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NLS CORPORATE CAMA 2020 > FOREIGN PARTICIPATION > Flashcards

FOREIGN PARTICIPATION Flashcards

1
Q

What are the Relevant Laws & Regulations under Foreign Participation?

A

1.Companies and Allied Matters Act
2.Investments and Securities Act
3.Industrial Inspectorate Act
4.Nigerian Investment Promotion Commission Act
5.National Office for Technology Acquisition Promotion Act
6.Foreign Exchange (Monitoring and Miscellaneous Provisions) Act
7. Nigerian Export Promotion Council Act
8.Immigration Act
9.Federal Competition and Consumer Protection Act
10. Central Bank Act

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2
Q

What are the modes of foreign investment in the Nigerian economy?

A
  1. Foreign Direct Investments
  2. Foreign Portfolio Investments
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3
Q

What is Foreign Direct Investment?

A

Foreign Direct Investment (FDI) refers to investments made by a company or individual in one country into business interests located in another country.

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4
Q

What is Foreign Portfolio Investment?

A

Foreign Portfolio Investment (FPI) happens when investors from other countries buy stocks and bonds in a different country. With FPI, these investors simply hold onto securities like shares and bonds without taking part in managing the companies they invest in.

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5
Q

What are the Categories of foreign companies exempted under CAMA?

A

1.Invited Companies-Foreign Companies invited for specific individual projects.
2. Loan Projects-Companies in Nigeria for the execution of specific individual loan projects on behalf of a donor country or international organization.
3.FG owned companies-Companies engaged solely in export promotion activities.
4.Engineering Consultants and Technical Experts- Engineering consultants and technical experts engaged on any individual specialist project under contract with any of the governments or any of their agencies or with any other body or person, where such contract has been approved by the FG.
SECTION 80(1) CAMA

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6
Q

What is the status of an exempted company?

A

It has the status of an unregistered company.

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7
Q

What documents do you attach to an application for exemption?

A

1.The name and place of business of the foreign company outside Nigeria.
2.The name and place of business of the proposed foreign company in Nigeria.
3.The name and address of each director, partner or other principal officer of the foreign company.
4.A certified copy of the charter, statutes, or memorandum and articles of association of the company.
5.The names and address of Nigeria residents authorized to receive notices & processes on behalf of the foreign company.
6.Duration of the foreign business in Nigeria.
7.Particulars of any previous projects carried out by the company.
8.Other particulars required by the minister.

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8
Q

What is the status of an exempted company?

A

UNREGISTERED COMPANY.
They are exempted from paying taxes.

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9
Q

What are Post exemption requirements after filing an application for exemption?

A

1.Serve notice to CAC within 30 days of notice of exemption.
2.The minister must publish the details exempted company in the official gazette of the federation.
3.Deliver (FORM 21) NOTICE OF EXEMPTION OF FOREIGN COMPANY AND annual report of exempted foreign company(FORM 22)

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10
Q

Grounds for Revocation of Exemption?

A

a.The company has contravened CAMA or
b. has not fulfilled any condition of the exemption order or
c. for any good or sufficient reason.

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11
Q

Who do you make an application for exemption to?

A

Ministry for Industry, Trade and Investment.

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12
Q

What are the items prohibited under the Negative List?

A

(a) production of arms, ammunition, etc.; (b) production of and dealing in narcotic drugs and psychotropic substances;
(c) production of military and para-military wears

section 31 NIPC Act

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13
Q

What is NIPC?

A

Nigerian Investment Promotion Commission

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14
Q

Functions of the NIPC?

A
  1. Provide and disseminate up to date incentives available to the investors.
  2. Promote investments in and outside Nigeria through effective promotional means
  3. Co-ordinate, monitor, and provide necessary assistance and guidance for the establishment and operation of enterprises in Nigeria
  4. Identify specific projects and invite interested investors for participation in those projects
  5. Assist incoming and existing investors by providing support services
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15
Q

What organization established the OSIC?

A

Nigerian Investment Promotion Commission

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16
Q

What is the One Stop Investment Centre(OSIC)?

A

The OSIC is an investment facilitation mechanism which brings relevant government Agencies to one location, coordinated and streamlined, to provide efficient and transparent services to investors.

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17
Q

Procedure for application to the NIPC?

A
  1. Apply to NIPC through NIPC form 1 for the following:
    -Business Permit
    -Expatriate Quota
    -Pioner status
  2. Pay non-refundable deposit N15,000 for each application in bank to the nearest NIPC office.
  3. Forward the application to NIPC Headquarters along with (2) copies
    of the receipt for purchase of the Form.
  4. After the submission of the NIPC Form 1, the Commission will register the applicant company WITHIN 14 working days.
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18
Q

What are the CHECKLIST OF ATTACHMENTS TO THE APPLICATION FOR NIPC?

A
  1. Completed NIPC Form 1
  2. Joint Venture agreement where applicable
  3. Photocopy of payment receipt for application Form
  4. Certificate of Incorporation for applicant’s company.
  5. Memo and articles of association
  6. Form CAC 1.1
  7. Tax Clearance certificate.
  8. Receipt of payment of stamp duties.
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19
Q

What is the minimum capital expenditure for foreign companies?

A

not less than N5, 000,000(Five million Naira)

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20
Q

What are the modes of settling disputes under NIPC?

A

1.An amicable settlement through mutual discussion
2.The dispute may be submitted to Arbitration at the option of the aggrieved party

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21
Q

What happens when there is a disagreement between the investor and the federal government as to the method of dispute settlement?

A

International Centre for Settlement of Investment Disputes (ICSID) Rules will apply

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22
Q

What is FEMMPA?

A

FOREIGN EXCHANGE MONITORING AND MISCELLANEOUS ACT.

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23
Q

What is the provisions of FEMMA?

A

Provide that any person may invest in foreign currency
• When investing with foreign currency, it must import the capital (i.e., the foreign currency through an authorized dealer, and obtain a certificate of Capital Importation.
Section 15(1) of FOREX Act.

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24
Q

Modes of importing capital into Nigeria?

A

A. Through an authorized dealer
B. Through the debt-equity conversion scheme
C. By bringing in equipment (Transfer of Technology)

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25
Q

What is debt equity conversion programme?

A

A scheme allowing capital to be introduced into the country by purchasing Nigeria’s debt instrument at a discounted value from any international stock exchange.

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26
Q

Who is an Authorized dealer?

A

An authorized dealer is a bank or other body recognized as such by the CBN pursuant to the FEMMPA Act.

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27
Q

benefits of capital importation through an authorized share dealer?

A

-Open a foreign currency domiciliary account with any authorized dealer;
-Open special non-resident naira account;
-Buy shares in Nigerian companies out of naira account;
-Repatriate capital, dividends and incomes at autonomous market rates minus taxes;
-Purchase of foreign currency at official exchange rate; and
Enjoy relaxation of money laundering laws.

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28
Q

Who issues a certificate of importation?

A

An Authorized dealer on the behalf of the Central Bank of Nigeria (CBN).

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29
Q

What are the advantages of CCI?

A
  1. Foreign companies can operate a Domiciliary account
  2. It allows for capital Repatriation
  3. Non resident special naira account can be opened.
  4. Unconditional repatriation of capital and profits out of the country
  5. Exemption from money laundering accusations
  6. Can purchase shares in other nigerian companies
    **SEF 11(1) & (12) CITA
30
Q

What are the consequences for failure to register FDI?

A
  1. It cannot carry on any business in Nigeria
  2. If it carries out any transactions, such will be void
  3. The court will therefore not enforce any of such contract at the instance of any party to the transaction
  4. Criminal sanctions for company and officers
31
Q

What is the procedure for FPI?

A

1.Application for allotment of shares by the Foreign investor or capital market operator whether from the primary market or secondary market.
2.Approval of allotment of shares by the BOD.
3.The BOD will issue a share certificate and enter the shares allotted into the electronic system which is the central securities control system.
4.Apply to the SEC for registration of the shares.
5. Importation of the capital through an authorized dealer

32
Q

Types of business visa for foreigners?

A

1.Short Visa
2. Temporary Residence Visa
3. Permanent Visa

33
Q

How long is Short term visa/Tourism visa valid for?

A

3 months(90 days)
Not for employment.

34
Q

How long is Temporary residence visa valid for?

A

2 years

35
Q

Types of Permits for foreigners?

A
  1. Business Permit
  2. Work Permit/Expatriate quota
  3. Residence Permit
36
Q

What is business permit used for?

A

Business Permits are issued solely to wholly foreign-owned companies or Joint Ventures and allows them to carry on business in Nigeria(after registration)

37
Q

Who issues business permit?

A

Minister of Internal Affairs

38
Q

What are the documents to accompany application for expatriate quota?

A
  1. Immigration form/T1
  2. CAC 1.1 Application for registration
  3. Certificate of Incorporation issued by CAC
  4. Copy of the MEMART
  5. Feasibility Report
  6. Joint venture agreement(where applicable)
  7. Form CAC 7(List of directors)
  8. Evidence of imported machinery
  9. Proposed annual salaries
  10. Evidence of work at hand, its duration and value attached
39
Q

What are the documents to accompany application for business permits?

A
  1. Immigration form/T1
  2. CAC 1.1 Application for registration
  3. Certificate of Incorporation issued by CAC
  4. Copy of the MEMART
  5. Feasibility Report
  6. Joint venture agreement(where applicable)
  7. Tax Clearance Certificate
40
Q

What is Expatriate/Work Permit used for?

A

Expatriate quota in Nigeria is granted upon application to foreign-owned or indigenous companies. The purpose is to enable them to employ or recruit foreign employees to legitimately work and live in Nigeria.

41
Q

What are the documents to accompany application for expatriate quota?

A
  1. NIPC Form 1
  2. Copy of the MEMART of the company.
  3. Copy of the Certificate of incorporation
  4. Feasibility report
  5. Form CAC 1.1(Application for registration)
  6. Tax Clearance Certificate (Original)
    7.License and Relevant Permit
  7. Evidence of capital importation
    9.Job description of the expatriates
  8. Evidence of job at hand
  9. Proposed annual salaries to be paid
  10. Evidence that the required personnel is not available in nigeria
42
Q

Any foreigner that intends to stay in Nigeria for more than 90 days must obtain?

A

Residence Permit

43
Q

What is CERPAC full meaning?

A

COMBINED EXPATRIATE RESIDENCE PERMIT AND ALIENS CARD

44
Q

What is CERPAC used for?

A

It allows foreigners and their dependents to reside in Nigeria after obtaining visa(subject to regularization visa).

45
Q

What is NOTAP used for?

A

Registration of FOREIGN TECHNOLOGIES in Nigeria

46
Q

When must foreign technology be registered under NOTAP?

A

60 days after the conclusion of the contract

47
Q

EFFECT OF NON-REGISTRATION of foreign technologies?

A

They won’t enjoy the benefits/repatriation of fees profits.
The key consequence of non-registration is that the foreign party cannot repatriate (transfer) any profits, fees, or royalties earned under this contract to their account outside Nigeria

Non registration of foreign technologies does not make it void.
STANBIC IBTC V FRCN

48
Q

When can the director of NOTAP refuse registration of Foreign Technologies?

A
  1. Where the technologies sought to be transferred is readily available in Nigeria.
  2. Where the price does not commensurate with the technology.
  3. Where the technology is obsolete or outdated.
  4. Where the transferee has to submit to foreign jurisdiction to resolve any controversy
    S 6(2) NOTAP ACT 2018
49
Q

When is Industrial Inspectorate Act needed?

A

Where a company seeks to undertake a capital expenditure of N500,000 or more.
They can apply for waiver by applying to the director of inspectorate division of the federal ministry of industry, trade and investment to grant some waivers.

50
Q

Benefits of registration with the industrial Inspectorate Division?

A

It can help in obtaining a tax waiver or expenditure allowance from FIRS, potentially reducing their tax liabilitie

51
Q

What is the major difference between Incentives and Assurances?

A

Assurances are promises while Incentives are reliefs.

52
Q

What are the Assurances granted to foreign investors?

A
  1. Participation in any business except those in the negative list-Section 31 NIPC
  2. Buying shares in any Nigerian enterprise in convertible currency.
  3. A foreign investor in Nigerian economy is guaranteed unconditional transferability of his profits through an authorized dealer.
  4. There is an adequate dispute mechanism resolution-S 26 NIPC
  5. No foreign owned business shall be nationalized except for public purpose & fair compensation must be given-S 25
  6. Importation of foreign currency is easy
  7. Any person may open, maintain and operate more than one domiciliary account
53
Q

What are general incentives available to foreigners?

A
  1. All companies with a turnover of less than N25 million a year are exempted from CIT.
  2. Capital allowances of 95% in the first year of purchase of plant and machinery to replace old ones.
  3. Exemption of small companies (that has less than 25 million turnover) from CITA and TETFUND
  4. Deductibility of donations made to the government during a crisis or pandemic from CIT
  5. Double Taxation Treaties Relief(if it can be shown that the company already paid tax to a commonwealth country)
  6. Export Free Zone
  7. One percent Bonus for filing return on time.
  8. Rural investment allowance
54
Q

Who grants Pioneer status?

A

NIPC!

55
Q

Who can qualify for Pioneer Status?

A

A joint venture or wholly foreign-owned company and an indigenous company with an asset of over N100,000,000 (One Hundred Million Naira).

56
Q

What are the reliefs granted under Pioneer status?

A
  1. Exemption from CIT for 3 years with a possible extension for another two years
  2. Tax free dividends during the tax holiday
  3. Losses in the relief period may be set off against profits after the end of the period
  4. Capital allowance on capital expenditure on qualifying assets during the relief period
57
Q

What are the incentives granted under Free trade/ export processing zones?

A
  1. Exemption from payment of federal, state and local govt. Taxes
  2. All goods imported into the zone are duty free
  3. There 100 percent assurance of repatriation of capital, profits and dividends
  4. No requirement of import or export licence
  5. 100 percent foreign ownersip of companies allowed
  6. Importation of goods free from import duties
  7. Rent free land during construction of factory space;
58
Q

What are Export incentives granted?

A
  1. Duty Draw Back
  2. Plant, machinery, equipment and accessories imported exclusively for mining operations in Nigeria are exempted from custom duties
  3. Duty drawback facilities
59
Q

What is Duty Draw Back?

A

It allows businesses to receive refunds on duties paid on raw materials used in the production of exported products.
Under this scheme, businesses can get an automatic refund of 60% of the duties upon initial screening by a duty drawback committee.
S 23 CITA

60
Q

What is the procedure for Application for Pioneer’s status?

A

1.The company must have a non current tangible asset of over N100,000,000(Hundred Million Naira).
2. An applicant must make a written application for pioneer status to be submitted to the NIPC in the first year of production together with the following documents:
i. A completed NIPC Form 1 and NIPC certificate
ii. Copy of the memorandum of the pioneer
iii. Certificate of Incorporation
iv. Tax Certificate(original copy)
v. Feasibility report or Business plan
vi. License or permit granted by the industry to carry out the business
vii. Form CAC 7 Particulars of first directors
viii. Statement of Share Capital

61
Q

What are the incentives granted to Foreign banks loaning money to Nigerian businesses?

A

There is tax waivers/incentives to encourage foreign banks to import capital can be directed into Nigeria as opposed to other countries.
This is because the bank is the one making profit.

62
Q

Assurances that NIPC grants foreign investors?

A

S 24 & 26
1. Free transferability of capital and returns.

63
Q

Relevant laws for Oil industry?

A
  1. Nigerian Upstream Petroleum Regulatory Commission (NUPRC)
64
Q

Regulatory Bodies & Acts for the Oil industry?

A

-The Nigerian Oil and Gas Industry Content Act
-Nigerian Upstream Petroleum Regulatory Commission (NUPRC)
- Federal Ministry of Petroleum Resources
-Nigerian Upstream Petroleum Regulatory Commission (NUPRC)

65
Q

Conditions for FDI?

A

Importation of shares into the country in any convertible currency through an authorized share dealer and subsequently obtain a certificate of importation.

66
Q

Procedure for FDI?

A

-Obtain a Business visa from the embassy
-Secure an address in Nigeria for service of documents needed for pre-incorporation
1. Prepare pre incorporation contracts i.e joint venture agreement(where applicable)
2. Registration of the proposed company with CAC
3. Registration of the company with Securities and Exchange commission(because of the importation of capital)
4. Registration with the Nigerian investment promotion commission
5. Importation of share capital in any convertible currency through an authorized share dealer & obtain certificate of importation
6. Obtain relevant permits and license i.e business permit, work permit, expatriate quota
7. Register with NOTAP if you are transferring foreign technologies.

67
Q

Reliefs to companies in an economically disadvantaged area?

A

-No payment of taxes for at least 7 years
-100% repatriation of capital
-Tax relief and incentives.

68
Q

documents needed to register a company with NIPC?

A
  1. Duly completed NIPC form 1
  2. Certificate of incorporation
  3. Memorandum and articles of association
  4. Evidence of payment of the non refundable application fee of N15,000
  5. Form CAC 1.1
69
Q

Can a foreign do business in Nigeria?

A

Yes, they can. Subject to certain restrictions. A foreigner is free to do Business alone or in partnership with any other person.
Section 20(4) of CAMA
Section 17 of NIPC ACT

70
Q

Upon exemption, what happens to a foreign company?

A

• Upon exemption, an exempted company have the status of an UNREGISTERED COMPANY. Section 82 CAMA
• The effect is that the company is exempted from payment of all company taxes.

71
Q

Duty of a company to keep accounting records?

A

-Disclose with reasonable accuracy, at any time, the financial position of the company;
and
-Enable the directors to ensure that financial statements prepared comply with the requirements of the Act.

72
Q

effect of non registration of a foreign company?

A

the foreign company shall not carry on business in Nigeria or exercise any of the powers of a registered company and shall not have a place of business or an address for service of documents or processes in Nigeria for any purpose other than the receipt of notices and other documents

If a foreign company does not register any transaction entered into is void and non enforceable.

SEC 78(2)

NLS CORPORATE CAMA 2020 (12 decks)

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