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NLS - Corporate Law Practice > FOREIGN PARTICIPATION > Flashcards

FOREIGN PARTICIPATION Flashcards

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1
Q

What laws govern foreign participation in Nigeria?

A
  1. Companies and Allied Matters Act
  2. Nigerian Investment Promotion Commission Act
  3. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act
  4. national Office for Technology Acquisition and Promotion Act
  5. Investments and Securities Act
  6. Immigration Act
  7. Industrial Inspectorate Act
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2
Q

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

A
  1. Exempt Foreign Company
  2. Foreign Direct Investment FDI
  3. Foreign Portfolio Investment FPI
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3
Q

What is Foreign Direct Investment?

A

Investment made by a foreign investor in Nigeria through the establishment of a Nigerian Company

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4
Q

What is Foreign Portfolio Investment?

A

Foreign investors purchase shares in existing Nigerian companies through the Nigerian Capital Market

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5
Q

How many categories of foreign companies are exempt from registration while carrying on business in Nigeria?

What section of CAMA

A

Section 56 provides 4 categories of exempt foreign companies

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6
Q

What are the four categories of foreign companies under section 56 CAMA?

A
  1. Foreign companies invited to Nigeria by FEDERAL GOVERNMENT to execute SPECIFIED INDIVIDUAL PROJECT
  2. Foreign companies in Nigeria for the execution of a SPECIFIED INDIVIDUAL LOAN PROJECT on behalf go a DONOR COUNTRY/INTERNATIONAL ORGANISATION
  3. Foreign GOVERNMENT OWNED COMPANY engaged solely in EXPORT PROMOTION
  4. ENGINEERING CONSULTANTS & TECH EXPERTS engaged on an INDIVIDUAL SPECIALIST PROJECT under contract with ANY GOVERNMENT IN THE FEDERATION provided it as approved by the Federal Government
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7
Q

What is the status of an exempt company?

A

It has the status of an unregistered company

Section 58 CAMA

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8
Q

What documents do you attach to an application for exemption?

A
  1. Name and place of business of foreign company outside Nigeria
  2. Name and place of (proposed) business of the foreign company in Nigeria
  3. Name and address of each director, partner or principal officer in the foreign company
  4. Certified copy of the charter, statues, memart or other instrument constituting or defining the constitution of the company
  5. Names and addresses of one or more persons resident in Nigeria authorised to accept on behalf of the foreign company service of process and any notices required to be served on the company
  6. The business or proposed business in Nigeria and its duration
  7. Particulars of any project previously carried out by the company as an exempted foreign company
  8. Such other particulars as may be required by the Secretary to the Federal Government
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9
Q

Can an exempted foreign company engage in any other business beyond that for which the exemption order was granted?

A

No, an exemption order is non-transferable. It cannot be used for any other purpose apart from that for which it was granted

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10
Q

Can a foreigner form a Nigerian company?

A

Section 20(4) CAMA permits aliens to join in forming a Nigerian company

HOWEVER

Section 18 NIPC Act prohibits any participation by foreign or Nigerian investors in the sectors designated as the negative list

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11
Q

Where can the “negative list” be found?

A

Section 31 NIPC Act

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12
Q

What sectors are contained in the negative list?

A
  1. Production of arms and ammunition
  2. Production and dealing in narcotic drugs and psychotropic substances
  3. Production of military and para-military wears
  4. Such other items as the Federal executive Council may determine from time to time
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13
Q

What is the procedure for establishing a nigerian company with foreign participation?

A
  1. Prepare and execute JV Agreement and other Pre-Incorporation contracts
  2. Incorporate the Company with the CAC
  3. Import Capital into Nigeria through an authorised dealer and obtain a certificate of capital importation (CCI)
    4 .Register the company with the NIPC
  4. Register interest of foreigners in the company’s shares with SEC
  5. Obtain regulatory permits
  6. Apply to obtain relevant incentives and reliefs available for foreign investors
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14
Q

What is the consequence of a foreign investor failing to incorporate a separate Nigerian Company before commencing business sin Nigeria?

A

If a foreign company fails to first register a Nigerian Company before commencing business in Nigeria, such company and its officers/agents shall be guilty of an offence and shall be liable to a fine

Section 55 CAMA

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15
Q

Where must securities held by a foreigner in a Nigerian company be registered?

A

With SEC using Form SEC 6F

Rule 415 SEC Rues 2013

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16
Q

How can foreign capital be imported?

A
  1. Importation of foreign currency
  2. Importation of equipment/machinery
  3. Importation of cash through the debt-equity conversion programme
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17
Q

Which law regulates the importation of foreign capital into Nigeria?

A

The Foreign Exchange Monitoring and Miscellaneous Provisions Act (Forex Act), as well as Manuals issued by the CBN from time to time

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18
Q

How must foreign capital be imported to Nigeria according to the Forex Act?

A

Through an Authorised Dealer

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19
Q

Who is an Authorised Dealer?

A

A bank/financial institution licensed by the CBN to render this service

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20
Q

Within what time frame must an Authorised Dealer issue a Certificate of Capital Importation after importing foreign capital?

A

Within 24 hours

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21
Q

Within what time frame must an Authorised Dealer sell foreign currency obtained from the foreign investor in the Foreign Exchange Market and what must they also do ?

A

Within 48 hours they must sell the foreign currency and make returns to Central Bank Nigeria

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22
Q

What is the Naira equivalent obtained from the sale of foreign currency by the Authorised Dealer used for?

A

It is used to open an account for the foreign investor with the Authorised Dealer

23
Q

What are the advantages of using the certificate of capital importation?

A
  1. It entitles the foreign investor to open a foreign currency domiciliary account which is special to non-residents
  2. It guarantees unconditional repatriation of capital and profit
  3. It allows for procurement of foreign currency at CBN rate
  4. The investment is guaranteed from expropriation and in case the government compulsorily acquires the investment, adequate compensation will be paid
  5. Allows for tax relier for interest on foreign loan
  6. It allows for unconditional transferability of funds through an authorised dealer in a freely convertible currency
24
Q

What law provides the mechanism for settling investment disputes between an investor and any government of the Federation?

A

Section 26 of the NIPC Act

25
Q

What is the mechanism for settling disputes as provided under Section 26 NIPC Act

A
  1. All efforts shall be made to reach an AMICABLE SETTLEMENT of the dispute through MUTUAL DISCUSSION
  2. If an amicable settlement cannot be reached, the dispute may be submitted for ARBITRATION by the foreign investor within the framework of any bi-lateral or multilateral AGREEMENT to which both countries are parties
  3. If there is no such existing agreement, parties may SETTLE the dispute in accordance with any (INTER)NATIONAL MACHINERY for settlement of investment dispute agreed upon
  4. Where parties cannot agree on the method by which the dispute should be resolved, INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTE (ICSID) RULES shall apply
26
Q

What is the NIPC?

A

The Nigerian Investment Promotion Commission is the government agency which coordinates and monitors all investment promotion activities in Nigeria

27
Q

What is One Stop Investment Centre (OSIC)?

A

A centre established by NIPC to eliminate the difficulty of dealing with multiple governmental agencies and improve on service delivery to interested investors.

28
Q

Who is required to register with the NIPC?

A

All companies having foreign participation

29
Q

What are the functions of NIPC?

A
  1. Maintain liaison between investors and the government
  2. Provide support services for investors
  3. Promote investments in Nigeria
  4. Implement measure to enhance the investment climate in Nigeria
  5. Provide information on incentives available to investors
  6. Maintain records of all foreign investments in Nigeria
30
Q

What must a foreigner intending to come to Nigeria for business first obtain?

A

A visa from the Nigerian Foreign Mission in his country of residence

31
Q

What must a foreigner intending to come to Nigeria to form or take over a company or practice a profession in Nigeria obtain?

A

A business permit

32
Q

What must a company intending to employ expatriates obtain?

A

Work permits for such employees

33
Q

What is an expatriate quota?

A

It is a quote granted to specify the numbers of non-Nigerian nationals a company may employ and the positions in the organisation they may occupy

34
Q

What are the different kinds of expatriate quotas?

A
  1. Permanent until reviewed

2. Temporary Quota

35
Q

What must an expat who intends to be in Nigeria for more than 3 months obtain?

A

A Residence Permit

36
Q

What is CERPAC?

A

The Combined Expatriate Residence Permit and Aliens Card

37
Q

Who must obtain CERPAC?

A

An expat staying in Nigeria for more than 56 days

38
Q

How long can an ECOWAS state citizen enter and stay in Nigeria for? And with what documents?

A

90 days

With valid travel documents

39
Q

What is the role of the Industrial Inspectorate Department?

A

It has the responsibility of inspecting and valuing capital expenditure incurred by businesses in Nigeria

40
Q

When must a company inform the Industrial Inspectorate Department of their Capital expenditure?

A

When it is N500,000 or more

41
Q

What is the procedure after informing the Industrial Inspectorate Department of your capital expenditure?

A

The Industrial Inspectorate Department will conduct an inspection to verify the value of the capital expenditure and issue a Certificate of Acceptance of Fixed Assets (CAFA)

42
Q

What can a Certificate of Acceptance of Fixed Assets (CAFA) be used for?

A

It can be used for claiming capital allowance (a tax relief under the Companies Incomes Tax Act) with the Federal Inland Revenue Service

43
Q

When must a foreigner register with NOTAP?

A

When he executes an agreement to transfer foreign technology to an agent/partner in Nigeria

44
Q

What is the time frame for registration with NOTAP?

A

Registration must be effected within 60 days of the execution or conclusion of the agreement?

Section 5(2) NOTAP Act

45
Q

What are the grounds on which NOTAP may refuse registration?

A
  1. The technology is readily available in Nigeria
  2. The price of the technology is not commensurate with market prices
  3. There is a term in the contract permitting the supplier to regulate or intervene directly in its execution which is unnecessary
  4. Where limitations are imposed on technological research and development by the transferee
46
Q

What documents would you annex to an application for registration with NOTAP?

A
  1. MEMART
  2. 2 x copies of the agreement
  3. 2 x copies of the questionnaire duly completed?
  4. A copy of the feasibility studies
  5. Annual audited account for 3 years
  6. Certificate of Incorporation
  7. Tax receipts for 3 years
  8. Profile of Transferor/Technical Partner
47
Q

Mention 5 Incentives/Reliefs afforded to companies

A
  1. Pioneer Status
  2. Tax Relief of Foreign Loans (Under CITA)
  3. Double taxation treaties
  4. Investment Tax Credit
  5. Duty drawback scheme
48
Q

What is pioneer status?

A

It is a tax exemption issued by NIPC to eligible companies for a period of 3 years which may be extended by a period of 1 or 2 years

A 7 year tax holiday is also reserved for pioneer industries located in economically disadvantaged local government areas. (Capital expenditure of at last N10,000 is needed and application must be within 1 year of commencing commercial production)

49
Q

What are the elements of a tax relief of foreign loans under CITA?

A
  1. The loan must not be less than N150,000
  2. The loan must be granted by a foreign company to any person carrying on trade/business in Nigeria
  3. If the loan is to be repaid after 10 years, then the interest is exempted from tax
  4. If the loan is to be repaid between 5-10 years then the tax on the interest accruing should be half of the chargeable tax
50
Q

What are double taxation treaties?

A

Agreements between Nigeria and another country to avoid being taxed twice on the profits they make

51
Q

What is an investment tax credit?

A

It is a tax credit available to companies that are engaged in Research and Development for commercial purposes

52
Q

What is a duty drawback scheme?

A

This scheme allows for the repayment of import duties which were paid during the importation of raw materials for production.

Such application must be made within two years of the date of exportation

53
Q

What is a tariff based incentive?

A

Where the company pays reduced or no import duty on certain equipment and machinery

NLS - Corporate Law Practice (13 decks)

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