Nigeria as an Investment Destination

Nigeria continues to attract entrepreneurs, investors and businesses seeking opportunities across technology, agriculture, manufacturing, infrastructure, professional services and other growing sectors.

For many Nigerians living abroad and foreign investors, it is possible to establish and operate a Nigerian business without being physically present throughout the entire process. However, successful market entry requires more than simply incorporating a company.

Choose the Right Business Structure

The first step is to determine the most appropriate legal structure for the proposed investment and business objectives.

Depending on the circumstances, an investor may consider incorporating a private company limited by shares or adopting another appropriate structure. The choice of structure can affect ownership, liability, governance, taxation and the ability to raise additional capital.

Complete Corporate Registration and Regulatory Approvals

Incorporation is only the beginning. Depending on the nature of the business, additional registrations, licences, permits and regulatory approvals may be required before operations can commence.

Businesses operating in regulated sectors such as financial services, healthcare, telecommunications, energy and other specialised industries may face additional compliance requirements.

Investors should therefore identify applicable regulatory requirements before committing significant funds or commencing operations.

Address Tax and Financial Compliance

Businesses operating in Nigeria must understand their applicable tax obligations and establish systems for meeting ongoing filing and payment requirements.

Tax registration and compliance should form part of the business’s establishment process rather than being treated as an issue to address after operations have begun.

Protect Intellectual Property

For businesses whose value depends on technology, brands, software, creative works or proprietary processes, intellectual property protection should be considered from the outset.

Relevant trademarks, copyrights and other intellectual property rights should be properly identified and protected to reduce the risk of infringement, misuse or loss of valuable business assets.

Put Shareholder Arrangements in Place

Where a business has multiple shareholders, a properly drafted shareholders’ agreement can provide clarity on ownership, decision-making, funding obligations, transfer of shares, minority shareholder protections and dispute resolution.

This can help prevent disagreements from developing into costly corporate disputes as the business grows.

Establish Proper Corporate Governance

A company should have appropriate governance and record-keeping procedures from the beginning.

This includes maintaining statutory records, documenting important corporate decisions and ensuring that directors and shareholders understand their respective rights and responsibilities.

Good corporate governance can also enhance confidence among investors, lenders, commercial partners and other stakeholders.

Address Employment and Contractual Matters

Businesses employing staff in Nigeria should ensure that their employment arrangements comply with applicable Nigerian employment laws and regulatory requirements.

Commercial contracts should also clearly define the rights and obligations of the parties and provide appropriate mechanisms for managing disputes and other potential risks.

Maintain Ongoing Legal Compliance

Legal compliance does not end when the company is incorporated.

As the business grows, its regulatory obligations may change. New licences may become necessary, additional employees may be engaged, investors may join the company, and new contracts or commercial arrangements may create additional legal considerations.

Ongoing legal support can therefore help businesses identify and address these issues before they become significant problems.

Practical Steps for Investors Abroad

• Choose the most appropriate business structure.
• Complete the necessary corporate registrations.
• Obtain applicable licences and sector-specific approvals.
• Establish compliance systems.
• Protect relevant intellectual property.
• Prepare a shareholders’ agreement where appropriate.
• Establish proper corporate governance procedures.
• Put appropriate employment and commercial contracts in place.
• Obtain continuing legal and regulatory support as the business develops.

Conclusion

For Nigerians abroad and foreign investors, establishing a business in Nigeria can provide significant opportunities, but incorporation should not be treated as the end of the legal process.

A properly structured business can reduce regulatory and operational risks, protect investors and founders, strengthen corporate governance and enhance confidence among commercial partners and potential investors.

The objective should not simply be to incorporate a company, but to establish a business that is legally structured for sustainable operation and growth in Nigeria.

A publication of Edidiong Akpanuwa & Co.