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Expatriate Employment Levy: The Key Things to Know
The Federal Government of Nigeria introduced, on 27th February 2024, the Expatriate Employment Levy, which mandates companies employing expatriates to pay a designated levy to the Government. The Expatriate Employment Levy has the dual objective of promoting local talent utilization while also funding initiatives focused on skill development, job creation, and capacity building for indigenous workers. Below are some of the key insights regarding the Expatriate Employment Levy and obligations of Nigerian companies with expatriate employees/staff. Expatriate Employment Levy (“EEL”) The EEL applies to expatriate staff, i.e. non-citizen or non-resident expatriates that occupy quota positions or are engaged by means of Temporary Work Permit, excluding the below; Private sector industries and companies that utilizes foreign workforce or rely on expatriate labor are affected by the EEL and employers are responsible for the payment of the new levy. Amount Payable in Expatriate Employment Levy Currently the amount payable as EEL is pegged at $15,000 USD for Directors and $10,000 USD for other categories of expatriate staff. The Nigerian Immigration Service is designated to oversee the enforcement and payment of the levy and Employers are required to log in to the EEL payment portal, www.eel.interior.gov.ng to make the payment. Please note that the levy is payable annually. Deadline for Payment of Expatriate Employment Levy The deadline for payment is Thirty (30) days and the penalty for default payment is N 3,000,000 (Three Million Naira Only). Obligations as an Expatriate Employer: In conclusion, ensuring compliance with the newly implemented Expatriate Employment Levy in Nigeria is paramount to any affected company’s continued success and reputation. Berkeley Legal is a leading business law firm in, Nigeria. We provide a comprehensive and sophisticated range of specialized and personalized legal services that are designed to meet the various needs of highly diversified local and international businesses. If you would like to know more about the Expatriate Employment Levy please contact info@berkeleylp.com. The information provided in this article is for general informational purposes only and does not constitute legal advice.
Incentives under the Nigerian startup act, eligibility, and more.
Introduction The Nigeria Startup Act 2022 (the ‘Act’) provides the legal and institutional framework for developing and operating startups in Nigeria in a bid to create an enabling environment for the establishment, development, and operation of startups in Nigeria. Application The Act applies to; Companies that are labeled startups, i.e. Companies incorporated under the Companies and Allied Matters Act and granted the startup certificate by National Information Technology Development Agency. It is important to note that an holding company or subsidiary Company of an existing company may not qualify to be registered as a startup. Organizations and establishments, whose activities affect the creation, support, and incubation of labeled startups in Nigeria. Key Highlights of the Act: The Council & the Secretariat: The Act established ‘The National Council for Digital Innovation and Entrepreneurship’ (the ‘council’) headed by the President and Vice-President of Nigeria in the capacity of Chairman and Vice-Chairman, respectively. Section 9 of the Act also designates the National Information Technology Development Agency (NITDA) as the Secretariat of the Council (the ‘Secretariat’). The support portal & the Consultative Forum: Subject to the Council’s approval, the Secretariat is to set up the Startup Support and Engagement Portal to make it easy and simple for startups to register with regulatory agencies, receive start-up labels, licenses, and permits, access tools and resources, resolve complaints, etc, in addition, the “Startup Consultative Forum” the forum will provide labeled startups necessary information required to carry out their business and take advantage of government incentives. Startup Label Certificate and Startup Register: The Act provides that subject to fulfillment of stated requirements, the coordinator shall with the approval of the Secretariat enter the name and particulars of the applicant in the register of startups and issue to the startup, a startup label. (Startup certificate). Incentives: Tax and Fiscal Incentives: The Act provides for various tax and fiscal incentives like seed funding, private equity funds, accelerators, incubators, etc. Training: The Act provides for the training and capacity-building of startup employees to be facilitated by the Industrial Training Fund and other organizations that partner with the Secretariat, for the training of entrepreneurs and their employees. Establishment of a Technology Development Zone: The Act provides that the Secretariat is to collaborate with the Nigeria Export Processing Zones Authority to establish a Technology Development Zone in Nigeria to spur the growth and development of startups, accelerators, and incubators. Eligibility: A startup is eligible for labeling and other incentives under the Act if it meets all of the following requirements. It is registered as a limited liability company under the Companies and Allied Matters Act It has been in existence for a period not more than 10 years from the date of incorporation. The object of the Startup includes innovation, development, production, improvement, and commercialization of a digital technology innovative product or process. It holds or owns a product or process of digital technology or a registered software. It has at least one-third of local shareholding held by one or more Nigerians as founder or co-founder. In the case of a sole proprietorship or partnership, the Startup satisfies conditions set out in paragraphs 3, 4, and 5 of the eligibility requirements listed above. Incentives Incentives available to startups under the act are as follows: Capital investment & financing through the Startup Investment Seed Fund. Assistance in Intellectual Property Rights Protection, in addition to this, measures are put in place to prevent the infringement of the intellectual property rights of Labelled Startups. Discounts and technical assistance in the transfer of foreign technologies. Repatriation of Capital and Profits is guaranteed at the official conversion rate provided that the investor presents a Certificate of Capital Importation. Access to Export Facilities and financial assistance from the Export Development Fund, Export Expansion Grant, and the Export Adjustment Scheme Fund. Establishment of National accelerator and incubator programs that will grow the startup ecosystem to resolve operational challenges and serve as breeding hubs for the startups Training and Talent Development of employees of labeled startups, etc. It is important to note that only a labeled startup can enjoy the incentives provided in the Act. If you would like to know more about your startup’s eligibility, and other available incentives, or require legal advice with regard to the Nigerian Startup Act, please contact info@berkeleylp.com The information provided in this article is for general informational purposes only and does not constitute legal advice.
Conversion of private companies to public companies in Nigeria.
INTRODUCTION Companies enjoy recognition in law as separate legal entities, for this reason, their activities are closely monitored and accordingly regulated by statutes, the Companies and Allied Matters Act (CAMA), 2020. A private company may wish to change its legal form to a public company without forming a new corporation or disrupting its business. The process of effectuating this is called conversion or re-registration of a company and the procedure for achieving it is contained in the Companies and allied matters act 2020. At the fulfillment of the procedures and presentation of requisite documents, a new certificate of incorporation is issued by the Corporate Affairs Commission (“CAC”) to the company showing the new status of the company. Before this application can be initiated, however, there are some requirements that must be met, and they are: That the minimum issued share capital is not less than 2,000,000. That the company has not previously been re-registered as an unlimited company. That the company fulfills the net assets requirements as stipulated in the Companies and Allied Matters Act. Succinctly, the procedure for conversion are as follows; Board Meeting: A board meeting is convened and at the meeting, a board resolution proposing the conversion and re-registration from a private company (LTD) to a public company (PLC) will be passed, subsequently, the board authorizes the Company Secretary to issue a notice of General Meeting in order to pass a special resolution. General meeting: A general meeting will be convened, and a special resolution will be passed that the company be re-registered as a public company (PLC). Requisite alterations: Consequential alterations with regard to the following must be made; The company name must be changed from Ltd to Plc in the Memo and Articles of the company. Increase of share capital to meet the legal minimum for public company (PLC) in the Memorandum and Articles of Association of the company. Removal of restrictions on transfer of shares and invitation of the public in the Articles. Regulations on appointment of directors and company secretary to conform with the requirement of public company (PLC) in the Articles. Application to the Corporate Affairs Commission: Application must be made to CAC in a prescribed form which shall be signed by at least one director and the secretary with the accompanying documents: A statement of the company’s proposed name on re-registration. In the case of a company without a secretary, a statement of the company’s proposed secretary. A special resolution of the general meeting stating that the company should re-register as a public company. Printed copy of the Memorandum and Articles of Association as altered in pursuance of the resolution, which reflects the provision as required under CAMA for public companies. A copy of a written statement certified on oath by the directors and secretary showing that the paid-up capital as at the date of the application is not less than 25% of the authorized capital. A copy of the company’s Balance Sheet as at the date of the resolution or the preceding 6 months, whichever is later. A copy of the valuation report (where required). A statutory declaration (Statement of Compliance) by the director and the secretary to the effect that the special resolution has been passed and the company’s assets are not less than the aggregate of the paid-up capital and the un-distributable reserves. In the event that the company is also going to be quoted at the Stock Exchange, a copy of any prospectus or statements in lieu of prospectus delivered within the preceding 12 months to the Securities and Exchange Commission for registration must also be submitted to CAC. Original receipt of filing fees. Evidence of filing of Annual Returns to date.} Upon satisfaction of the requirements, the CAC retains the documents and issues a new certificate of incorporation stating that the company is a public company. It is important to obtain Certified True Copies (CTC) of the documents filed at the CAC for record purposes. If you would like to know more about conversion of Companies or require legal advice please contact info@berkeleylp.com The information provided in this article is for general informational purposes only and does not constitute legal advice.
Africa Continental Free Trade Area: An Overview
INTRODUCTION The Africa Continental Free Trade Area (AfCFTA) agreement was signed on 21st March 2018 in Kigali, Rwanda, by 44 African Heads of State. This historic trade pact aims to create a single continental market for goods and services, facilitate the free movement of businesspersons and investments, and establish a Continental Customs Union. AfCFTA is one of the most significant steps towards economic integration in Africa and forms the world’s largest free trade area, connecting nearly 1.3 billion people across 54 African countries. KEY OBJECTIVES The primary objective of the AfCFTA is to promote intra-African trade by eliminating or reducing tariff and non-tariff barriers among member countries. This is expected to boost trade and investment flows within the continent, foster industrial development, and enhance Africa’s competitiveness in the global marketplace. By creating a unified market, the agreement seeks to accelerate economic growth, create employment opportunities, and drive sustainable socio-economic development in Africa. IMPLEMENTATION PHASES The implementation of AfCFTA occurs in several phases, each addressing specific aspects of the trade agreement: 1. Phase 1 – Trade in Goods and Services: The first phase commenced in 2021 and focuses on the elimination of tariffs on 90% of goods traded among member countries over a five-year period (10 years for Least Developed Countries – LDCs). The remaining 10% of tariff lines are divided into two categories: “sensitive products,” with tariffs eliminated over 10 years (13 years for LDCs), and “excluded products,” not subject to liberalization. This phase allows for the gradual reduction of trade barriers, paving the way for increased trade volumes and enhanced regional integration. The Pan African Payment Settlement System (PAPSS) has recently been launched to enhance trade. This is a cross border, financial market infrastructure enabling payment transactions across Africa. PAPSS as it is called is endorsed by the AU and the AFREXIM bank for cross border transactions. PAPSS ensures instant or near instant transfer of funds between originators in one African country and beneficiaries in another. 2. Phase 2 – Intellectual Property Rights, Sustainable Investment, and Competition Policy: In this phase, member states negotiate intellectual property rights protection, investment policies, and competition policies. Establishing a framework for intellectual property rights protection is crucial for encouraging innovation and technological advancements within the region. Additionally, promoting sustainable investments and implementing fair competition policies can further drive economic growth and attract foreign direct investment. 3. Phase 3 – E-commerce: The third phase, which is yet to commence, will address e-commerce issues and explore opportunities for digital trade within the AfCFTA. As technology plays an increasingly critical role in global trade, leveraging e-commerce can significantly enhance trade efficiency and promote business growth within Africa. CHALLENGES AND OPPORTUNITIES While AfCFTA offers immense opportunities for Africa’s economic development, it also presents some challenges that must be addressed: Challenges: Potential loss of government revenue due to tariff reductions may impact public services and development projects. Non-tariff barriers, such as bureaucratic challenges and inconsistent regulations, can hinder the smooth flow of trade and investments. Harmonization of regulations among member countries is essential to ensure a cohesive and integrated market. The reduction of tariffs may expose domestic industries to competition from cheaper imports, necessitating measures to enhance local competitiveness. Opportunities: Increased market access for African businesses across the continent can stimulate economic growth and foster entrepreneurship. The elimination of trade barriers can promote economic diversification and specialization in areas of comparative advantage, leading to improved productivity and efficiency. AfCFTA has the potential to attract foreign direct investment, as global companies seek to establish operations within the continent to access the continental market. Enhanced regional integration and cooperation among African countries can create a conducive environment for sustainable economic development and intra-African trade. CONCLUSION The Africa Continental Free Trade Area represents a landmark initiative for African countries to foster economic integration and promote intra-African trade. By creating a continental market and eliminating trade barriers, AfCFTA has the potential to drive economic growth, employment, and sustainable development in Africa. Despite the challenges, the opportunities presented by this historic trade agreement are significant, and with careful planning and cooperation among member countries, AfCFTA can pave the way for a prosperous and integrated Africa, positively impacting the lives of millions of Africans and positioning the continent as a formidable player in the global economy. We are available to provide legal, advisory, and compliance support services to private and public Companies both within and outside Nigeria. If you require further clarification and information on the above article, kindly get in touch with us at info@berkeleylp.com
Procedure for converting debt to equity in Nigeria
Debt-to-equity financing plays a significant role in the financial landscape of Nigeria. As the nation strives for economic development, understanding the dynamics of financial activities, including the capital structure of institutions and corporations, becomes crucial. Debt-to-equity financing is an essential aspect of this structure and warrants thorough examination. In its simplest form, debt refers to financial obligations owed by one entity to another, encompassing loans, goods or services. Total debt represents the aggregate of short-term and long-term liabilities. On the other hand, equity pertains to ownership interests, typically in the form of shares or stocks. Equity investment involves purchasing and holding shares in anticipation of returns from dividends and capital gains, granting shareholders voting rights. Debt-to-equity financing arises when a corporation seeks capital with the expectation of significant returns, necessitating repayment of the capital sourced. Repayment terms and conditions are typically agreed upon between the debtor and the creditor. However, if a company encounters difficulties in adhering to the initially agreed-upon repayment structure, debt-to-equity financing can provide an alternative arrangement, often termed a “compromise of arrangement.” In Nigeria, the procedure for debt-to-equity financing typically involves the following steps: Assessment of Financial Situation: The debtor company must evaluate its financial position and determine if debt-to-equity financing is a viable solution for its repayment difficulties. This assessment includes analyzing the company’s share capital and determining if it can accommodate the debt conversion. Negotiation and Agreement: The debtor and creditor negotiate the terms of the debt-to-equity conversion. This includes determining the proportion of debt that will be converted into equity and any adjustments to the existing repayment structure. The terms are documented in a legally binding agreement. Shareholder Approval: If the debtor company’s share capital is insufficient to cover the debt, it needs approval from its shareholders to increase the share capital. This typically involves convening a general meeting of shareholders, presenting the proposal, and obtaining their consent through a resolution. Registration with the Corporate Affairs Commission (CAC): Once the shareholders approve the increase in share capital, the debtor company must register the changes with the Corporate Affairs Commission. This involves filing the necessary documents and paying the required registration fees. The CAC will update the company’s records to reflect the increased share capital. Debt Conversion: After completing the registration process, the debt can be officially converted into equity. This is typically done through the issuance of new shares to the creditor, proportional to the agreed-upon conversion ratio. The creditor becomes a shareholder in the company. Regulatory Compliance (for foreign investors): If the debt-to-equity financing involves foreign investors, additional regulatory compliance steps are necessary. The issuance of a Certificate of Capital Importation (CCI) is required for foreign investment in Nigeria. The foreign investor must obtain or convert their existing CCI to reflect the equity investment. This process may require coordination with the Central Bank for regularization. Tax Considerations: Throughout the debt-to-equity financing process, both parties must carefully consider the tax implications. It is essential to ensure compliance with applicable tax laws and regulations to avoid any adverse tax consequences. Consulting with tax professionals or advisors is recommended to navigate the tax aspects of the arrangement. It is important to note that the specific procedure may vary depending on the circumstances of each case, the parties involved, and any additional regulatory requirements. Engaging legal and financial professionals experienced in debt-to-equity financing can help ensure compliance with all relevant laws and facilitate a smooth process. By following these steps and adhering to the necessary legal and regulatory requirements, companies in Nigeria can pursue debt-to-equity financing as a potential solution to financial difficulties and create a more sustainable capital structure. In conclusion, while debt-to-equity financing offers a viable option for financing corporations and companies in Nigeria, it demands careful evaluation due to its potential challenges. Considering the prevailing market conditions and the prevalence of loan agreements burdened by devaluation, debt-to-equity financing can help address financial difficulties and leverage the potential for increased returns on investment. However, comprehensive analysis and consideration of the specific circumstances are imperative to mitigate risks and ensure a fair and mutually beneficial arrangement for all parties involved.
Tumininu Oladipo
Partner
Tumininu heads the firm’s Corporate, Securities & Finance (CSF) Practice. She has a decade experience in Capital market transactions, strategic investments, Corporate Commercial law, Corporate Governance, Regulatory Compliance, Mergers and Acquisitions, Project Finance, and Funds. She has worked closely with both domestic and international clients, guiding them through complex legal challenges. and helping them navigate regulatory frameworks effectively. In addition to her professional skills, she is an excellent communicator and negotiator, proficient at presenting complex legal concepts in a clear and concise manner, she is also regarded for her attention to detail, analytical thinking, and ability to anticipate and mitigate potential legal risks. Outside work, Tumininu loves listening to music and reading.
Folasade Kilaso
Managing Partner
Folasade has over 25 years of professional experience and she specializes in corporate and regulatory matters across several sectors including Banking, Capital Market, Asset Management, Energy, Real Estate, Public-Private Partnership, Insurance, Immigration, Risk Management and Corporate Governance. She was an Executive Director of Standard Chartered Bank of Nigeria and has served on the board/ committee of various institutions such as the Financial Institutions Training Centre (FITC), Nigeria Inter Bank Settlement Systems (NIBSS), Chartered Institute of Bankers Nigeria (CIBN) and Central Bank of Nigeria (CBN) – Sub Committee for Women Economic Empowerment. She is currently a Non- Executive Director of Sterling Bank, Elstree Farms and B-Tech Digital & AI Limited. She is also a member of the Ethics and Governance committee of the LCCI (Lagos chamber of commerce and Industry). Sade is a pragmatic business lawyer. She is known for giving constructive, clear, and concise commercial advice to clients. Sade enjoys mentoring, fine dining, theatre, and spending time with her family.
Oluwatosin Soyebo
Senior Associate
Oluwatosin is a Senior Associate in the firm’s Business law Practice Group. He is skilled in negotiations, compliance, corporate governance, research, and advocacy and has over a decade experience, often leading teams and projects globally. He has advised international clients on bids for national assets from the Nigerian government, demonstrating his proficiency in complex transactions. Oluwatosin has also been instrumental in arbitration-related proceedings between international oil companies and the Nigerian National Petroleum Corporation. Notably, he has contributed to resolving arbitrability issues in Nigerian tax matters, his diverse skills and dedication make him a trusted professional in the legal field, delivering exceptional results and resolving critical issues. Oluwatosin enjoys watching football and formula 1.
