Company structure

The primary law governing companies and businesses in Nigeria is the Company and Allied Matters Act (CAMA). It deals with the various types of company structures, eligibility, process for registration, and rules for operation.

The regulatory body that is in charge of implementing the provisions of the CAMA is the Corporate Affairs Commission (CAC).

The various business structures allowed in Nigeria are – registered business name, company limited by shares, company limited by guarantee, unlimited company (all companies may be private or public), and incorporated trustees.

For the purposes of this guide, we will deal with only a private company limited by shares.



What are the requirements?

A company must have a minimum of 2 members, and a maximum of 50 members
Founding members must not be – under the age of 18 years old (unless at least 2 other members are over the age of 18), of unsound mind, an undischarged bankrupt, or disqualified by CAMA from being a Director
The current minimum share capital of a company to be registered in Nigeria is N10, 000


What documents are needed for incorporation?

Memorandum and Articles of Association
Notice of registered address of the business
List, particulars, and consent of the first Directors of the company
Statement of compliance by legal practitioner
Upon successful registration, the company is presented with a Certificate of Incorporation.

Under Nigerian law, only accredited individuals/companies can incorporate companies. So businessmen need to hire the services of accredited companies/individuals for this process. The only professionals eligible for accreditation are Lawyers, Chartered Accountants and Chartered Secretaries.

To find out a bit more about registering a company/business in Nigeria you can read up on the below articles.

How to Register a Company in Nigeria

How to Register a Business Name in Nigeria

7 Benefits of Incorporating a Company





Intellectual Property (IP) Protection

The Nigerian legal system affords protection to IP rights in the following categories – copyright, trademark, and patents.

Copyright

A copyright is a legal right that grants the creator of an original work exclusive right to its use and distribution, usually for a limited time. The exclusive rights are not absolute; they are subject to certain limitations.

In Nigeria, the primary piece of legislation for copyright is the Copyright Act, and the body charged with the enforcement and protection of copyright is the Nigerian Copyright Commission (NCC).

The ownership of copyright is vested in the creator of a copyright work, usually referred to as the “author” of the work. He/she owns the copyright in the work in the first instance. However, the author is at liberty to transfer his rights to a third party. In such a case, the person who has obtained the right by transfer or other legal means becomes the owner of copyright.

What is eligible for copyright protection?

Literary works;
Musical works;
Artistic works;
Cinematograph works;
Sound recording; and
Broadcasts
For it to be eligible for copyright protection, the work must be sufficiently original, and must be in a form which is expressed e.g. in writing, a painting, a musical recording etc. You can’t have copyright protection over something in your head, which has not been expressed.

Originality and expression are the key pillars for eligibility
Do you need to register a copyright?

It should be noted that registering for copyright is not a precondition for protection. You do not have to register your copyright. Copyright subsists automatically in a work from the moment the work is created.

However, the NCC has established a voluntary copyright registration scheme designed to enable authors and right owners notify the Commission of the creation and existence of a work.

The NCC justifies the establishment of this scheme based on the following benefits:

It provides an independent source of verifying data relating to a work or its author to the general public;
The acknowledgement certificate issued provides prima facie evidence of the facts shown on it;
It provides a depository for preserving original copies of works notified;
The information and data contained in the Notification database offers reliable rights management information to members of the public and prospective licensees to the work


What’s the process for registering a copyright?

You can register a copyright with the NCC by submitting a completed registration form, along with two (2) copies of the work, and evidence of payment of the prescribed fee. Registration can be done online or physically at the NCC office.



Trademark

A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others.

Once a trademark is registered, it enables the trademark owner to amongst other things- take legal action against anyone who uses the registered mark without permission, sell and/or license the registered trademark (so in a sense it becomes an asset), and allows the owner to legally put the ® symbol next to the brand – to show ownership and warn others against using it.

In Nigeria, the legislation, which governs the registration of trademarks, is the Trade Marks Act (and the Trade Mark Regulations made pursuant to it). The government agency that is in charge of the registration of trade marks is the Trademarks, Patents And Designs Registry, Commercial Law Department, Federal Ministry Of Industry, Trade And Investment. Applications are made to the Registrar of Trade Marks.



What is eligible for trademark registration?

Device, brand, heading, label, ticket, name, signature, word, letter, numeral, or any combination thereof;
For it to be eligible for registration it must contain or consist of at least one of the following essential particulars –

the name of a company, individual, or firm, represented in a special or particular manner;
the signature of the applicant for registration or some predecessor in his business;
an invented word or invented words;
a word or words having no direct reference to the character or quality of the goods, and not being according to its ordinary signification a geographical name or a surname;
any other distinctive mark
Do you need to register a Trademark?

In order to have exclusive use of your trademark, it is imperative that you register it. Unlike with copyright, protection does not vest automatically in the owner. Not registering a trademark would mean that you do not have exclusive right to use it. If someone were to use the same mark as you, the only recourse you would potentially have would be an action for the tort of passing off. So, yes you should register your trademark.



What’s the process for registering a Trademark?

The Trademark registration process can be broken into 3 general stages:

Availability Search – You conduct a search to determine whether there are registered marks that are similar to your proposed mark. The outcome of the search will help you determine whether the proposed mark may be registered or not.
Trademark Application – If there is no similar mark, you may apply for registration. If the application is deemed registrable, the registry issues a Letter of Acceptance that serves as an approval in principle. After the acceptance has been issued, the mark is advertised in the Trademarks journal published by the Trademarks Office.
Application for Certificate – Once the proposed mark has been advertised, an interested party may oppose the registration of the mark within 2 months of the advertised journal. If the mark is not opposed within 2 months, you may then apply to the Registrar for a Trademark Certificate.
A trademark is valid for an initial period of 7 years, and then for further renewable 14-year periods.

Patent

A patent is an exclusive right granted for an invention, which is a product or a process that provides a new way of doing something, or offers a new technical solution to a problem.

A patent basically grants the inventor a temporary but exclusive monopoly of the commercial exploitation of that invention. It gives the inventor the right to exclude others from making, using, or selling the claimed invention in that country without their consent, for the duration of the patent.

In Nigeria, the primary legislation that governs the grant of patents is the Patents and Designs Act. The Government agency that manages the grant of patents is the Trademarks, Patents And Designs Registry, Commercial Law Department, Federal Ministry Of Industry, Trade And Investment. Applications are made to the Registrar of Patents and Copyrights.

What is eligible for Patent registration?

Patents are granted for the invention of products or processes. However, for it to be patentable, the invention

Must be new,
Must have an inventive step that is not obvious to someone with knowledge and experience in the subject,
Must be capable of being made or used in some kind of industry and not be, a scientific or mathematical discovery, theory or method, a literary, dramatic, musical or artistic work, a way of performing a mental act, playing a game or doing business, the presentation of information, or some computer programs, an animal or plant variety, a method of medical treatment or diagnosis,
And must not be against public policy or morality.


Do you need to register a Patent?

Yes. In order to be able to exclusively commercially exploit an invention, it must be patented. The rights to a patent are vested in the “Statutory Inventor” i.e. the first person to file and register the patent. However, the law in Section 2(2) of the act enables the possibility of redress by reassigning the rights to an invention, to a person who is adjudged to be the true inventor whether or not he is the first to register a product.



What’s the process for registering a Patent?

To make a patent application in Nigeria, the first step is to ensure the invention has not already been patented, by conducting a search. If the result of the search is positive, then the application is made:

A petition or request for a patent signed by the applicant or his agent and containing the applicant’s full name and address;
a specification, including a claim or claims in duplicate; plans and drawings, if any, in duplicate;
where appropriate, a declaration signed by the true inventor requesting that he be mentioned as such in the patent and giving his name and address;
a signed power of attorney or authorization of agent if the application is made by an agent;
an address for service in Nigeria if the applicant’s address is outside Nigeria; and payment of the prescribed fee.
Once granted, a patent is valid for 20 years.


Insurance

Getting the requisite insurance coverage is an important part of setting up a business in Nigeria. Below we will highlight a number of mandatory insurance policies that businesses have to obtain in order to lawfully operate in Nigeria.

These compulsory insurance policies are those that are mandated to be taken out by the relevant laws for the protection of third parties and the general public.

Statutory Group Life Insurance
Section 4(5) of the Pension Reform Act 2014 makes it compulsory for every employer to maintain a Group life insurance policy in favour of each employee for a minimum of three times the annual total emolument of the employee. If the employer refuses or omits to pay for the policy, the employer is liable to make arrangement to effect the payment of claims arising from the death of any staff in its employment during such period



Builders Liability Insurance
Section 64 (1) of the Insurance Act provides that during the construction of any building with more than two floors, there must be insurance coverage protecting injury or death to person, or damage to property caused by negligence. The penalty for non-compliance is N250, 000 or 3 years imprisonment (or both).



Occupiers Liability Insurance
This insurance is compulsory for all “public buildings” i.e. any building that is not 100% used by the owner for residential purposes. These include tenement houses, hostels, residential buildings occupied by tenants, lodgers or licensees, and any other building to which members of the public enter and exit for the purpose of educational, recreational or medical services (e.g. schools, cinemas, hospitals, malls, petrol stations, etc).

Occupiers Liability Insurance provides compensation in events of bodily injury, death and property damage in case of building collapse, fire, earthquakes, storm or flood. An occupier or owner of premises who is in default commits an offence and is liable on conviction to a fine of not more than N100,000 or to imprisonment for one year or both.



Employee Compensation Contribution
Section 33(1) of the Employee’s Compensation Act 2010 requires all employers to make a minimum monthly contribution of 1% of the total monthly payroll of employees to the Employee Compensation Fund. The Fund shall be used to provide compensation to employees or their dependants for any death, injury, disease or disability arising out of or in the course of their employment.



Motor 3rd Party Liability
All owners of Motor vehicle whether private or commercial vehicle are required to insure their vehicles by virtue of Section 68 of the Insurance Act 2003. This type of insurance provides compensation in the event of death, bodily injury, and property damage to members of the public. Failure to obtain the mandatory insurance policy is an offence and defaulters are liable on conviction to a fine of N250,000 or imprisonment for 1 year or both.



Tax

Nigeria is a Federal State, and as such all the different levels (Federal, State, and Local) have taxing powers. For the purposes of this guide we will focus on Federal taxes, as they are applicable in all states of the Federation.

The Taxes and Levies (Approved List for Collection) Act, CAP T-2, Laws of the Federation of Nigeria (“LFN”), 2004 provides a list of the taxes that each tier of government can charge in Nigeria.



Companies Income Tax
This is a tax chargeable on all companies (other than Companies engaged in petroleum operations) registered in Nigeria. It is an annual tax on the profits of registered companies, which profits must accrue in, be derived from, brought into, or received in Nigeria.



Personal Income Tax
This is a tax payable by all individuals and registered businesses and partnerships except those registered under Part A of Companies and Allied Matters Act 1990 (incorporated companies). The State Inland Revenue Service administers the tax.



Capital Gains Tax
This is a 10% tax imposed on Capital Gains arising from a sale, exchange or other disposition of properties known as chargeable assets. Capital gains are the profits that an investor realizes when he or she sells the capital asset for a price that is higher than the purchase price. Capital gains taxes are only triggered when an asset is realized.



Tertiary Education Tax
This is a tax chargeable on all companies registered in Nigeria at chargeable profits as contribution to the Tertiary Education Tax Fund. All registered companies in Nigeria are required to pay a percentage of their assessable profit into a Tertiary Education Tax Fund. This fund is disbursed for the rehabilitation, restoration and consolidation of educational institutions in Nigeria. The tax is charged at 2%



Value Added Tax
This is a tax payable by the consumer at 5% of the net value added based on eligible transactions once consumed. It is a tax imposed on the supply of goods and services.



Information Technology Tax
This tax is payable by specified companies (GSM service providers and all telecommunications companies, cyber companies and internet providers, pension managers and pension related companies, banks and other financial institutions, and insurance companies) who have an annual turnover of One Hundred Million Naira (N100, 000,000).

The companies are to pay a levy of one per cent (1%) of their annual profit before tax to the National Information Technology Development Fund (“NITD Fund”). This tax when paid is tax deductible for company income tax purposes.

*Below are a couple of articles you might find interesting on registering for tax in Nigeria:



How to register for VAT in Nigeria

How to get a Tax Payers Identification Number



Employment

There are 4 key pieces of legislation pertaining to labour and employment rights, which employers need to be mindful of. They are the Labour Act, the Employee Compensation Act, the Pension Reform Act, and the Local Content Act.

Labour Act Cap L1 LFN 2004– This law lays out the protection of employees in Nigerian companies with respect to their remuneration, employment terms, etc.
Employee Compensation Act 2011 – This Law makes comprehensive provisions for payment of compensation to employees who suffer from occupational diseases or sustain injuries arising from accident at workplace or in the course of their employment.
Pension Reform Act 2014 – This Law governs and regulates the administration of the uniform contributory pension scheme for both the public and private sectors in Nigeria. The Law amongst other things establishes a contributory pension scheme, lays out the provisions on the rate of contribution, exemptions, and management of the scheme, and deals with the authorisation and regulation of Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs).


Regulatory Bodies

For companies wishing to operate in certain sectors, there are specific Nigerian agencies that have been set up by the Government to regulate the companies that provide goods and services within those specific sectors.

These agencies have powers to set out the requirements to operate in the relevant sectors, guidelines for operations, and sanctions for non-compliance. A few of them include:

Central Bank of Nigeria
Securities and Exchange Commission
National Agency for Food Drug and Cosmetics
Nigerian Communications Commission
National Office for Technology Acquisition and Promotion
Standards Organisation of Nigeria
Consumer Protection Council




@lawpadi @Diamondpractice : 08098609580

INTRODUCTION:
The world has come to terms with the reality that ICT has become an inseparable part of human existence. Any wonder that it has penetrated activities and operations in areas like commerce, trade, governance, transportation, health etc.

The response and readiness of emerging economies like Nigeria, to the fast moving train of ICT development and penetration call for attention. The discussion does not stop at whether the Nigerian societal structure is welcoming and conducive to the effective use of ICT, rather it extends to the suitability of the existing Legal framework in Nigeria, the present legal scope, policy and legislative response to the pace of development in the sector.

The rate of technological innovation in ICT reflects in its now elaborate components and features. It has accelerated dramatically and the sector today is larger than it was 25 years ago .It encompasses a more universe of players than ever before. Today, the sector includes hardware, software, the Internet, Broadcasting, telephony, and content, Artificial Intelligence, application and support services provided by Regulators, Corporate giants and Individuals like Coders, Programmer, Web designer/Developers.

This article basically, is an attempt to discuss historical perspective to the reaction of Nigerian Legal system to ICT, through to the existing scope of legal and regulatory Framework in Nigerian ICT sector. This is important because it will enable a precise and formative discussion on the progress of the sector’s development, lapses, and informed approach to arising issues.

HISTORICAL EVOLUTION OF ICT SECTOR IN NIGERIA:
Generally, the sources of law under Nigerian legal system can be largely said to be from the Received English laws[2], Nigerian Legislations, Customary and Case laws. Therefore ICT laws in pre-independent Nigeria were either laws made by the British for the colony[3] or laws made in England that are applicable to the British colony.

Telecommunication facilities in Nigeria were first established in 1886 by the colonial administration. These were geared towards discharging administrative functions. There was an introduction of public telegraph services linking Lagos by submarine cable along the west coast of Africa to Ghana, Sierra-Leone, Gambia and on to England. In 1893, government offices in Lagos were provided with telephone service, which was later extended to Ilorin and Jebba in the hinterland. A slow but steady process of development in the years that followed led to the gradual formation of the nucleus of a national telecommunications network.

By 1904, the wireless Telegraph proclamation No.3 of 1904 was in place to govern the use and operation of wireless telegraphy services in the Country. According to Section 2 of the proclamation, no person could import, keep , use, or establish any apparatus or installation for transmission of messages by wireless Telegraph without prior approval by obtaining a license from the Governor[4].

Following the creation of Posts and Telegraph department in 1914, the first commercial telephone trunk services commenced operation in 1923 around Calabar area of Southern eastern Nigeria whilst the line carrier system was introduced between Lagos and Ibadan in the Southwest in 1946.

At independence, the control of Nigeria’s telecommunications sector, was vested in the Nigerian post and telecommunication (P&T) owned by the federal government. This regulatory framework existed side by side with laws like the Wireless Telegraph Act, the Nigerian Broadcasting Corporation Act of the Parliament No. 39 of 1956[5].

The Wireless and Telegraphy Act was reviewed in 1966, 1968, and 1991 before the enactment of decree 75 of 1992 that established the Nigerian Communications Commission (NCC). The NCC (Amendment) Decree of 1998 and the Wireless Telegraphy (amendment) Decree of the same year were promulgated to update the industry regulation.

Computing and telecommunications (and also such area as broadcasting and publishing) used to be quite distinct industries perhaps involving distinct technologies and regulations. Things have improved exponentially; the pace of adoption of new Information technology has been speedy. This historical discuss of ICT evolution in Nigeria has not only pointed out the shaky start to ICT regulation and implementation strategy, but also that the idea of ICT in Nigeria is perhaps a recent phenomenon with telecommunication being the oldest element.[6]

THE LEGAL AND REGULATORY FRAME WORK OF ICT IN NIGERIA:

The existing frame work of ICT will be comprehensively discussed in the light of existing Legislations, Regulatory efforts, applicable common law practices, case laws and influence of ancillary Agencies on ICT.

1. LEGISLATIONS:
The Legislative power of the Federal Republic of Nigeria is vested in the National assembly of the federation which shall consist of a senate and a House of Representatives.[7] Item no. 46 on the part 2 of the Second schedule list posts, telegraphs and telephones as part of those exclusive legislative lists that can be legislated upon by the National Assembly.

The Nigerian legislative body has made laws affecting the items in No. 46. It may be safe to conclude that it is on this premise that the National assembly enacted existing laws touching ICT in Nigeria generally to cover ICT infrastructures, its operations and Regulations.

a. Wireless Telegraphy Act[8]: The first significant legal instrument was the Wireless Telegraphy Act of 1961. The Act provides for regulation of wireless telegraphy, grant of license, offences and penalties etc. Section 3 of the Act defines the Commission mentioned in the Act as The Nigerian Communications Commission established under the Nigerian Communication Act when it relates to telecommunication and where it relates to broadcasting, the National Broadcasting Commission established under the National Broadcasting commission Act.

b. Nigerian Communication Act 2003: Efforts that birthed the present Communication Act in Nigeria was first attempted in 1992. It was the promulgation of Decree 75 of 1992 that established the Nigerian Communication Commission. The Act applies to the provision and use of all communication services and networks in whole or in part within Nigeria or on a ship or Aircraft registered in Nigeria.[9] This Act was meant to serve as water shed. It licensed the Private telecoms operator (PTOs) in the mid 90s; this entry did not alter the competitive equation in the telecommunication industry.[10]

The present Nigeria Communication Act was preceded by National Telecommunication Policy developed by the Ministry of Communications in 2000 and the 2001[11] Information Technology policy developed by the Federal government. The Nigeria Communication Act in 2003 however covers among other aspects significantly the facilitation of investment s in the Nigerian Telecommunication sectors , the protection and promotion of the interests of Consumers against unfair practices ; The promotion of fair competition in the communications industry.[12]

c. National Information Technology Development Agency Act[13]: The Act established the National Information technology Agency. It entrusts the Agency with supervisory role and authority over organizations incorporated under the Laws of Nigeria to manage and administer Nigeria’s Country code top level domain (.ng). Such supervisory role extends to the internal structuring of such organizations to ensure broad representation of stake holders of ICT community in the Country.[14] The Act creates a framework for the planning, research, development, Standardization, Application, Coordination, Monitoring, evaluation and regulation of Information Technology practices.

d. National Broadcasting Commission Act: The Act established and empowered the National Broadcasting Commission to administer the Act and with the approval of the Minister make regulations for the purpose of generally giving effect to the Act. The Act further makes provision for license application procedure and regulations.[15]

The above laws represent the fulcrum of legal and regulatory framework of ICT scope in Nigeria as it is. However, there are other laws touching either directly or indirectly on the development of the ICT industry. Some of these laws protect the ICT infrastructure on ground or in some instances deal with Cybercrime and other arising operations , obligations and liabilities. These laws include:

I. The Cybercrime (Prevention and Prohibition Act) 2015: The Bill was signed into law in the year 2015. It is meant to prevent, prohibit. Detect and punish cyber crimes. It is worthy of note that the Act equally makes provision for the designation and protection of National critical information infrastructures and computer networks. The Act upon its enactment as been lauded to be a solution to some of the internet and electronic related crime that has surfaced with the growth of ICT. However upon review[16], the Cybercrime law has its shortcomings. Stakeholders have maintained that the Act does not maintain a “technology Neutrality” and not technology specific. Also, there may be a serious problem with the enforcement because under the Act, the enforcement duty is not entrusted in a known and specified law enforcement Agency[17].

II. Telecommunication and Postal Offences Act: This is infrastructure based law. Part one of the Act provides for telecommunication offences as it relates to tampering with wireless cables, illegal operation of telephone call offices, radio communication offences, call-back operation etc. One cannot say confidently that this law is futuristic in its approach to dealing decisively with protecting telecommunication infrastructures because the development and pace in the ICT industry requires a timely response and reaction either by regulation or guidelines in that area.

III. The Evidence Act 2011: The Act has removed the procedural huddles of proving and admitting electronic generated evidence in Nigerian Courts. The Act robustly defined “documents” to include any device by means of which information is recorded, stored and retrievable including Computer output[18]. The Act provides a bit of stability for ICT related suits especially when there is contention as to admissibility of electronic deliverables in Courts proceedings .

The Sector can progress and further thrive on other legislative Bills and deliberations waiting to be passed into law for the benefit of the sector and its players[19]. These pending Bills would cover the area of electronic transaction, regulation of free flow of e-information, cybersecurity, data protection etc.

2. REGULATORY AND INSTITUTIONAL FRAMEWORK:

The regulatory duties in Nigerian ICT industry are vested in agencies and bodies established under relevant laws. They are responsible for the administration of their establishing Acts and carrying out functions in accordance with the provisions of the relevant laws. They must open up the industry to foster competition and diffusion of ICT into the society[20].

1. Nigerian Communication Commission (NCC): It is a body created under the Nigeria Communication Act 2003. NCC is responsible for the development and monitoring of performance standards and indices relating to the quality of telephone and other communication services. The Commission licenses, regulates, monitors and develop the Nigerian telecommunication sector. Section 70 of the Communications Act empowers NCC to make regulations and guidelines on wide range of issues under the Act and matters connected with the Telecommunication sector[21].

2. The National Information Technology development Agency (NITDA): NITDA is in place to plan and develop Information Technology in Nigeria. This responsibility is achieved through Research Work, monitoring and serving as a sounding board to the Government about ways of promoting the development of Information Technology in Nigeria including introducing appropriate Information Technology legislations to enhance national security and the vibrancy of the industry.

Section 6(c) of the NITDA Act also provides for the power of the Agency to develop guidelines for electronic governance and monitor the use of electronic data interchange and other forms of electronic communication transactions as an alternative to paper-based methods in Government, Commerce, Education, the private and public sectors, the labour, and other fields, where the use of electronic communication may improve the exchange of data and information[22].

The agency also has the mandate to fast track the internet and intranet penetration in Nigeria and promotes sound internet governance. Hence, the Act in its Second schedule entrusts the Agency with supervisory authority over organizations incorporated under the laws of Nigeria to manage and administer Nigeria’s Country code top level domain (.ng).[23]


3. National Broadcasting Commission (NBC): The Commission regulates the broadcasting sector by administering powers and duties provided under the NBC Act and relevant provisions of the Wireless Telegraph Act.. The power of the Commission under the Act also includes advising the Federal Government generally on the implementation of the National Mass Communication Policy with particular reference to Broadcasting. It grants license on Radio and Television Broadcasting[24]. Section 23 of the NBC Act allows the Commission with the approval of the Minister, make regulations generally for the purpose of giving effect to the provisions of the Act[25].

A more recent effort of the NBC towards improving the Nigerian Broadcasting Terrain is the provision of guidance and implementation of the switchover from analogue to digital broadcasting which kicked off in Plateau state in 2016[26]. This development in the broadcasting sector continues to be under the regulatory power and authority of the NBC[27].

4. National Frequency Management Council (NFMC): The Nigerian communication Act made provision for the establishment of the NFMC in the Ministry of Communications. The Council which is chaired by the Minister comprises of membership from the Ministry of Communications, Aviation, Transport and federal Ministry of Science and Technology[28] . The function of the Council mainly involves dealing with spectrum related issues.[29]

5. Ministry of Communication Technology: This is the supervisory ministry for the National Information Technology Development Agency and the Nigerian Communications Commission, Galaxy Backbone PLC and well as the Nigeria Postal Services. The Ministry provides policy direction focused on the development of ICT and its use for economic development[30]. The Ministry developed a National ICT Policy in 2012. The National ICT policy addresses 23 thematic areas that are of critical importance, including Policy and Regulatory framework, Internet and Broadband development, Local content, Coordinated ICT development across all sectors, National Security and safety amongst others.

The Policy and regulatory strategy intended for the ICT sector in Nigeria is targeted at converged “go to” system in order to actualize global standard in the Nigerian ICT sector. Therefore efforts are channeled towards ensuring a singular effort in regulations and policy formulation for the sector.

3. CASE LAWS:
The Courts entertain suits from ICT Regulators, Service providers and Consumers. This has always been an opportunity for the Court like in any other instance to make valuable pronouncements on Legislations, Rules and Guidelines that have bearings on ICT. Courts judicial power to entertain, hear and determine suits arising from ICT constitutes an avenue to validate activities of the Regulators and their powers under various legislations. In Ifeanyi Ukaegbu v National Broadcasting Commission & 3 Ors. Suit No. CA/A/146/05: the Court of Appeal held that “the NBC Code is not contrary to the Constitution. It is a valid subsidiary legislation to give full effect to the NBC Act. There is wisdom in regulating broadcasting. The issue is as simple as one filtering his drinking water before he drinks it into his bowels…it will not be in one’s interest to connect his house directly to a high tension electric current no matter the nature of his house…without stepping it down with a transformer. It has disastrous consequences. No country conscious of its security and existence can ever have a codeless broadcasting environment”. [31]

Also, in Registered Trustees of ALTON & Ors V. Lagos State Government & Ors[32]., the Court declared the Lagos state Infrastructure Maintenance and Regulatory Law 2004 illegal, null and void for attempting to usurp the regulatory functions of the NCC to regulate the erecting/installation/maintenance of telecommunication masts/equipment.

There are also cases of Motophone Limited V NCC and Blue-Chip V.NCC[33]. The Motophone’s case challenged the decision of NCC for withdrawing 2G license at the wake of 2G auction in 2001.

From the cases examined so far, the bulk of disputes are mostly between the Regulators and service providers. This does not mean that service providers have performed satisfactorily well in the opinion of consumers in the evaluation of their performances. Such complaints are lodged at first instance with the Regulator which may culminate into further Court cases when such complaints are not given prompt attention[34].

It is worthy of note that aside from Court –bound disputes, ICT Regulators equally perform quasi-Judicial function. This function enables them to sanction and revoke licenses granted to Service providers. E. g in the subsidiary legislation, Telecommunication Networks interconnection regulations, section 17 empowers the NCC to hear appeals from licensed telecommunications Operators over interconnection disputes. The NCC also has power to resolve disputes between persons who are subject to the NCA[35].

4. ANCILIARY AGENCIES AND IMPACT ON ICT ECOSYSTEM:
There are agencies in Nigeria whose duties and activities influence ICT sector even though such agencies cannot be described as an out and out ICT Regulators. They are best described as Constructive Regulators. The following agencies can be said to be in this category.

a. Central Bank of Nigeria (CBN): The CBN, pursuant to its power under Section 47 (3) of the CBN Act, issued a Guideline known as the Guideline on Electronic payment of Salaries, pensions, Suppliers and taxes in Nigeria. “Paying organizations” under this regulation significantly has the responsibility to provide basic infrastructure for making and receiving electronic payments. The CBN influences the ICT sector for instance through the introduction of ICT- related infrastructures like Automated Teller Machine(ATM) , Point of Sale Machine (POS) in Banking and similar financial services. [36]

b. National Office for Technology Acquisition and Promotion (NOTAP): The function of the National Office under the NOTAP Act can best be described as an oversight duty for all Technology driven sectors including the ICT sector. The National Office registers contracts or agreements transferring technologies into the Country. The function of NOTAP is not nominal nor fringe.[37]

c. Consumer Protection Council (CPC): The CPC influences the ICT from the Consumers’ standpoints. The Council endeavours to make regulations and guidelines under the CPC Act[38] to ensure fairness and safety of Consumers. An example of these guidelines is Compendium on the Rights of the Telecom Consumer that was launched as part of the commemoration of the World Consumer Rights Day 2014 the theme of which was ‘Fix our phone rights’.

d. National Environmental Standards and Regulations Enforcement Agency (NESREA): NESREA is on ground to regulate and manage the ecosystem in the face of the environmental threats and degradation that accompanies the development of ICT. NESREA Act provides for the power of NESREA to make regulations and guidelines. Amongst the numerous environmental protection and sustainability guidelines made so far, there is National Environmental (Standards for Telecommunications/Broadcasting Facilities) Regulations, 2010. S. I. No. 11. The main objective of these regulations is to protect the environment and human health, ensure safety and general welfare, eliminate or minimize public and private losses due to activities of the telecommunications and broadcast industry.

CONCLUSION:
The examination of the legal and regulatory framework of ICT sector in Nigeria shows that the sector has an existing organizational structure that can welcome further improvement and efficient enforcement strategy. Also even though the Sector in operation has welcomed convergence in terms of operability, it cannot be totally said that the regulatory framework has embraced this reality. The sentiment of Mr. Paul Usoro SAN a , on the need for convergent regulatory framework is apt “The reality of convergence has driven fundamental changes in Telecommunications regulation. Uncertainty exists as to regulation of converged operations. The term “telecommunications” is gradually being replaced by “Communications”- wide enough to cover Telecommunication, broadcasting and Information Technology”[39]. Therefore a recommendation that the Regulators should merge into “Super Regulator” may come with inevitable consequence of enacting new laws or amending existing ones.

Therefore, it is not enough that the examined regulatory framework has a structure; there must be a synergy between these Regulators. Rather than struggling with and jealously monitoring overlapping functions and boundaries, same would be a point of strength and reasons to pool resources for further development of the sector.

This write up no doubt will stimulate further recommendations on any strategic approach to improving the ICT sector from the standpoints of its Legal, Institutional and Regulatory framework.


cc OLAWALE AJIBOYE

Structures for carrying on business in Nigeria
There are a number of company structures which are recognized by the Companies and Allied Matters Act Cap C20, Laws of the Federation of Nigeria 2004 (CAMA) - which is the principal legislation that regulates the affairs of Nigerian companies). These include a private company limited by shares; a private company limited by guarantee; and a public company limited by shares. A foreign investor that wishes to set up in Nigeria would have to incorporate a company using one of these structures.
Notwithstanding that a foreign investor may regard its proposed Nigerian operations as a branch or subsidiary, the Nigerian operations would have to be undertaken by a separate legal entity, registered under the CAMA. This is because section 54 of the CAMA provides that in order to do business in Nigeria, a foreign investor must incorporate a separate entity in Nigeria, and until a foreign company is so incorporated it “shall not have a place of business or an address for service of documents or processes in Nigeria for any purposes other than the receipt of notices and other documents as matters preliminary to incorporation under the CAMA.
Notwithstanding this general rule, Section 56 of CAMA empowers the Federal Executive Council (which is constituted by the President, Vice President and all ministers, and represents the executive arm of the Nigerian government) to grant exemptions from the mandatory incorporation requirement with respect to foreign companies which are:
• engaged by or with the approval of the Federal Government to execute specific projects
• undertaking approved loan projects on behalf of donor countries or international organisations
• foreign government-owned companies engaged wholly in export promotion activities, or
• engineering consultants or technical experts working on specialist projects under contract with any government of the federation or one of its departments or under approved contracts with any other persons.
However, even if a foreign investor could qualify for an exemption from incorporation on any of the above stated grounds, it might not always be advisable to seek such exemption since:
• Firstly, such exemptions are very rarely granted and, if granted, are only granted in respect of one project and for a fixed period of time (usually three years). The exemptions are hardly ever renewed.
• Secondly, the Federal Executive Council may revoke the exemption at any time if the Council is of the opinion that the company has contravened any provision of the law or has failed to fulfil any condition contained in the exemption order. This means that if a foreign investor sought and obtained an exemption, it might well be vulnerable to the exercise of executive discretion at some future date.
For the above reasons, we usually advise our foreign investor clients who are seeking to explore other business opportunities in Nigeria, or who are engaging in activities that will be carried out over an extended period in Nigeria, to incorporate a local company unless there are specific reasons why this would not be appropriate.
Of the various company structures available, there are clear advantages under local law to a foreign investor [doing business in Nigeria through a private company limited by shares. These include:
• this type of entity has perpetual succession and may incur liabilities of its own
• as a private company, the shareholders – including a foreign investor - are able to appoint, directly or indirectly, the directors and other persons who will manage the company
• any liability that a foreign investor may incur as a shareholder is limited to the amount unpaid in respect of any shares held by a foreign investor [NV] in the capital of the company, and
• should a foreign investor wish to divest itself of its interest, it will find that it is relatively easy to transfer shares in a private company.
Incorporating a limited liability company
The procedure and requirements for incorporating a private and a public limited liability company are essentially the same. These requirements include the following:
• The company must have a minimum of 2 shareholders (who may be individuals or corporate entities). With limited exceptions, companies in Nigeria may be 100% foreign owned. For example, in order for an oil and gas company to enjoy competitive advantage in the award of contracts in the oil and gas industry, at least 51% of the shares of that company must be owned by Nigerians. The initial subscribers must, between them, subscribe for at least 25% of the authorised share capital of the company;
• The company must have a minimum of 2 directors (who may also be the shareholders of the company, and may each be foreign nationals)
• The company must have a registered office
• The proposed company name must be approved by the Corporate Affairs Commission (“CAC”) – Nigeria’s Companies’ Registry
• An indication of the nature of the business to be carried on by the company must be contained in the Memorandum and Articles of Association of the company, and
• A private limited liability company has a minimum authorised share capital of =N=10,000.00; a public limited liability company has a minimum authorised share capital of =N=500,000.00. This distinction is, however, irrelevant in the case of companies with foreign equity participation because such companies are required to have a minimum share capital of =N=10,000,000.00 (ten million Naira) regardless of whether the company is private or public.
The statutory fees payable to incorporate a company in Nigeria would be dependent on the authorised share capital of the company. For instance, where the authorised share capital of the company is =N=10 million the statutory fees payable would be =N=168,500.00 (approx. $1,085.41 at the CBN’s current exchange rate of =N=155.24 to =N=1.00).
Foreign investment approvals
Where a company has foreign shareholders, the company will require certain foreign investment approvals. These are:
Business Registration: All companies with foreign participation in their capital structure are required to register with the Nigerian Investments Promotion Commission after they are incorporated, and obtain a Certificate of Registration of Company with Foreign Participation. This is a fairly straightforward process and registration can be achieved within 3 days. An official fee of =N=15,000.00 is payable to the NIPC for the issuance of this certificate.
Business Permit: Companies with foreign shareholders are also required to obtain a certificate called a “business permit” from the Federal Ministry of the Interior (“FMI”) before they are permitted to carry on business in Nigeria. In order to obtain the business permit, the company will need to, amongst other things, provide evidence that it has invested in the Nigerian company either through cash and/or equipment. This evidence will usually be in the form of a Certificate of Capital Importation which is discussed below.
Certificate of Capital Importation: Nigeria’s foreign exchange regulations require that foreign investors must, if they wish to have access to the official foreign exchange markets for the purpose of remitting their dividends, interest or capital, obtain what is called a Certificate of Capital Importation (“CCI”) as evidence that their investment has been brought into Nigeria.
CCIs are issued by Authorised Dealers (i.e. banks licensed by the Central Bank of Nigeria to deal in foreign exchange) through which the funds are remitted into Nigeria and state, on their face, the purpose for which the moneys were brought in and the amount of the investment.
Once obtained, a CCI permits the foreign investor to access the official foreign exchange market to purchase foreign exchange to remit its dividends, or to repatriate its capital in the event of the partial or complete sale of its investment. A CCI can be obtained within 24 – 48 hours after the investor has brought its foreign investment capital into Nigeria through an Authorised Dealer.
Employment of foreign employees in Nigeria
Expatriate Quota Approvals: Where a company intends to employ expatriates, it must apply for expatriate quota positions for the relevant number of expatriate personnel it intends to employ. This approval is granted by the Federal Ministry of the Interior and it is the authorisation that sets out the maximum number of expatriates that a Nigerian company may employ. There is no restriction on the number of quota positions that may be applied for; however, the number of quota positions that will be granted is at the discretion of the Minister of the Interior. The applicant company is, amongst other things, required to have an authorised share capital of at least =N=10,000,000.00 (ten million Naira).
Expatriate quotas are usually granted for a period of 2 years and may be renewed up to 5 times or for a period not exceeding 10 years in exceptional circumstances. The Federal Government of Nigeria has a policy of encouraging the employment and training of Nigerians and, therefore, the renewal of a quota position is normally dependent on showing that at least 2 (two) Nigerian employees have been appointed to understudy the expatriate.
Residents Permits and Visas: After the grant of the expatriate quota positions, the expatriates will each be required to apply for residence permits, in order for them to reside and work in Nigeria. Expatriates can be accompanied by their families and dependant applications will be submitted on their behalf.
Tax Registrations
All local companies are required to be registered with the relevant tax authorities for tax purposes. After incorporation, the company makes an application to the relevant tax office requesting the issuance of a Tax Identification Number (TIN), a Tax Clearance Certificate (TCC) and VAT registration.
The taxes payable by local companies include:
• Companies Income Tax levied at the rate of 30% on the profits of all Nigerian companies (excluding certain tax-exempt companies and companies engaged in the exploration for or production of petroleum)
• Education Tax at the rate of 2% of corporate profits as assessed under the Companies Income Tax Act (“CITA”)
• Stamp Duties imposed at different rates on most legal documents
• Value Added Tax at a flat rate of 5% on the supply of a wide range of goods and services
• Capital Gains Tax (CGT) levied at the rate of 10% on any gains from the disposal of assets. This tax is not payable where the money is used to acquire replacement assets within a twelve month period before or after the disposal ( note that in Nigeria, there is no CGT on the disposal of shares)
• Withholding Tax ranging from 5% (for construction and agency arrangements) to 10% (for dividend, interest and rent).
A company that employs staff is also required to:
• make a monthly deduction of 2.5% of each employee’s basic salary payable to the National Housing Fund
• make monthly contributions to a mandatory pension scheme (contributions are made by the employer and the employee), if it has 5 or more employees
• register with the Nigeria Social Insurance Trust Fund and contribute a minimum of 1% of its total monthly payroll into the employees’ compensation fund, and
• make a contribution of 1% of payroll costs to the Industrial Training Fund if it has 25 or more employees.
Tax Incentives
There are several investment incentives available to investors in Nigeria which are aimed at reducing their tax liabilities.
• The Pioneer Status scheme established by the Industrial Development (Income Tax Relief) Act grants companies, operating in certain industries, that have a minimum expenditure of =N=50,000.00 (in the case of companies controlled by Nigeria indigenes) or =N=150,000.00 (in the case of any other company) a non-renewable tax holiday exempting the company from the obligation to pay corporate income and education tax, and the obligation to withhold tax on dividends for 5 years.
• Manufacturers and purchasers of local plant and machinery are entitled to an Investment Credit of 25% (for plant) and 15% (for machinery) – convertible to an Investment Allowance (“IA”).
• A company that is replacing plant and machinery is permitted to take a Capital Allowance of 95% of the qualifying expenditure in the first year with 5% retention as the book value until disposal. In addition, the CITA permits the company to claim an IA of 15% of the qualifying expenditure made in respect of the replaced assets.
• An industry engaged in research and development is allowed to deduct up to 120% of costs incurred and up to 140% of the cost if local materials are used.
• Capital Gains Tax is not charged in respect of gains from the sale of shares and stocks.
• The interest payable in respect of a loan granted to a Nigerian company by a foreign company may be exempt from tax, depending on the tenor of the loan and the moratorium granted. Applicable tax exemptions for loans are as follows:
Repayment Period including moratorium Grace Period Tax Exemption
More than 7 years Not less than 2 years 100%
5-7 years Not less than 18 months 70%
2-4 years Not less than 12 months 40%
Less than 2 years Nil Nil
Additional incentives are also granted in respect of investments in certain sectors such as the oil and gas, power, and agricultural sectors.
For example, where a company operating in the oil and gas sector utilises Nigeria’s natural gas resources, the incentives that are available include a tax holiday for an initial period of 3 years, which is renewable for an additional 2 years..
In the power sector, all areas of investment are considered to be pioneer and would, therefore, qualify for the grant of pioneer status.
In relation to agriculture, any company carrying out agricultural activities is entitled to an exemption from the provisions of section 28A of CITA which imposes a minimum tax on all companies regardless of whether or not they make a profit.
Other key matters to consider
In Nigeria, there are certain sectors which require special licenses to carry on business in those sectors. These include the telecommunications, banking, capital markets, insurance and the oil and gas sectors.
Agreements that provide for the transfer of foreign technology to Nigerian companies are required to be registered with the National Office for Technology Acquisition and Promotion (“NOTAP”) within 60 days of the execution of the agreement.
Conclusion
It is possible that the applicable laws relevant to the incorporation of companies may be revised or changed. We would, therefore, recommend that detailed legal advice should be sought and obtained in order to ensure that the information set out herein is up-to-date and/or applicable to your circumstances.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document

BUSINESS POLICY In Nigeria

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