Company Law

An Overview Of Foreign Participation In Nigeria


Nigeria, the most populated African country also popularly known as the ‘Giant of Africa’, with a population of over 218 million and a land mass of 351,650 sq. miles,[1] has over the years been the hub for investment by many foreign companies. The World Bank’s publication, ‘Doing Business 2020’, has also ranked Nigeria 73 out of 190 on enforcement of contracts, a significant improvement from previous years.[2] Nigeria has experienced an influx of foreign investors due to its large population and vast land which serves as the targeted market and site for the products offered by these investors. Similarly, a foreigner must meet a minimum standard to participate in Nigeria’s economy.

This article will explain the requirements and process for a foreigner to participate in Nigeria’s economic sector.

Nigeria Foreign Policy

The promulgation of the Nigerian Investment Promotion Decree of 1995 and the Foreign Exchange (Monitoring and Miscellaneous Provisions) Decree, can be said to be the deliberate efforts made by the then-Nigerian government to encourage foreign investors to invest in Nigeria’s economy. These and a plethora of legislations like the Investment and Securities Act, Central Bank of Nigeria Act, Nigerian Investment and Promotion Commission Act, Immigration Act, Companies and Allied Matters Act, etc. regulate the Nigerian foreign participation space. Today, a foreigner can now carry on business in Nigeria alone or partner with another foreigner or Nigerian citizen in any business sector except businesses listed in the negative list.[3] They are;

  1. Production of arms, ammunition, etc.
  2. Production of and dealing with narcotic drugs and psychotropic substances.
  3. Production of military and paramilitary wear, including those of the Police, Customs, Immigration, Prisons and such other businesses as the Federal Executive Council may determine from time to time.

Also, incentives have been provided by the Nigerian government to encourage foreign participation, they are;

  1. Unconditional transfer and repatriation of investment funds through an authorized dealer.
  2. Unconditional repatriation of dividends net of taxes attributed to the investment a Payments in respect of loan servicing where a foreign loan has been obtained.
  3. The remittance of proceeds net of taxes in the event of the sale or liquidation of the enterprise or any interest attributable to it.[4]
  4. No enterprise shall be nationalized or expropriated by the Federal Government unless the acquisition is in the national interest or for a public purpose
  5. No foreigner shall be compelled to surrender his investment to another person in Nigeria
  6. Where an enterprise is nationalized or expropriated, there must be prompt, adequate payment of compensation; and a right of access to the Courts as to the quantum of compensation.
  7. Compensation is to be paid promptly and in foreign exchange. [5]
  8. In the event of a dispute between an investor and any of the Governments of the Federation in respect of an enterprise, a dispute resolution model not regulated by the national Courts is allowed.[6]

Registration and Exemption from Registration of a Foreign Company

For a person to legally carry on business in Nigeria as a foreigner, such a person must take steps to obtain an incorporation status as a separate legal entity in Nigeria. Until its incorporation, such a person is not permitted to carry on business in Nigeria or have any right or benefits of a registered company nor have a place of business and address for service of documents or processes.

The requirement of registration does not apply to companies that are exempted under the Companies and Allied Matters Act (CAMA) or exempted under any treaty to which Nigeria is a party. The categories of companies exempted from registration under CAMA[7] are:

  1. Foreign companies invited to Nigeria by or with the approval of the Federal Government to execute any specified individual project;
  2. Foreign companies which are in Nigeria for the execution of specific individual loan projects on behalf of a donor country or international organization;
  3. Foreign government-owned companies engaged solely in export promotion activities; and
  4. Engineering consultants and technical experts engaged on any individual specialist project under contract with any of the governments in the Federation or any of their agencies or with any other body or person, where such a contract has been approved by the Federal Government.

For a foreign company to enjoy the status of an exempted company in Nigeria, it must apply to the Minister of Trade and Investment and provide the following information;[8]

  1. the name and place of business of the foreign company outside Nigeria;
  2. the name and place of business or the proposed name and place of business of the foreign company in Nigeria;
  3. the name and address of each director, partner, or other principal officers of the foreign company;
  4. a certified copy of the charter, statutes, or memorandum and articles of association of the company, or other instrument constituting or defining the constitution of the company and if the instrument is not written in the English language, a certified translation thereof;
  5. the names and addresses of one or more persons resident in Nigeria authorized to accept, on behalf of the foreign company, service of processes and any notice required to be served on the company;
  6. the business or proposed business in Nigeria of the foreign company and the duration of such business;
  7. particulars of any project previously carried out by the company as an exempted foreign company; and
  8. such other particulars as may be required by the Minister or Secretary to the Government of the Federation.

Upon receiving an application for exemption, the Minister, if he believes that the circumstances warrant it, may exempt the foreign company from registration obligations, subject to such conditions as he may prescribe.[9] Every exemption granted by the Minister is for a specific period of time or the time required to complete the specified project.[10] The Minister must publish such exemption in the Federal Government Gazette, and the publication must clearly state the period of exemption or the specified projects for which the exemption is granted.[11] The Minister also has the power to revoke at any time, any exemption granted if he believes that such a company has contravened any provision of CAMA or has failed to meet any condition stipulated in the exemption order.[12]

An exempted company is under the obligation to deliver to the Corporate Affairs Commission (CAC) every calendar year, a report in the prescribed form. Failure to do this will subject the company to such penalty as CAC may specify by its regulation.

Classification of Foreign Participation

Aside from participating in Nigeria’s economy as an exempted company, there are two recognized classifications of foreign participation in Nigeria.

  1. Foreign Direct Investment.
  2. Portfolio Investment.

Foreign Direct Investment

This is the direct investment by foreign investors who invest in Nigeria by establishing a company for that purpose. Upon registration, such a company enjoys all the rights of a registered company in Nigeria. Below are the procedures for foreign direct investment. This can be in the form of starting a new company or establishing a branch or subsidiary of an existing foreign company.

  1. Prepare VA or other necessary pre-incorporation contracts (where needed).
  2. Obtain a business visa as anyone coming into Nigeria must first possess a visa to legally come into the country.
  3. Secure address for service of documents before completion of registration.
  4. Conduct an availability search and reservation of the proposed name of the company.
  5. Register and incorporate the company with Corporate Affairs Commission or obtain a Letter of Exemption if any ground of exemption applies.
  6. Import capital through an authorized dealer and obtain a certificate of capital import.
  7. After incorporation as a Nigerian company but before starting a business, the Company must be registered with the NIPC- Section 20 NIPC Act.
  8. Register foreign-owned shares and securities with the Securities and Exchange Commission.
  9. Obtain necessary permits as applicable such as Business permits, Expatriate quotas, residence permits, etc.
  10. The company will also register if any transfer of technology is executed with any of the expatriates.
  11. Apply for incentives applicable to the company.

Portfolio Investment

This is the purchase of shares of existing Nigerian companies whether private or public. This is done by foreign currency being imported through an authorized dealer usually a bank or non-banking organization appointed by the Central Bank of Nigeria and converted to Naira at the official exchange rate. Below are the procedures for portfolio investment;

  1. Application for allotment of shares by the foreign investor to a Nigerian company.
  2. Approval of allotment of the shares to the foreigner by the board of directors of the company.
  3. Importation of capital through an authorized dealer.
  4.  Obtain a shares certificate from the company.
  5. Apply to the Securities and Exchange Commission for registration of securities.

CONCLUSION Since the independence of Nigeria and the enactment of policies to promote foreign participation, Nigeria has seen the emergence of several foreign companies, especially in the oil and gas sector, import and export, management and consulting, etc. consequently, this has increased the employment and economic development, provided for human resource development, improve capital flow, create a competitive market, etc.

[1]World Meters ‘Nigerian live population’ <accessed 12/12/2022>

[2] 2021 Investment Climate Statements: Nigeria <accessed 12/12/2022>

[3] Section 18 NIPC Act

[4] Section 24 NIPC Act

[5] Section 25 NIPC Act.

[6] Section 26 NIPC Act.

[7] Section 80 (1) Companies and Allied Matters Act 2020

[8] Section 80 (2) Companies and Allied Matters Act 2020

[9] Section 80 (3) Companies and Allied Matters Act 2020

[10] Section 80 (4) Companies and Allied Matters Act 2020

[11] Section80 (6) Companies and Allied Matters Act 2020

[12] Section 80 (5) Companies and Allied Matters Act 2020


About AUTHOR Mr. Oyetola Muyiwa Atoyebi, SAN CONTRIBUTOR: Joy Ayara

Mr. Oyetola Muyiwa Atoyebi, SAN is the Managing Partner of O. M. Atoyebi, S.A.N & Partners (OMAPLEX Law Firm). Mr. Atoyebi has expertise in and vast knowledge of Corporate Law Prectice and this has seen him advise and represent his vast clientele in a myriad of high-level transactions. He holds the honour of being the youngest lawyer in Nigeria’s history to be conferred with the rank of Senior Advocate of Nigeria. He can be reached at CONTRIBUTOR: Joy Ayara Joy is a member of the Corporate Team at OMAPLEX Law Firm. She also holds commendable legal expertise in Corporate Law Practice. She can be reached at