It is obvious we may not exhaust the topic within allocated time, my
full papers will be made available to all for further study. My presentation
will cover an hour while another 30 minutes will be for questions and answers.
Now my presentation begins!
WHAT IS BUSINESS?
It is an engagement that begets financial benefits to its
participants. Like buying and selling (Trade), sports, music, performances,
online exchanges and other professional practices, etc.
Not all businesses are legal and lawful. Some businesses have been
banned, restricted or prohibited by government because of their harmful nature
to mankind, deceit, abuse and morals.
Some of the banned and prohibited businesses in Nigeria are Prostitution,
Human trafficking, Slavery, trade on cocaine and other harmful substances. Businesses
that are banned and prohibited cannot be allowed on any condition but
Restricted/Controlled ones are allowed on certain conditions.
Some Restricted/Controlled businesses are; Arms, Prescribed Drugs,
Army Uniforms, medical practice, legal practice, banking, insurance, advisement
agencies, private security guards, money lending, engineering consultancy and
Bureau De Change.
If a business is not Prohibited or Restricted then it should be
legal and lawful. The list is endless. I advise to always seek advice of our
lawyer when in doubt of legality of a business.
WHO CAN DO BUSINESS IN
NIGERIA?
Any person, a Nigerian or a foreigner that is above 18 years and of
sound mind can do business in Nigeria. Although, such foreigner must obtain
necessary permits. Sex, Colour, Tribe, Religion, Social Status and political affiliation
does not affect or determine who does business in Nigeria.
You don’t need to be from Enugu State before you can mine coal, or
from Rivers State before you can invest in oil business.
In explaining who can do business in Nigeria, I used the word
"Person". Person here represents human beings (individuals),
registered companies, business names, government corporations, foreign registered
companies, foreign unregistered companies and partnerships.
Due to need to pull fund, separate business from owners, quote
business on stock exchange, beget integrity, sustain business and establish
reputable business institution, most often individuals and businesses carry out
their businesses in different forms, capsules and legal creations known as
COMPANIES, BUSINESS NAMES and PARTNERSHIPS.
TYPES OF BUSINESS ENTITIES ALLOWABLE IN NIGERIA
1. COMPANIES (registered formation of not less than 2 persons as shareholders
and directors. All Directors must be adults but a minor can be a shareholder
where there are two other shareholders. It can sue and be sued. It is seen in
law as different from its owners. Its liability is different from that of its
owners.)
2. BUSINESS NAMES (Like its name it’s a name for trading and does not create a legal personality.
It never ends with words like "Limited, PLC" rather ends with words
like "Enterprises, Sons, Ventures or any other thing". Liability of a
business name is equally that of its owners.
3. PARTNERSHIPS (It may be an understanding of individuals, companies, business
names to make a joint venture. The liability of a partnership is same as the liability
of each partner. A partnership MUST be written.)
CREATION OF BUSINESS
ENTITIES IN NIGERIA
The sub topic is well discussed in the link above. Please note that
sole agency/ government body saddled with the responsibility of registration
and approval of business entities in Nigeria is Corporate Affairs Commission. Its Head Office is in Abuja but it
has offices in almost all states. Its website is below; http://new.cac.gov.ng/home/services/
Please note that no state goverment or local government body or
agency has powers to register a business entity (COMPANY and BUSINESS NAME) in
Nigeria. I am aware that some state agencies parade themselves as organs of government
that can create and register business entities; this is wrong.
Now at this point, you know your business is lawful and legal. It is
register able and you have gone on to register it in Corporate Affairs
Commisison through your lawyer or by yourself. Business is registered, so
what's next?
BUSINESS REGULATIONS AND
COMPLIANCE IN NIGERIA
There are several other government and professional agencies
empowered by law to regulate businesses relating to them. Businesses are
expected to comply with the Codes, Regulations and demands of such agencies for
such businesses to remain in business. We shall comment on some of them.
Government and Professional Agencies that regulate businesses in
Nigeria include; Federal Reporting Council of Nigeria (FRCN), National Office
for Technology Acquisition and Promotion (NOTAP), Standard Organization of
Nigeria (SON), Nigerian Electricity Regulatory Commission (NERC), Broadcasting Organizations
of Nigeria (BON), Transmission Company of Nigeria, Nigerian Communication Commission,
NEITI NAFDAC, PENCOM, COREN and CBN etc
FIRS (comes for tax), APCORN (comes for advertisements palaced
outside/public media,)
The above agencies affect and relate with businesses in Nigeria. Due
to time constraints I will not explain them. Now that you are done with government
and professional agencies affecting and regulating your business, it is time to
start the business itself.
In doing your business, there necessary agreements to have and
services to obtain too.
NECESSARY BUSINESS
CONTRACTS FOR BUSINESSES IN NIGERIA. They are,
ü Shareholders Agreement,
ü Share sale Agreement,
ü Technical Know-How Agreement,
ü Profit Sharing Agreement,
ü Tenancy Agreement,
ü Land Sale Agreement,
ü Employment Agreement,
ü Independent Contractor Agreement,
ü Power Purchase Agreement,
ü Ancillary Services Agreement,
ü Anti-Corruption Agreement,
ü Coprorate Governance Code and Legal Services Agreement.
The list is endless but for time I will not mention more or comment
on the above.
Now Your business in running and basking, there may be need for
expansion or quote on stock exchange or for more funds. Below is a way out!
BUSINESS FINANCING
There are few business support loans from Nigerian government for
some sectors of the economy. You may key in if your business falls therein.
They are 5Billion Naira for Small Scale Miners, Bank of Industry Loan, YouWin
support/loan, Electricy Sector CBN Satblibization Fund. Also, commercial banks
do lend to businesses as well as other industry specific banks. There are some
private sector loans run by some non government agencies too.
Lastly, let us assume your business has done well and you need to
sale and move on or even acquire another business or you want to close your
business, what can you do?
BUSINESS
SALE/RESTRUCTURE/CLOSURE
There may be need to sell or restructure and that can be done
through Share sale Agreement and change of directors depending on nature of
business. It may also be by reduction in shares strength/di-investment, Mergers
and Acquisition etc.
Where a business entity is to be closed/terminated in Nigeria, it
can be through any of these Liquidation (this applies to companies) or
Dissolution (this applies to business names). The procedures need the services
of a lawyer.
My experience has shown that getting and retaining the services of a
lawyer by a business helps the business stay out of trouble and comply adequately
with regulations. I like to see startups grow and dreams come true.
Questions and Answer
Question: I would like you to throw more light on restricted businesses
Answer: Restricted Businesses are businesses that one cannot start or
operate without certain permission and certification from government or
relevant professional bodies. It is to avoid quackery, abuse, deceit and fraud.
Like you cannot be allowed to run a hospital if you are not a medical
personnel, a law firm if you are not a lawyer certified by NBA, bank without
CBN.
Question: As a start-up with limited funds, at what point is one required to
register his business
Answer: Startups with limited funds are expected to register their
business from day one to protect their brands. It is in their best interest.
Most law firms have special packages for startup to register them with low
prices. We do that and it is our way to support startups.
Question: You also talked about federal government having the sole right to
register businesses. What of cooperatives?
Answer: A cooperative is not a business entity in that sense. It is not a
company or business name. It is not a registered in Corporate Affairs
Commission. Co-operative society is a society of persons which has as its
objects the promotion of the economic interests of its members in accordance
with co-operative principles or a society established for the purpose of
facilitating the operations of other
co-operative societies, see Section 5 of the Co-operative Societies Act . It is
an association, society and organisation of individuals set up for the primary
aim of engaging in ventures that enhance the economic interests, profits and
advancement of its members. Co-Operative Societies in Nigeria are established
and regulated as provided in Co-Operative Societies Act .
Question: What are the regulations guiding online businesses in Nigeria
Answer: Online businesses are regulated by already existing laws regulating
trade and businesses in Nigeria; like Sale of Goods Act. If you sell a fake phone
through the internet, it is still fraud and misrepresentation which are already
in our law books. Also note that we also have Cybercrimes Act, 2015 to guide activities
online.
Question: Please Sir, I want to have an idea of the amount it can cost one to
register a business.
Answer: Business registration fees
vary among lawyers and law firms.
Question: Sir, is it unlawful to produce a food product without a NAFDAC
Number?
Answer: NAFDAC has responsibility to regulate food and drug administration
in Nigeria. You need their consent on such products else it will be unlawful.
