Company formation has always been a global trend. According to the Guinness book of world records, the First Company to be established in the world was a Japanese hot- spring hotel known as Nisiyama Onsen Keiunkan in 705 AD.
This trend has continued for ages because of man’s desire to create value which in turn results in wealth. The following are some of the reasons why it’s legally beneficial to have a Business outfit incorporated by a foreign investor in Nigeria whereby the Liability (profit or loss) of Members are Limited to the exact number of shares owned by such individual;
- Limited fiscal liability – A Foreign Investors personal investments are protected and they are only responsible for company debts up to the worth of their shares. In practice, most foreign Investors protect their Wealth by either franchising their brand to other local Investors or by using the parent company as the majority shareholder in the Nigerian Outfit.
- The incorporated position will greatly develop a Foreign Investors specialised figure and business profile. Limited companies are often more interesting to prospective clients and investors, giving the inkling of a well-organized, established and reputable business.
- A prospective foreign investor can benefit enormously due to the growth of the Nigerian economy by offering their shares to the public, thereby raising funds for the Company.
- A 100%Foreign Company, which has been registered in Nigeria can also partner with other local companies be it through merger or other collective investment schemes to benefit from the enormous natural and human resources in Nigeria
- Ownership of a limited company can be transferred or transmitted to other individuals. As the company exists as a separate legal entity from the individual, the company can continue to exist even in the event of the owners’ death – unlike a sole proprietorship.
- When a Prospective Company name has been reserved for a Foreign Investor by the Corporate Affairs Commission, it is protected and cannot be used by any other Profit or non-profit Organisation in Nigeria.
- Companies limited by shares allow for strategic financial planning with regards to tax. Profits can be distributed by way of salary and dividends, and this can make it a very tax effective structure.
Now that we have taken a cursory look at the Historical development of the concept “Company” and benefits of establishing a Limited Liability company in Nigeria by a Foreign Investor, it will be apt to glimpse at the process and procedure required to establish a Company by a Foreign Investor so as to benefit from the massive investment opportunities in Nigeria.
PROCESS AND PROCEDURE.
- Check for availability of proposed company name: This is the First step a Foreign Investor through his or her Corporate Attorney has to take to show seriousness about reaping from the vast resources(especially cheap Labour) in Nigeria. Corporate Affairs Commission in Nigeria affords the luxury for an applicant to submit two names from which one will be selected and reserved for 60 days.
- Complete pre-registration form – CAC1.1 (Online using Company Registration Portal). At this stage, the Investors will be required to supply their personal details such as Names, Nationalities, Residential address, Date of Birth, Phone number, e-mail addresses and Means of identification which is basically International Passport. This is also the stage an Investor will be required to show the nature of his or her proposed investment in Nigeria
- Pay filing and Stamp duty fees
- Prepare the signed scan copy of your pre-registration documents for upload as follows:
- Form CAC1.1
- Memorandum and Article of Association (MEMART)
- Recognized form of identification for Director(s)/Subscriber(s) and Secretary
- Evidence of payment to CAC
- Upload the scanned documents for processing
- Submit the original copies of the documents uploaded (Form CAC1.1, MEMART, etc) to the CAC office you had selected in exchange for your certificate and the Certified True copies of the documents.
In conclusion, Equipped with all Relevant CAC Documents, it will be hurdle Number one crossed. A critical look at the various documents needed to process all applications which end up with the Investor resident or naturalised in Nigeria shows that Company Formation at the CAC is indispensable.