicable to same. Business owners must be cognizant of the fact that incorporation is not the final stage of regulatory compliance but only the beginning.

SECTION A

Company Income Tax and VAT registration

Nigerian law requires all companies incorporated in Nigeria and carrying on business in Nigeria to register for Companies Income Tax and Value Added Tax (VAT). The effective tax rate for corporate entities in Nigeria is 30% of the assessable profits of the company. In addition to this, corporate entities in Nigeria are also subject to 2% tertiary education fund contribution of their assessable profits. The documents required are as follows:

  • Duly completed VAT Application Form;
  • Duly completed Tax Clearance Certificate Application Form;
  • Statement of Share Capital and Return of Allotment – Form CAC 2;
  • Particulars of Directors – Form CAC 7;
  • Notice of Registered Address – Form CAC 3;
  • Particulars of Company Secretary – form 2.1;
  • Certificate of Incorporation.

Nigerian Investment Promotion Commission (NIPC)

The NIPC is the investment promotion agency of the Federal Government and is charged with the responsibility of tracking foreign investments in Nigeria. All companies with foreign shareholders are required to register with the NIPC. The documentation requirements are as follows:

  • Completed NIPC form 1;
  • Letter of Authorization authorizing the agent to submit the application;
  • Certificate of Incorporation;
  • Memorandum and Article of Association;
  • Statement of Share Capital and Return of Allotment – Form CAC 2;
  • Particulars of Directors – Form CAC 7;

Special Control Unit against Money Laundering (SCUML) Registration

The SCUML registration is mandated pursuant to the Money Laundering (Prohibition) Act and the AML/CFT Regulations for Designated Non-Financial Businesses and Professions in Nigeria and it is done at the Economic and Financial Crimes Commission (EFCC). The corporate documents of the local entity are submitted to the EFCC along with a completed online registration form. Registration with SCUML is required for bank account opening. The required documents are as follows:

  • Certificate of Incorporation;
  • Memorandum and Article of Association;
  • Company’s Current Tax Clearance Certificate (Original to be presented for sighting);

 Financial Reporting Council (FRC)

The FRC has the power to oversee compliance with accounting, auditing, corporate governance and financial reporting standards in Nigeria by all registered corporate entities. All companies and the professionals involved in the financial reporting process must be registered with FRC (It also requires the financial statements of a company to be certified by its Chief Executive Officer (CEO) and Chief Financial Officer (CFO). The following are required to register with the FRC:

  • The Company;
  • Chief Executive Officer;
  • Any Director signing the financials; and
  • Chief Financial Officer

Please note that the registration process involves a biometric process for which the physical presence of the relevant officers is required. This applies to all companies registered in Nigeria not just foreign owned companies. The documents required for the FRC registration include:

  1. For Individual registration
    • Evidence of registration with professional / trade organisation;
    • Photocopies of professional/educational certificates;
    • One original passport sized photograph;
    • International Passport;
    • A scanned copy of the signature of the person to be registered;
    • Completed FRC form Company online registration

Please note that each individual will also be required to complete a biometric registration in person at the FRC offices.

2. For company registration

  • Name and Address of the CEO
  • Name and Address of the CFO
  • Name and Address of the External Auditors
  • Name and Address of the Company’s Bankers
  • Name, Position, Email, Phone Number and Scan Signature of the contact person for the Company.

 

Business Permits

A business permit authorises a company with foreign equity participation to carry on business in Nigeria. A company is required to obtain a business permit from the Ministry of the Interior. This can only occur after the shareholders have paid for their shares into the company bank account set and a Certificate of Capital Importation is issued by the bank. An office lease agreement is also required. The required documents are as follows:

  • Completed Immigration Form T/1
  • Photocopy of the company’s Certificate of Incorporation
  • CTC of the company’s Memorandum and Articles of Association
  • Certified True Copies of Corporate Affairs Commission Forms CAC 2, 3 & 7 (particulars of Shareholders and Directors)
  • Feasibility report of the company
  • Lease Agreement or Certificate of Occupation for premises
  • Letter of reference from a Bank
  • Application letter on Company’s letter head

SECTION B – Statutory Contributions

Under Nigerian laws, a company and employer have the following obligations:

Contributory Pension Scheme; Life Insurance

All private sector employers with at least 5 employees to participate in the scheme by making contributions to the employees’ retirement savings accounts (“RSA”) The employer is required to make a minimum contribution of 10% the employee’s monthly emoluments whilst the employee contributes a minimum of 8%. Under the PRA, the employer is also required to maintain a group life insurance policy for employees for an amount representing the minimum of three times the annual total emolument of such employees.

Industrial Training levy

Under the Industrial Training Fund Act, employers engaged in industry or commerce, having 5 or more employees or less than 5 employees but with an annual turnover of at least N50million are liable to contribute a levy of 1% of the amount of the annual pay roll of the employer to the industrial training fund. There is also an obligation to have a training programme for employees; 50% of the training costs paid by the employer is refunded on application if the governing council of the ITF is satisfied that the training programme of the employer is adequate. New employers are required to register with the ITF; we will assist with this by filling ITF Form 7 and paying the requisite fees required for registration.

Employee Compensation Scheme

The Employee Compensation Scheme was established to guarantee adequate and prompt payment of compensation to employees and their dependants for injury, disability, disease or death associated with the employees’ employment. Every employer is required to make a minimum monthly contribution of 1% of total monthly payroll into the Employee Compensation Fund (“the Fund”) established for this purpose.

Personal Income Tax

Every Nigerian resident is subject to personal income tax under the Personal Income Tax (Amendment) Act (“PITA”) imposes tax on the income of Nigerian residents.

PITA establishes the Pay As You Earn (“PAYE”) Scheme and under the PAYE Scheme, the employer is required by law to deduct the monthly tax liability of its employees and remit the tax to the relevant tax authority (state tax authority where the employee resides in Nigeria i.e. in Lagos State it is the Lagos State Internal Revenue) within 10 days of monthly pay schedules, failing which the employer will be liable to pay a penalty. Employers are required to register with the relevant state revenue board with list of employees/salaries.

Please note that expatriate employees on expatriate quota approvals are deemed to be resident in Nigeria for the purpose of the PITA for the duration of the quota utilization.

 

Berkeley Legal is in position to provide advice on incorporation and post-incorporation requirements. The Firm has extensive knowledge and experience in rendering such services and interfacing with applicable regulatory bodies.

The information provided in this article is for general informational purposes only and does not constitute legal advice. If you require specific legal advice on any of the matters covered in this article please contact info@berkeleylegal.com.ng