Minimum paid-up capital for companies with foreign participation in Nigeria

Section 3.0 of the 2022 Revised Handbook On Expatriate Quota Administration Business Permit published in November 2022 states:

“[A] business permit is granted to only wholly foreign-owned or joint venture companies with foreign participation, with a minimum paid-up capital of NGN 100 million to enable them to commence business in the Federal Republic of Nigeria. The value of equipment or machinery imported into the country for the purpose of conducting business could also form a portion of the paid-up capital to be invested in the country.”

This means that Nigerian companies with at least one foreign shareholder must have paid-up capital of at least NGN 100 million. Nigerian subsidiaries of foreign companies and Nigerian companies with foreign shareholders are expected to increase paid-up share capital to at least NGN 100 million. 

On 05 December 2023, the Corporate Affairs Commission (CAC) announced via a public notice (refer to image A) that it had started implementing Section 3.0 of the 2022 Revised Handbook On Expatriate Quota Administration.

This means that all new companies with expatriate/foreign participation must have NGN 100 million paid-up capital as a minimum investment to apply for a business permit. It also means that all existing companies with expatriate/foreign participations must increase their share capital from NGN 10 million to NGN 100 million by 04 June 2024. The CAC public notice also stated that the penalty for failure to increase share capital was the compulsory winding up of these existing companies.

On 08 December, 2023, the CAC reversed itself and issued this statement (see image B) on its social media accounts, and this statement (see image C) in major newspapers. 

The CAC clarified on 08 December 2023 that it meant to say “issued capital” and not “paid-up capital”. The CAC added that they would issue an amended notice soon. To date, no amended notice has been published. 

Conclusion

Why did the CAC attempt to enforce Section 3.0 of the 2022 Revised Handbook On Expatriate Quota Administration? Likely to generate revenue for the CAC. 

The CAC does not have the power to enforce that section of the revised handbook without an amendment to the 2020 Companies and Allied Matters Act. Such an amendment would be detrimental to encouraging companies with foreign participation from registering in Nigeria. 

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Helen E. Ijewere is currently the Regional Chair MEA of the GGI Global Mobility Solutions Practice Group. She is a Director at Nolands Nigeria. Her areas of specialisation are Global Mobility Solutions, Tax, Corporate Governance, Risk, Ethics, Compliance and Fraud. She joined the firm in January 2016 from private practice. She has a JD from the University of North Carolina School of Law, Chapel Hill, NC, USA, and a BA from Trinity College, Washington, DC, USA.