The Corporate Affairs Commission has implemented the ₦100,000,000 minimum share capital requirement for companies with foreign participation.
The Federal Ministry of Interior’s Revised Handbook on Expatriate Quota Administration, 2022 has caused a lot of furor among lawyers and business entities with foreign participation in Nigeria. All these came about as a result of the increased minimum share capital for companies with foreign participation which was increased from ₦10,000,000 (Ten Million Naira) to ₦100,000,000 (One Hundred Million Naira) which the Corporate Affairs Commission had intended to implement as from the 5th of December, 2023. At the time, they did not implement same due to engagement with stakeholders who expressed concerns over same.
Without any formal notification to the general public, the Corporate Affairs Commission has now implemented and is enforcing the directive for companies being incorporated with the Commission which has foreign participation to have an issued share capital of ₦100,000,000 (One Hundred Million Naira). Accredited agents have encountered this issue from July, 2024, at the time of our updating this article. This simply means that companies with foreign participation being incorporated with the Corporate Affairs Commission are being queried and the agents undertaking the registrations being required to increase the share capital to ₦100,000,000 if the company they are registering has foreign participation.
Are companies with foreign participation already registered required to increase their share capital to ₦100,000,000?
Given that the Corporate Affairs Commission has started implementing the mandatory minimum issued share capital for companies with foreign participation in Nigeria, we advise companies owned by foreign entities and individuals who had share capital of ₦10,000,000 to increase their share capital to the updated ₦100,000,000 in order to prevent regulatory sanctions. The Corporate Affairs Commission is yet to impose specific sanctions for non-compliance, but since the Commission is always bent on imposing sanctions for non-compliance with regulatory requirements, we are sure that they will impose a sanction soon enough. The Commission—generally not one to embark on public sensitization of its policies—will probably impose sanctions silently, then enforce it whenever an affected company tries to make a post-incorporation filing or application.
What the minimum issued share capital will be for companies with Foreign participation seeking to be registered with the CAC?
That minimum will be ₦100,000,000. Any other sum below this prescribed minimum threshold will lead to an application for incorporation receiving a query. This will now prolong the registration process for your corporation.
Will this minimum share capital requirement apply for a company with local shareholders?
As long as a company being registered in Nigeria has foreign participation, with either a foreign individual or foreign registered company being a shareholder in that company, the company must set up the minimum share capital of the sum of ₦100,000,000 for subscription at the time of its incorporation. Failure to do this will lead to the application getting queried and a refusal of the CAC to register such company until the promoters of the company complies with the requirement.
What is the implication of this minimum share capital requirement at point of incorporation of a company with foreign participation?
The implication is in the financial cost of incorporating the company. The agent registering such a company for you will have to pay an increased fee in stamp duties payment to the Federal Inland Revenue Service (assessed at 0.75% of the issued share capital) and increased filing fee to be paid to the Corporate Affairs Commission. These are all calculated in relation to the prescribed share capital of a company, and, the higher the share capital, the higher the stamp duty payment to be made to the FIRS and the incorporation fee to be paid to the Corporate Affairs Commission.
About Kabbiz Global Nominees Limited
Kabbiz Global Nominees Limited is Nigeria’s foremost provider of business registration, corporate governance and regulatory compliance services. We specialize in registering limited liability companies for foreign corporations and individuals seeking to migrate their businesses to Nigeria or just to invest in the Nigerian economy. We provide legal advisory, business advisory, corporate governance and regulatory compliance services to foreign entities doing business in Nigeria whether in-person or virtually.
If you have any questions regarding this article or about company registration in Nigeria, we invite you to reach out to us at Kabbiz Global Nominees Limited for professional assistance. Email us at [email protected] and we will be happy to assist you and get your business migration to Nigeria underway.
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