Starting a business in Nigeria: one of Africa's most dynamic markets

The private limited company is one of the most common legal structures for foreign investment. It is a separate legal entity, meaning the liability of shareholders is generally limited to the value of their shares. It is no longer mandatory for a private company to have at least two shareholders. Where there is foreign participation, companies are generally expected to meet a minimum share capital requirement of NGN 100 million, subject to the applicable approvals and requirements. The timing and evidence of capitalisation should be confirmed as part of the set-up process.

For investors focused on manufacturing or export-oriented activities, setting up within a free zone, such as Lekki or Lagos Deep Offshore Logistics (LADOL), may offer advantages. Approved free zone enterprises may benefit from customs duty reliefs and tax incentives, subject to the applicable zone rules and regulatory requirements. Foreign investors may also be able to repatriate capital and profits, subject to applicable documentation, banking and foreign exchange requirements.

The limited partnership is commonly used for certain investment and professional services structures. It consists of at least one general partner, who has unlimited liability for the firm's debts, and one or more limited partners, whose liability is generally capped at their agreed contribution. The maximum number of partners is 20. This structure can offer a balance of flexibility and control and may be suitable for specific investment projects in sectors such as real estate or energy.

A limited liability partnership (LLP) is a flexible vehicle that combines features of a partnership with separate legal personality and limited liability protection. It requires at least two partners, which may be individuals or corporate bodies. It must also have at least two designated partners responsible for statutory compliance, at least one of whom must be resident in Nigeria. There is no fixed limit to the number of partners in an LLP.

A public limited company (PLC) is generally used by larger businesses, particularly where a company intends to offer shares to the public or list on the Nigerian Exchange. Where there is foreign participation, the company is generally expected to meet the applicable minimum share capital requirements, although sector-specific rules may impose higher thresholds. Unlike a private company, a public company does not have a statutory limit on the number of shareholders, but it is subject to stricter governance, audit and public reporting requirements.

Foreign companies are generally required to incorporate a local entity before carrying on business in Nigeria, unless they are granted an exemption. Branch-type arrangements are therefore usually limited to specific exempted activities, such as government-approved projects, donor-funded initiatives or specialist technical services. These may include short-term infrastructure projects or technical consultancy for the state. For most commercial purposes, a foreign investor will need to incorporate a separate Nigerian subsidiary.

A representative office may be suitable for firms looking to explore the Nigerian market without carrying on core commercial activity. It is generally limited to non-revenue-generating activities such as market research, promotion and liaison with local partners. It should not be used to carry on business, enter into commercial contracts or generate revenue in Nigeria.

We advise on the most suitable company form in Nigeria based on your business objectives and operational needs. Our 'at-a-glance' comparison table outlines key information on different company formation options.

Nigeria company formation involves statutory costs that vary depending on your issued share capital and your level of foreign participation. Companies with international shareholders are generally subject to higher minimum share capital requirements than local firms, so transparent financial planning is essential for a successful market entry.

• Registration and filing fees: These include the CAC fees for name reservation and incorporation. The cost is typically linked to the company's issued share capital and the required incorporation filings.

• Stamp duty: This is a tax administered by the NRS and typically forms part of the incorporation process. It is generally calculated by reference to the value of the shares being registered.

• NIPC registration: Companies with foreign participation are generally required to register with the NIPC after incorporation. This involves an administrative process and may require payment of the applicable fees. Depending on the business activity, separate business permits, sector licences or other approvals may also be required.

• Office space and registered address: Every Nigerian company must provide a verifiable physical address within the country.

• Expatriate quota and residency permits: If you intend to relocate foreign staff or directors to Nigeria, you may need to factor in the cost of applying for an expatriate quota from the Ministry of Interior. Combined Expatriate Residence Permit and Alien Card (CERPAC) fees may then apply for each foreign national who will live and work in the country.

• Professional and legal fees: These may include expenses for consultants or legal counsel to prepare corporate documents, provide guidance on sector-specific requirements and support the multi-agency compliance process.

At Hawksford, we follow a structured, step-by-step process to support your company formation in Nigeria. Support can be provided through each stage, helping to reduce the administrative complexity of entering a new market.

We typically begin with a consultation to understand your business objectives, operational requirements and long-term goals. This can allow us to provide tailored advice on suitable legal structures and licensing requirements for your business.

Based on the initial consultation, we can develop a set-up plan outlining the recommended approach for establishing your business in Nigeria. This can include guidance on company formation, corporate structuring and specific legal considerations relevant to your industry and activities.

We can then assist with the preparation and processing of the required documentation, helping ensure accuracy and compliance with Nigerian regulations. This can include preparing corporate documents, completing application forms and supporting applications to relevant government authorities.

We can manage the incorporation process through the CAC and its digital registration portal. This can include company name reservation, filing incorporation documents and assisting with the Memorandum and Articles of Association.

Post-incorporation registrations and approvals can also be supported, including NIPC registration for companies with foreign participation and tax registration with the NRS, including Tax Identification Number (TIN) and Value Added Tax (VAT) registration where applicable.

Where required, we can assist with Nigeria's multi-agency requirements, including applications for a Business Permit and support with capital importation documentation. This can help ensure your entity is aligned with applicable sector-specific requirements and legally positioned to begin operations.

Support can be provided with work authorisation and residency processes for your foreign staff, including the preparation and submission of required documentation to the relevant Nigerian authorities. This can include support with Expatriate Quota applications, Subject to Regularisation (STR) visas, biometric appointments for the CERPAC and expatriate quota returns where applicable.

We can also help coordinate communications with immigration authorities and support the regularisation of stay process, helping ensure foreign employees have the appropriate authorisation to live and work in Nigeria.

We can help with the opening of a corporate bank account in Nigeria by providing guidance on the required documentation and liaising with banks during the onboarding process. This may include support with corporate documents, tax details, board resolutions, identification documents, proof of address and beneficial ownership information, depending on the bank's requirements.

Beyond the initial set-up phase, additional support can be provided to help your Nigeria company become operational. This can cover office set-up and other services needed to support local operations.

We can also support ongoing accounting and tax compliance, including corporate tax, VAT registration and filing, financial statement preparation and bookkeeping.

When setting up a business in Nigeria, the initial incorporation process is managed through the CAC digital portal. The wider set-up timeline for foreign-owned companies may be affected by post-incorporation requirements, including corporate bank account opening, Business Permit applications and Expatriate Quota approvals where foreign staff will be employed.

Other factors that can affect the timeline include the chosen legal structure, the complexity of your intended business activity and any sector-specific licensing requirements, such as approvals from the National Agency for Food and Drug Administration and Control (NAFDAC) or the Nigerian Communications Commission.

Timing may also depend on capital importation documentation, where foreign capital is being brought into Nigeria, and the review of documents by relevant authorities.

• Chosen legal structure: Certain Nigerian legal entities may take longer to establish. Complexity of business activity: Business activities that require special approvals from specific government entities may take longer to process.

• Efficiency of document processing: The timing of document submission and review by relevant authorities can also affect the set-up timeline.

Our expertise and proactive planning approach can help streamline your business set-up process. We provide clear guidance on the required steps and potential bottlenecks, helping you prepare effectively and reduce administrative delays. We also work with you to help ensure all documentation is accurate, complete and submitted correctly, reducing the risk of delays caused by errors or omissions.

• Initial planning and documentation preparation: Typically 1 to 2 weeks.

• Company incorporation and registration: 4 to 8 weeks.

• Bank account opening: Typically 7 weeks.

• Visa and work permit processing (if required): Typically 2 to 6 weeks.

• Estimated end-to-end set-up timeline: 3 to 5 months (approximately 14 to 23 weeks).

The above timelines are indicative and can differ depending on the business activity, approval requirements and the time taken by external parties. To find out more about company formation in Nigeria, please get in touch with us.