On this Page
1. Registration with ISIPA
2. Company Taxation
3. Labour
4. Production Factor
5. Land
6. Legal Framework
Imo State has a well-developed legal system that is based on English Common Law, it's constitution is patterned after the character of the United States of America. Business transactions in Imo are governed by the Common Law.
Law Courts in Nigeria:
• The Supreme Court is the highest court in Nigeria with original and appellate jurisdiction in certain constitutional, civil and criminal matters prescribed in the Constitution.
• The Court of Appeal hears appeals from the National Industrial Court, Federal and State High Courts and Customary Courts of Appeal.
• The Federal High Court has jurisdiction in matters connected with the revenue, admiralty, banking, foreign exchange and other currency and monetary or fiscal matters.
• The State High Court has jurisdiction to hear and determine both civil and criminal proceedings.
• The National Industrial Court has jurisdiction in labour and industrial relations matters.
• Customary Courts of Appeal exercise jurisdiction in civil proceedings on customary law
• Magistrates’ Courts, District Courts, Area Courts and Customary Courts all have original jurisdiction in civil and criminal matters.
Imo state in the bid to boost foreign investment employs laws and regulatory bodies set up by the state and federal government. Some of the important regulatory bodies are:
1. Companies and Allied Matters Act Cap C20, LFN, 2004. (CAMA) sets out the role of the Corporate Affairs Commission (CAC). It regulates the incorporation of companies, business names names, incorporated trustees and other incidental matters. Except where a foreign entity is exempt from registration and granted exemption status by the CAC, registration is a requirement for doing business in Nigeria. A foreign company may be granted exemption status from company registration by the CAC if:
• it is invited into Nigeria by or with the approval of the
Federal or State Government for a specified project or
• where it is in Nigeria for an individual project on behalf of a donor country or international organisation or
• it is engaged solely in export promotion activities or the
foreign company contains technical and engineering consultants executing a specific project.
2. Imo State Investment Promotion Agency (ISIPA) established by law in 2010 to facilitate, coordinate, grow and monitor all investments in the state economy with special focus on making the economy private sector driven. ISIPA has set up its “One Stop Centre” making it possible for investors to access all relevant information, documents and statutory approvals that are needed to set up an investment project in Imo. A foreign investor is required to register with ISIPA prior to operating in the State.
The ISIPA Act also sets out a “negative list” that prohibits private investment (domestic and foreign) in production of arms, ammunition, paramilitary wares and accoutrements as well as the production of and dealing in narcotic drugs and pyschotropic substances.
3. The Securities and Exchange Commission (SEC) established by ISA as the key regulatory authority for capital markets in Nigeria. It places the duty on directors to ensure the integrity of a company's financial controls and reporting.
The most common corporate form in Nigeria is the limited liability company, registered by the CAC and regulated by the provisions of the CAMA. Once a limited liability company is incorporated, it will have a legal personality separate and distinct from its shareholders.
A key feature of the limited liability company is that its assets and liabilities are separate from those of its shareholders (whose interest is limited to the shares held in the company and the rights such as dividends flowing therefrom). The liability of a shareholder in relation to a limited liability company is limited to the cost of the shares subscribed to by such shareholder.
A limited liability company may be set up at the CAC within five business days.
The procedure for incorporating a limited liability company is as follows:
1. Securing a name – a person seeking to incorporate a
company at the CAC will, as a first step, need to apply for
and reserve a name for the company. There are restrictions
on the type of name that may be reserved (the CAC will not
approve any name that is similar to the name of an existing
company or contains certain prohibited words). An approved
name is reserved for the applicant’s use for a period of 60
days (this is extendable) within which the incorporation
must be completed.
2. The subscribers are required to prepare the necessary
documentations such as Memorandum and Articles of
Association and complete all other relevant forms and pay
the appropriate fees for a company to be registered.
3. Fees – the registration cost comprises stamp duty
registration fee and other miscellaneous costs for example,
the cost of incorporating a company with a share capital of
one million Naira (NGN) is approximately NGN20,000.
Under Nigerian law, a company may be acquired by the purchase of the shares of existing shareholders of a target company, subject to the provisions of the CAMA, the terms of the Articles of Association of the company and any agreement between the existing shareholders. By virtue of the provisions of the CAMA, the acquisition by a third party of shares in a private company is subject to the approval of the board of directors of the company.
Furthermore, where the Articles of Association or any agreement between shareholders provides non-transferring shareholders a right of pre-emption in relation to the sale of any shares in the company, the acquirer will need to procure a waiver from such existing shareholders of their rights of pre-emption before the shares may be acquired. Upon registration of the transfer, the company issues a new share certificate to the transferee and the transfer becomes effective. Following the conclusion of the share transfer, it may be registered within 14 days at the CAC, to serve as notice to the public of the new ownership of the company.
The ISIPA Act provides for Investment guarantees, transfer of capital, profits and dividends. Where funds have been imported for the purpose of investment in a lawful enterprise, a foreign investor is guaranteed unconditional transferability or repatriation of their profits, dividends, payments in respect of loan servicing where a foreign loan has been obtained, proceeds (net of all taxes), and other obligations in the event of a sale or liquidation of the enterprise or any interest attributable to the investment through an authorised dealer, in freely convertible currency.
In addition, the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995 (Forex Act) provides that no foreign currency imported into Nigeria will be seized, forfeited or expropriated by the government save where such transactions relate to goods or services which are prohibited under Nigerian Law.
Investments made in foreign currency must be imported through an authorised dealer and converted into Naira at the official exchange rate. The authorised dealer subsequently issues a Certificate of Capital Importation to the investor as evidence of the capital importation. This is to guarantee shareholders and investors the unconditional transfer or repatriation of their profits, dividends, etc. which are attributable to their investment.
The ISIPA Act guarantees ownership and protects against the threat of nationalisation or compulsory acquisition of a foreign investor’s interests by the government. Should a need arise for compulsory acquisition, the law makes provision for payment of fair and adequate compensation and a right of access to the courts for the determination of the investor’s interest or right and the amount of compensation to which he is entitled.
The transfer of technology in Nigeria is governed by the National Office for Technology Acquisition and Promotion Act 2004, which established the National Office for Technology Acquisition and Promotion "NOTAP). The principal function of NOTAP is to encourage a more efficient process for the identification and selection of foreign technology.
The state government has put in place several tax incentives to encourage and attract foreign investors. Tax relief is available to companies operating in pioneer industries or producing pioneer products. Such companies can enjoy an income tax holiday of up to seven years. In addition to income tax holidays, pioneer companies enjoy other benefits. Companies operating in Tax Free Zones and Export Processing Zones are exempt from tax obligations in Nigeria for operations carried out in the zones provided that all the companies’ activities are performed exclusively within the zone. Further, tax relief/exemptions are available in respect of interest on loans obtained to do business or invest in Nigeria. Other tax incentives relating to VAT, petroleum tax, and company income tax are covered in more detail in later Chapter.
The Immigration Act 2015 was enacted to make easier to do business in Nigeria and to align Nigerian laws with international standards with respect to employment, administration, deportation etc. In the main there are 4 types of visas applicable for non-residents visiting for work purposes.
The first is the Business Visa which is issued to allow an investor to attend meetings in the country.
3 months. The third is Expatriate Quota, this allows companies to employ expatriates and the company must apply for and be granted the quota of expatriates that may be employed by that organisation. Employees will be considered as residents for tax purposes. Finally, there is the Combined Expatriate Residence Permit and Aliens Card (CERPAC) which permits non-residents to reside and work in Nigeria. This permit is valid for 3 years and it is renewable.
Following an Executive Order in 2017, the Government has now adopted a policy of “visa on arrival”. This is a class of short visit visa issued at the port of entry. The facility is available to frequently travelled High Net Worth Investors and Intending Visitors who may not be able to obtain visa at the Nigerian Missions/Embassies in their countries of residence due to the absence of a Nigerin those countries or exigencies of urgent business travels. There is further information on the Nigerian Immigration Service website.
For More Information on Legal Framework visit Imo Legal Framework