On 5th December 2023, the Corporate Affairs Commission (Commission) issued a public notice signaling a pivotal shift in the minimum paid-up capital requirements for companies operating in Nigeria with foreign participation. This directive is in adherence to the requirements outlined in the Revised Handbook on Expatriate Quota Administration (2022).
The Immigration Act, 2015 mandates companies with foreign participation to secure a business permit from the Minister of Interior before commencing business operations in Nigeria. This regulation extends to both wholly foreign-owned companies and joint ventures between local and foreign partners, irrespective of the foreign partners’ shareholding percentage. Previously the Handbook on Expatriate Quota Administration 2004 set the minimum issued share capital requirement at NGN10,000,000 (Ten Million Naira).
However, the Ministry of Interior in 2022 introduced theRevised Handbook on Expatriate Quota Administration, elevating the minimum share capital requirement for companies with foreign participation to NGN100,000,000 (One Hundred Million Naira).
To implement this regime, the Commission has, effective immediately, mandated that all applications for the incorporation of a company with foreign participation will only be processed if they comply with the revised minimum paid-up capital of NGN100,000,000 (One Hundred Million Naira Only).
Additionally, existing companies with foreign participation with a minimum paid-up share capital below the NGN100,000,000 paid-up capital threshold, are advised to ensure compliance within six (6) months from the date of this notice. Failure to comply to this directive will lead to the following consequences:
Therefore, it is imperative for existing companies with foreign participation to utilize this six-month window in complying with this directive by increasing their share capital and filing all necessary documentation with the CAC. Adherence to these regulations not only mitigates the risk of penalties, legal actions, or winding-up proceedings but also safeguards the company’s reputation and financial stability.
For new companies, compliance ensures a seamless initiation of business operations in Nigeria, averting potential disruptions due to non-compliance issues.
Stren & Blan Partners is a full-service commercial Law Firm that provides legal services to diverse local and multinational corporations. We have developed a clear vision for anticipating our client’s business needs and surpassing their expectations, and we do this with an uncompromising commitment to Client service and legal excellence.