Business, Small Business – Goldsmiths Solicitors Nigeria https://www.goldsmithsllp.com Goldsmiths Solicitors Nigeria Wed, 03 Jun 2026 09:49:51 +0000 en-US hourly 1 https://www.goldsmithsllp.com/wp-content/uploads/2025/05/cropped-Untitled-design-32x32.png Business, Small Business – Goldsmiths Solicitors Nigeria https://www.goldsmithsllp.com 32 32 Corporate Restructuring in Nigeria: When to Do It, Why It Matters, and How to Do It Right https://www.goldsmithsllp.com/corporate-restructuring-in-nigeria-when-to-do-it-why-it-matters-and-how-to-do-it-right/?utm_source=rss&utm_medium=rss&utm_campaign=corporate-restructuring-in-nigeria-when-to-do-it-why-it-matters-and-how-to-do-it-right Wed, 03 Jun 2026 08:26:47 +0000 https://www.goldsmithsllp.com/?p=10188

The legal process for restructuring is the most significant for a Nigerian company, and arguably, one that is the most often initiated incorrectly. Those who get restructuring right treat it as a thoughtful, planned process – one with clear commercial objectives and the benefit of legal advice that understands both the relevant legal and regulatory framework, and the desired business outcome. Those who get it wrong approach restructuring reactively: when time-critical, after a term sheet is signed or in the midst of a shareholder dispute that is already causing damage to the relationships the restructuring is intended to resolve. Below are the five typical triggers that can give rise to a restructuring in Nigeria: what options are available and what mistakes are the costliest when dealing with them. Please note that all references to stamp duties and other related fiscal levies apply in accordance with the Nigeria Tax Act (NTA) 2025, effective January 1, 2026.

1.  An Incoming Investor Requires a Holding Company Structure

It is quite common in Nigeria that, when dealing with private equity investors, development finance institutions or strategic acquirers, they  insist on conducting investment into a clean holding company, from which investment into the target operating company will be made. The argument for a holding company is quite clear:it gives clear access, separates investment from operating risks, and allows room for further investment, offshore subsidiaries and exiting. A restructured company will need to complete its holding structure arrangements before the close of the investment when there is a new investor already talking, a process which will likely cost more money and is more time-consuming. The following regulatory and tax procedures are needed to put in place a holding company above a Nigerian company:

  • Either a share for share exchange, or a new subscription into the holding company (newly created).
  • Filing with Corporate Affairs Commission (CAC) in relation to the transfer with each of the companies (if any) being transferred, and with the new holding company itself under Companies and Allied Matters Act (CAMA), 2020. Section 175 of CAMA dictates that share transfers need to be duly effected and entered into the company’s register, and as required by Section 176 of CAMA, CAC must be informed of any such transfer before it becomes effective.
  • Stamp duty implications under NTA 2025 retains the exemption on shares and stock transfers. Generally, ad valorem on instruments like the shareholders’ agreements and subscription documents need to be considered under NTA 2025. If offshore entities are being used, NIPC notification might be required in addition to regulatory clearances. Under NTA 2025, there have been important changes in relation to Capital Gains Tax (CGT); it is now taxed at income tax rates (30% on the company rate, and 0% on small companies, that is, companies having less than N100 million and less than N250 million on fixed assets, respectively). CGT now applies even to offshore share sales. Where indirect foreign share transfers have taken place, a CGT charge will apply, although it is possible to obtain relief based on applicable treaties. Such issues can significantly impact the tax consequences of structuring. A company can make a deliberate and conscious decision regarding its holding company’s domicile depending on the relevant investors, sectors and countries that the company is being implemented in and operates within; these countries which include Ireland Mauritius and Netherlands can offer exemptions from double tax treaties and different treatments on the taxation of dividends.
  • Nigeria Tax Act 2025’s controlled foreign company rules (CFC) which levy tax on untaxed profits from offshore subsidiary businesses, should be evaluated for all holding company choices.

2.  A Shareholder Dispute Makes the Current Structure Unworkable

No structure is ideal and shareholder disputes mean one company has become a battleground rather than a business. For co-founders who invested in an equal partnership and without reserved matters rights at inception, they have become stalemated over a major commercial decision. An early investor who failed to properly document their rights over the shares of a company might seek to impose conditions which are beyond what other stakeholders envisaged. The returning co-founder, for whom the company was always structured in an equal part despite holding no significant role, might seek a share sale based on an agreed initial valuation that no longer appears justifiable. Whatever the situation, restructures that are driven by disputes need the utmost care since they should have an immediate impact on the overall result of the disputes. Each of a share buy-back, demerger, capital reduction, or the transfer of a business into a new company has a different impact upon each shareholder, tax implications under NTA 2025 and regulatory requirements in Nigeria. The most appropriate tool will be determined based on the overall legal status of each party and the business goals being pursued through the restructure. The foremost principle is that the documentation must correctly document the arrangement agreed between the shareholders before regulatory actions can be taken. Creating additional legal risk for companies on an already fragile shareholder arrangement by attempting to justify post-facto the circumstances, rather than preceding the corporate restructuring, means there is additional legal risk.

 

 

Read the full update or download the PDF here.
]]> What Every Nigerian Employers & Employees Should Know About Employment Law https://www.goldsmithsllp.com/what-every-nigerian-employers-employees-should-know-about-employment-law/?utm_source=rss&utm_medium=rss&utm_campaign=what-every-nigerian-employers-employees-should-know-about-employment-law Mon, 01 Jun 2026 11:21:53 +0000 https://www.goldsmithsllp.com/?p=10178

On 1st May, Nigeria joined over 160 countries in celebrating International Workers’ Day, a public holiday that offers not just celebration, but a time for reflection. It is also a reminder of how wide the gap is between Nigerian labour law as written and the realities in many Nigerian workplaces. – This gap is not merely academic, but has real commercial consequences. For businesses that are unaware they are being targeted for unfair dismissal claims, for employees whose rights are not known, and for employers who think a one-page offer letter is sufficient for an employment contract, this article examines both sides of the employment relationship, because Workers’ Day is not about one without the other.
 

The Legal Framework: What Governs Nigerian Employment

The main legislation governing employment is the Labour Act (Cap L1), Laws of the Federation of Nigeria 2004 alongside the Employees Compensation Act, 2010, the Factories Act, LFN 2004, the 1999 Constitution (as amended) amongst others. The Act itself was passed in 1971 and has received little substantive reform since, thus, it does not adequately reflect the current realities of the modern Nigerian workplace.

Other sources of employment law in Nigeria include the Trade Unions Act Chapter T8, LFN 2004 and the National Industrial Court Act 2006 which made the National Industrial Court of Nigeria (NICN) the employment disputes court of record. In practice, however, the NICN sets the standard for how employer-employee disputes are settled in Nigeria and its judicial pronouncements in the last decade have moved decisively in the employees’ favour.

Five Things Nigerian Employers Should Audit Today

  1. Your employment contracts are NOT optional

Section 7 of the Labour Act requires employers to give employees a written declaration of terms of employment within 3 weeks of engagement. Most Nigerian employers satisfy this obligation with offer letters confirming salary, job title and start date – and little else. This is legally inadequate. A legally compliant employment contract should include: probation terms & conditions; grounds for termination & procedure; discipline and grievance procedures, confidentiality & intellectual property ownership; for senior staff, non-competition obligations (which must be drafted carefully to be enforceable under Nigerian law).

An unfinished contract does not protect the employer. This creates ambiguity which courts will resolve against the drafter – the employer.

  1. Wrongful Dismissal

The NIC has in a plethora of decided cases held that a fair hearing is an implied term in every employment contract in Nigeria, whether or not the contract provides for it explicitly. A company that fires an employee for gross misconduct without first investigating and without giving the employee time to respond is placing the employer at great legal risk. This is true even where the contract provides for a “termination with cause” or a “termination on notice” provision. The NICN has in several decisions required employers to exercise procedural fairness even where the substantive right to terminate is not in dispute.

Read the full update or download the PDF here.
]]> Five Important Contract Clauses Every Nigerian Business Should Audit Now https://www.goldsmithsllp.com/five-important-contract-clauses-every-nigerian-business-should-audit-now/?utm_source=rss&utm_medium=rss&utm_campaign=five-important-contract-clauses-every-nigerian-business-should-audit-now Fri, 08 May 2026 10:05:45 +0000 https://www.goldsmithsllp.com/?p=10107

Most Nigerian business owners know their contracts need attention. Yet, only a few have read them recently. There is a gap between what a contract actually says and what a business truly needs. In terms of scale, risk exposure, and commercial relationships, it grows wider every year the document is left unreviewed.  

This article examines five clauses that we consistently find in Nigerian business contracts. Each of them has real commercial consequences if it fails. All of them are fixable if the problem is identified before the dispute, the loss, or the failed deal.

  1. FORCE MAJEURE

A party is excused from performance under force majeure clauses where circumstances beyond its control prevent performance. The events mentioned in most Nigerian commercial contracts were drafted some few years ago and have not been reviewed and updated since then despite the annual or occasional  renewal of these contracts by parties.

These are the risks that should now appear in any properly drafted Nigerian force majeure clause: shortages of foreign exchange and difficulty in obtaining foreign exchange at the official rate, sudden regulatory intervention including CBN directives, NRS enforcement actions, and unforeseen sector-specific regulatory changes, digital infrastructure failures including internet outage or cloud service disruption, critical business systems become unusable because of power supply and energy failures, etc.

An outdated or unsupported force majeure clause is not protection, it is a false sense of security. The real question for every contract is not simply “does it contain a force majeure clause?” but “would this protect us if something went wrong today?”

  1. GOVERNING LAW AND JURISDICTION

The governing law determines which country’s laws will be applied in interpreting the contract. The jurisdiction that is stated is what will determine which court can hear the dispute. The difference between specifying Lagos courts and specifying Nigerian law as governing law and jurisdiction is not the same thing and this is one of the most frequent drafting errors in Nigerian commercial contracts. The governing law determines which country’s laws apply to the interpretation of the contract while jurisdiction determines which court can hear and determine the dispute.  

A contract between two companies that provides “Lagos courts” but not Nigerian law is an ambiguity that an adept opposing counsel will exploit in a dispute. As well, a contract that sets Nigerian law as the governing law without specifying jurisdiction opens the door to litigation in a venue neither party expected.

As such it is important that every contract must state:

  • The governing law (Nigerian law, English law, or another law as appropriate), and
  • The dispute resolution forum (a specific High Court, the Lagos Court of Arbitration, or institutional arbitration under LCIA or ICC International Court of Arbitration).
Read the full update or download the PDF here.
]]> Earth Day 2026: What Environmental Compliance Means for Nigerian Businesses https://www.goldsmithsllp.com/earth-day-2026-what-environmental-compliance-means-for-nigerian-businesses/?utm_source=rss&utm_medium=rss&utm_campaign=earth-day-2026-what-environmental-compliance-means-for-nigerian-businesses Wed, 22 Apr 2026 06:09:32 +0000 https://www.goldsmithsllp.com/?p=10069

Earth Day is a global reminder that environmental responsibility is no longer an ethical or reputational concern for businesses, it is a commercial one. For Nigerian businesses seeking international investment, DFI financing, or partnerships with multinational corporates, environmental compliance has become a fundamental prerequisite. For businesses in sectors with huge physical or operational footprints, it is a regulatory obligation backed by meaningful enforcement powers.

In Nigeria, the intersection of environmental regulation and corporate legal obligations is more consequential than most businesses appreciate. This article sets out the key environmental compliance requirements that Nigerian businesses need to understand going forward.

 

  1. NESREA: Nigeria’s Primary Environmental Enforcement Agency

NESREA is the primary federal agency responsible for environmental standards and enforcement in Nigeria. It operates under the National Environmental Standards and Regulations Enforcement Agency (Establishment) (Amendment) Act and has the authority to inspect business premises, issue compliance notices, levy fines, and institute criminal proceedings against companies and individual officers for environmental breaches.

NESREA’s regulations apply across a wide range of industries like manufacturing, construction, food processing, hospitality, waste management, and any industry that generates effluents, emissions or waste. The regulations cover: ambient air quality standards; water quality standards for industrial effluents; soil contamination limits; noise pollution limits; and chemical and hazardous waste handling requirements.

Many Nigerian businesses particularly those that have grown rapidly and not updated their compliance frameworks are operating in breach of one or more of these standards without being aware of it. A NESREA inspection that reveals non-compliance can result in fines, operational shutdowns, and in serious cases, criminal liability for individual directors and officers.

  1. Environmental Impact Assessments

The Environmental Impact Assessment Act requires that an EIA be conducted for all projects likely to have huge effects on the environment before those projects are approved and commenced. The categories of projects that require an EIA include public or private projects, including manufacturing, agriculture, mining, petroleum, and construction.

Nigerian businesses that have commenced projects that required an EIA without obtaining one face both regulatory exposure and practical risk: a project subsequently found to require an EIA can be shut down and required to undergo the process before it can recommence regardless of how much has been invested.

  1. Environmental & Social Compliance as an Investment Prerequisite

For Nigerian businesses seeking financing from Development Finance Institutions like the Africa Finance Corporation (AFC), African Development Bank (AfDB), Proparco: Société de promotion et de participation pour la coopération économique (Private sector financing arm of the AFD Group – Agence Française de Développement) and Deutsche Investitions-und Entwicklungsgesellschaft ( DEG – German development finance institution), environmental and social (E&S) compliance is not optional. DFI loan agreements incorporate E&S standards (typically the IFC Performance Standards or the Equator Principles) as binding contractual obligations, breach of which constitutes an event of default.

These E&S standards go beyond basic regulatory compliance to address: the assessment and management of environmental and social risks; labour and working conditions; resource efficiency and pollution prevention; community health, safety, and security; land acquisition and involuntary resettlement; and biodiversity conservation. A Nigerian business seeking DFI financing that has not invested in understanding and meeting these standards is unlikely to close a transaction.

Read the full update or download the PDF here.
]]> Nigerian Lending – Perfection. Banks and Borrowers Keep Making These 5 Mistakes https://www.goldsmithsllp.com/nigerian-lending-perfection-banks-and-borrowers-keep-making-these-5-mistakes/?utm_source=rss&utm_medium=rss&utm_campaign=nigerian-lending-perfection-banks-and-borrowers-keep-making-these-5-mistakes Wed, 15 Apr 2026 10:37:52 +0000 https://www.goldsmithsllp.com/?p=10041

There is no loan facility stronger than the security that underlies it. Any bank that doesn’t properly secure its assets is not a secured creditor. And a borrower that does not understand its perfection obligations might find that its representations to its lender were false. These are five security perfection mistakes we see often and every party involved in a Nigerian credit transaction needs to know about them.

  1. Unregistered Charges at the CAC

Charges by a Nigerian company over its assets must be registered with the CAC within 90 days under the Companies and Allied Matters Act 2020. An unregistered charge is void against a liquidator, administrator, or any other creditor, so the secured lender is essentially on par with all other unsecured creditors in an insolvency or enforcement situation.

We know this is a requirement, but it is often not met, especially in transactions where several parties move very quickly, where the borrower’s lawyers are doing all the perfecting without the lender being involved in the process, or where post-closing perfection undertakings are given but never enforced.

A documented perfection checklist, under lender counsel supervision, with CAC registration evidence gathered and verified before drawdown – that’s the solution. The principle is simple: There is no registration and there is no drawdown.

  1. Missed or Incorrect Stamp Duty

Loan agreements, debentures and mortgages in Nigeria are subject to Stamp Duty. In Nigerian courts, an unstamped or inadequately stamped document is not admissible as evidence. The document does not disappear; the parties remain obligated to each other. It removes the possibility that those obligations can be enforced in courts.

In many cases, the stamp duty position on complex instruments such as debentures with multiple asset classes, syndicated facilities with multiple lenders, and cross-border security packages is not clear, and Nigerian stamp duty law has not kept up with the pace of modern lending transactions. Lenders and their advisers should not rely on precedent or think that what was accepted in a previous transaction will be accepted here. Specific advice on the position of each instrument before execution is the standard.

 

  1. DEFECTIVE DEBENTURES

Debentures with defects create both fixed and floating charges on a company’s assets. But the scope and enforceability of those charges depends entirely on how the debenture is written – and badly written debentures are very common in Nigerian lending transactions.

The most common defects are:

  • It fails to mention the asset classes that bear the primary security value.
  • Use of ambiguous descriptions of charged assets.
  • Not including important provisions for the crystallization of the floating charge into a fixed charge.

Debenture provisions that violate the company’s articles of association are unlikely to be fit for purpose. That goes for FinTechs, technology companies and businesses whose assets are intangible.

Read the full update or download the PDF here.
]]> New Rules for Agent Banking in Nigeria https://www.goldsmithsllp.com/new-rules-for-agent-banking-in-nigeria/?utm_source=rss&utm_medium=rss&utm_campaign=new-rules-for-agent-banking-in-nigeria Fri, 24 Oct 2025 13:46:00 +0000 https://www.goldsmithsllp.com/?p=9349 On 6 October 2025, The Central Bank of Nigeria (CBN) issued the Guidelines for the Operations of Agent Banking in Nigeria (the “Guidelines”). The purpose of the Guidelines is the provision of the minimum standards for the regulations and operations of agent banking in Nigeria. They provide for the responsibilities and obligations of the parties to agent banking relationships and the general operational rules which must be adhered to by the parties in an agent banking relationship. The Guidelines became operational immediately upon its issuance on 6th October 2025, however, the requirement for payment terminal devices such as Point of Sale (POS) devices to be geo-fenced or tagged is scheduled to be operational from 1st April 2026.

Agent banking entails the provision of financial services by a third party (Agents) to customers on behalf of a licensed deposit-taking financial institutions (Principals).

This article therefore provides an overview of some of the key provisions of the new Guidelines.

Scope of Permissible Agent Banking Activities

The activities which are allowed or prohibited under agent banking relationships are set out in the Guidelines. Some of the activities that are permitted under agent banking are cash deposits and withdrawals, facilitating bill payments, local currency funds transfer services, providing account opening forms on behalf of principal, facilitating cheque book request and collection, etc.

Super Agents and Agents are however prohibited from carrying out banking services including account opening, loan underwriting, investment and foreign exchange services.

Agent Banking Arrangements

Agent banking arrangements or relationships could involve two or three parties as the case may be. Agent banking relationship could involve the Principal and the Agents or where the relationship is tripartite, include a Super Agent as an intermediary between the Principal and Agents.

The Principal is a duly licensed deposit-taking financial institutions authorized to carry out agent banking activities; the Super Agent is an incorporated entity licensed to carry out the activities of recruiting, aggregating and managing Agents, while Agents are individuals or non-individual entities appointed by Principals or Super Agents to carry out agent banking activities.

An agent banking relationship is formalized when a financial institution enters into an agent banking agreement with an Agent for the purpose of providing any of the permitted agent banking activities. An Agent cannot be engaged by more than one financial institution to provide agent banking services or be under more than one network of Super Agent at a time.

Mandatory Regulatory Requirements for Appointment of Agents

Financial institutions and Super Agents have very strict regulatory obligations in the appointment of Agents to provide permitted agent banking services to customers. These regulatory requirements are to be met by financial institutions or Super Agents prior to the appointments of Agents. The regulatory requirements include obtaining satisfactory documentations from Agents such as certificate of incorporation with the Corporate Affairs Commission (CAC), particulars and Bank Verification Numbers (BVN) of directors/promoters etc., conducting enhanced due diligence on Agents, and carrying out risk assessment obligations on Agents prior to their appointment and onboarding. The risk assessment could be carried out directly by the financial institution or through a Super Agent.

Use of Dedicated Agent Accounts

Transactions by Agents within the scope of the permitted activities are required to be performed through a dedicated account or wallet maintained with the Principal and the POS device provided to the Agent shall be linked with the account or wallet only. Performance of transactions outside the dedicated account or wallet is a violation which attracts sanctions including liability for any misconduct or fraud arising from the transaction, termination of the agent banking agreement and blacklisting of the Agent.

List of Agents and Locations

Financial institutions are to publish a list of their Agents on their website. Each branch of the financial institution is also required to display the list of its Agents within its locality.

Agents are only allowed to provide agent banking services within their approved locations and may not relocate, transfer or close their operations at the approved locations without prior notification to the financial institution and/or Super Agent.

To prevent Agents from operating at multiple locations, devices provided to Agents in providing agent banking services must be geo-fenced or tagged to the operate only within the agreed registered Agent location. The requirement for the devices to be geo-fenced or tagged will take effect from 1st April 2026.

Operational and Transactional Limits

Financial institutions are required to provide operational and transactional limits for Agents in line with the Guidelines and ensure that the limits are not exceeded in the provision of agent banking services. Accordingly, the mandatory transaction limits set by the Guidelines include N100,000 daily limit and N500,000 weekly limit for deposits and withdrawals. A daily and weekly limit of N100,000 apply to bill payments.

Sanctions and Penalties

The CBN may direct financial institutions to take remedial or corrective actions including taking actions that it may deem appropriate against erring Agents or terminating the Agent Banking Agreement. CBN may also impose sanctions and penalties against financial institutions, Super Agents and/or Agents as the case may be. The sanctions which CBN may impose include:

  1. Suspension or prohibition from further engagement in agent banking business
  2. Prohibition from onboarding new agents
  3. Suspension or removal of the Board, Management and officers of the Principal
  4. Revocation of agent banking approval
  5. Revocation of operational license.

Conclusion

The issuance of the new Guidelines by CBN is to ensure the regulation of the operations of agent banking in Nigeria. Agents are restricted to transact only the permitted business activities within their approved locations. The devices of Agents are to be geo-fenced or tagged to prevent Agents from operating from multiple locations. Agent banking arrangements are to be formalized with the execution of agent banking agreements upon the satisfactory review of the documentations, conduct of enhanced due diligence and risk assessments. CBN has the power to direct financial institutions who are Principals in agent banking arrangements to take remedial or corrective actions, however, CBN has extensive powers to impose administrative penalties and sanctions on erring Principals and Super Agents.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

]]> All You Need to Know About Nigeria’s Newly Signed Tax Reform Acts https://www.goldsmithsllp.com/all-you-need-to-know-about-nigerias-newly-signed-tax-reform-acts/?utm_source=rss&utm_medium=rss&utm_campaign=all-you-need-to-know-about-nigerias-newly-signed-tax-reform-acts Wed, 02 Jul 2025 09:01:06 +0000 https://www.goldsmithsllp.com/?p=9239 Introduction

On 26th June 2025, the President of the Federal Republic of Nigeria signed four landmark tax reform bills into law, marking a significant shift in the nation’s tax landscape. The laws are the Nigeria Tax Act (Ease of Doing Business), the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act. Once operational, these laws are expected to simplify tax administration, improve compliance, enhance revenue generation, and foster a more business-friendly environment. The implementation of the newly signed four tax fiscal reform laws will commence by 1st January 2026.

This article outlines some notable highlights of the Acts that individuals and businesses should be aware of.

Key Highlights of Nigeria’s Newly Signed Tax Reform Acts

Some of the highlights of the newly signed Tax Reform Acts include:

  1. Personal Income Tax Relief: Low-income earners earning NGN800,000 or less per annum are completely exempted from personal income tax under the Nigeria Tax Act (NTA). 25% personal income tax applies only to individuals earning above N50 million annually. The Act also increases the tax exemption threshold for compensation for loss of employment or injury from NGN10million to NGN50million.
  2. VAT Exemptions on Essential Goods and Services: Essential goods and services including food items, medical equipment and services, pharmaceuticals, tuition fees, electricity, educational books and materials, exports (excluding oil and gas exports) etc., are exempted from VAT. The impact of this is that businesses selling these goods and services can recover their VAT costs, despite the zero rate.
  3. Establishment of Nigeria Revenue Service (NRS): The Federal Inland Revenue Service (FIRS), the agency established to regulate the collection of tax in Nigeria has now become Nigeria Revenue Service (NRS). The Nigeria Revenue Service (Establishment) Act repeals the current Federal Inland Revenue Service Act and defines the NRS’ expanded mandate, including non-tax revenue collection of other agencies such as the Nigeria Customs Service, Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Nigeria Ports Authority (NPA), among others. The Bill also lays out transparency, accountability, and efficiency mechanisms. The Acts also provide that State Internal Revenue Services (SIRS) will be autonomous in the running of their affairs.
  4. Increase in Tax Exemption Threshold for Small Companies: Prior to the assent of the Acts, only small companies with an annual gross turnover of less than N25m were exempted from tax. Under the new Acts, there is an increase in the tax exemption threshold for small companies from annual gross turnover of N25m to N100m. Thus, small companies with gross turnover of N100m and below and total fixed assets not exceeding NGN250million are now exempt from Companies Income Tax (CIT), Capital Gains Tax (CGT) and the newly introduced Development levy.
  5. Increased Capital Gains Tax (CGT) rate – The NTA increases the CGT rate from 10% to 30% for companies, aligning the CGT and CIT. For individuals, capital gains will be taxed at the applicable income tax rate based on the progressive tax band of the individual.
  6. Introduction of Development Levy – Nigerian companies except small companies will pay a “Development Levy” at 4% of their assessable profits. The Development Levy consolidates the Tertiary Education Tax (TET), Information Technology Levy (IT), the National Agency for Science and Engineering Infrastructure (NASENI) levy and the Police Trust Fund (PTF) levy.
  7. Introduction of Economic Development Incentive – The Acts replace the “pioneer” tax holiday with a new Economic Development Incentive (EDI), offering a 5% annual tax credit for 5 years on qualifying capital expenses made by eligible companies within 5 years from production start. Unused credits can be carried forward for another 5 years, after which they expire.
  8. Minimum Effective Tax Rate (ETR) – Nigerian companies who are members of a multinational group with aggregate group turnover of EUR750million and above or have an annual turnover of NGN50billion and above, will now be subject to ETR of 15% of their “Net Income”. This rule does not apply to Free Zone companies on their exports out of Nigeria, provided that such companies are not part of multinational groups.
  9. Introduction of the Office of Tax Ombuds: Under the new Acts, an Office of Tax Ombud has been introduced to protect taxpayers against arbitrary tax assessments. The Tax Ombuds office will liaise with the tax authorities on behalf of taxpayers and serve as an independent arbiter to review and resolve complaints relating to taxes, levies, duties or similar regulatory charges.
  10. Increased penalties for non-compliance: There has been a significant increase in non-compliance penalties and the introduction of new penalties. Some of the updates include increase in the penalty for failure to file returns to NGN100,000 in the first month, and NGN50,000 for every month the failure continues, introduction of new penalties such as penalty of NGN5million for awarding contracts to individuals or entities that are not registered for tax, penalties for failure to grant access for deployment of technology, inducing a tax officer, etc.
  11. Powers for AGF to Deduct Taxes: The new laws grant the Attorney General of the Federation (AGF) powers to deduct unremitted taxes by a government or MDA and pay to the beneficiary government.
  12. VAT and CIT Rates Remain the Same: Under the new laws, Value Added Tax (VAT) remains at 7.5% and Company Income Tax (CIT) for large companies remains at 30%, without any increment. However, the 30% rate can be reduced to 25% effective from a date as may be determined in an Order issued by the President on the advice of the National Economic Council.
  13. Tax Incentives for Agricultural Companies: Income generated by companies engaged in agricultural businesses, including crop production, livestock, aquaculture, forestry, dairy, cocoa processing and manufacturing of animal feeds will be exempt from income tax for the first five (5) years from commencement of business.

Other notable reforms introduced by the new Acts include; transfer of income from Electronic Money Transfer levy exclusively to states as part of stamp duties, ceding of 5% of VAT revenue to states by the federal government, tax break or incentives for employers to hire more people, tax exemption on personal effects not exceeding N5m, VAT exemption on purchase of real estate, amongst others.

Conclusion

The signing of the four landmark tax reform Acts in Nigeria marks a significant transformation in Nigeria’s tax regime. The reforms introduced by these Acts are expected to reduce the tax burden on vulnerable groups, encourage MSME growth, and stimulate foreign and local investments. Businesses are advised to reassess their compliance strategy and consult with legal or tax professionals to understand how the new laws affect their operations.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com or contact:

]]> Regulatory Compliance Checklist for Start-ups in Nigeria https://www.goldsmithsllp.com/regulatory-compliance-startups-nigeria/?utm_source=rss&utm_medium=rss&utm_campaign=regulatory-compliance-startups-nigeria Thu, 27 Mar 2025 11:20:32 +0000 https://goldsmithsllp.com/?p=8971 Almost three years after The Start-up Act, was signed into law in Nigeria, the jury is still out as to whether or not it has made any difference at enhancing the development and growth of the Nigerian Startup sector and encouraged innovation and entrepreneurship for startups.

In October 2022, Nigerian president at the time, signed the Start-up Act, which aimed to enhance the development and growth of the Nigerian Startup sector and encourage innovation and entrepreneurship for startups.

As a result of this Act, there has no doubt been a lot of regulatory attention on Start-ups, with regulatory compliance becoming an important factor for new companies to consider.

A start-up can be referred to as a company that is in the early or initial stages of business or development. According to the Nigerian Startup Act, 2022, a start-up is a company which has been in existence for a period not more than 10 years.

Generally, all companies, whether start-ups or not, must satisfy certain regulatory requirements in order to remain operational and avoid sanctions by regulators. It is therefore necessary for Start-ups to stay informed of the compliance requirements relevant to them and to comply with those requirements.

Below are some of the regulatory requirements Start-ups should watch out for

1. Incorporation of Company

It is a mandatory requirement that all businesses in Nigeria must be incorporated with the Corporate Affairs Commission (CAC) in accordance with the Companies and Allied Matters Act (CAMA), 2020. Incorporation grants your company legal identity and is mandatory before an organization commences business. For official information and updates on company incorporation and compliance, visit the Corporate Affairs Commission’s Public Notes 

 

2. Regulatory Compliance for Tax Registration and Filings

Start-ups must register with the Federal Inland Revenue Service (FIRS) and State Inland Revenue Service for remittance of Company Income Tax (CIT), Value Added Tax (VAT), Personal Income Tax and Withholding tax (WHT) where applicable.

Upon registration with the FIRS, a company is issued a Tax Identification Number (TIN), which serves as the company’s identification number for all dealings with the federal tax authorities. Failure to register for tax will attract sanctions from the FIRS.

The first CIT must be filed within 18 months of incorporation, and subsequently within six months of their financial year-end. Companies are also required to file and remit VAT on or before the 21st day of the month following that which the transaction was made.

Remittance of Personal Income Tax or PAYE (Pay As You Earn) on behalf of local employees are to be filed monthly to the state government where the worker resides on or before the 10th day of the month following the month of deduction.

Additionally, employers are required to file annual PAYE returns not later than 31st January in respect of all employees in its employment in the preceding year.

WHT returns are to be filed monthly within 30 days from the date the amount was deducted or the time the duty to deduct arose. Failure to file the relevant tax returns result in penalties and tax liabilities.

 

3. Post incorporation filings

Any changes in any company’s structure, such as directorship, shareholding, registered address, etc. must be filed with and approved by the CAC. Annual returns (Statement of Affairs if the company has not commenced business) must also be filed to maintain active status with the CAC. For start-ups, the first annual returns must be filed within 18 months of incorporation of the company and subsequently on an annual basis. Failure to file annual returns could result in the company being declared inactive and ultimately deregistered. Also, late filing of annual returns attracts a penalty for each year of default.

 

4. Industry-Specific Licenses and Permits

Depending on the sector in which you operate, specific licenses or permits from regulatory bodies may be required. For example, sports betting companies require licenses from the state lottery boards and financial services companies require licenses from the Central Bank of Nigeria, Securities and Exchange Commission etc. For a company with foreign participation, it is required to obtain a business permit from the Federal Ministry of Interior which allows the company to commence business operations in Nigeria.

 

5. Mandatory Meetings for Regulatory Compliance

Companies are mandated to hold Annual General Meetings (AGM) and board meetings. Companies may hold extraordinary general meetings as they deem fit. For a start-up company, the first AGM must occur not later than 18 months of incorporation, with subsequent AGMs held no later than 15 months after the last AGM. Regarding board of directors’ meeting, the first board meeting should take place within six months of incorporation. Subsequently, the Directors may have meetings from time to time as they deem necessary.

 

6. NSITF Contribution and Pension

Employers must contribute 1% of their employee monthly payroll to Nigerian Social Insurance Trust Fund (NSITF) every year and remit monthly pension contribution of 8% for the employee and 10% for the employer with an approved Pension Funds Administrator (PFA) not later than 7 days of payment of salary every month. Start-ups must make their first NSITF contribution within two years of commencing operations. Companies that fail to make the required contribution to NSITF, shall pay a fine of at least 2% of the amount due to be remitted, in addition to the amount to be paid.

 

7. Nigerian Data Protection Commission Registration and Data Audit

Companies controlling or processing personal data must register with the Nigerian Data Protection Commission (NDPC) and file annual data audit reports. These companies are referred to as data controllers and data processors of major importance. Start-ups that control and process data are mandated to register with the NDPC upon incorporation failure to do so or late registration incurs penalties.

 

8. Brand Protection

Although not mandatorily required, Start-ups and existing companies are advised to protect their intellectual property or intangible assets by registering trademarks, patents, and copyrights with the Federal Ministry of Industry, Trade, and Investment. This prevents competitors from unlawfully copying, counterfeiting and registering your brand.

 

9. Corporate Governance

In Nigeria, companies are required to adhere to corporate governance best practices to ensure proper management. Companies in some specific industries are also required to set up sub-committees to effectively undertake the business of the companies. For example, some corporate governance requirements can be found under CAMA 2020, the Nigerian Code of Corporate Governance (NCCG), 2018, the Code of Corporate Governance for Public Companies (CCGPC) 2011; Code of Corporate Governance for Banks and Discount Houses in Nigeria 2014, amongst others. Start-ups are required to comply with the codes relevant to their industries.

 

9. Nigerian Investment Promotion Commission (NIPC) Registration

The Nigerian Investment Promotion Commission (NIPC) is a government agency established to encourage, promote and coordinate investments in Nigeria. Whether wholly or jointly owned by foreigners, start-ups intending to operate in Nigeria must register with the NIPC before the commencement of business operations.

 

10. National Office for Technology Acquisition and Promotion (NOTAP) Registration

Nigerian companies seeking to enter into contracts or agreements with a foreigner for the transfer of foreign technology to Nigerians are expected to register the contracts with NOTAP. Failure to register the contract will however not affect the validity of the contract but will prevent the Nigerian entity from making payments from Nigeria through any licensed bank in Nigeria to any person outside Nigeria.

 

11. Special Control Unit Against Money Laundering (SCUML) Registrations

Designated Non-Financial Institutions (DNFIs) which include construction, consulting, financial services, tax companies, etc. must register with the Special Control Unit Against Money Laundering (SCUML) of the Economic and Financial Crimes Commission (EFCC) and obtain a registration certificate. DNFIs are also expected to submit their cash-based transaction reports and Currency Transaction Reports to SCUML for onward forwarding to the Nigeria Financial Intelligence Unit (NFIU).

 

Conclusion

Almost three years after The Start-up Act, was signed into law, the jury is still out as to whether or not it has made any difference at enhancing the development and growth of the Nigerian Startup sector and encourage innovation and entrepreneurship for startups. There are numerous and enormous mandatory regulatory requirements which Start-ups (and existing companies) must comply with in Nigeria. Navigating regulatory landmines in Nigeria is vital for the success and sustainability of any business. Regulatory compliance keeps companies legally protected, helps them  identify and mitigate risks and enhances operational efficiency.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

]]> How to Obtain International Money Transfer Operators (IMTO) License from the Central Bank of Nigeria https://www.goldsmithsllp.com/how-to-obtain-international-money-transfer-operators-imto-license-from-the-central-bank-of-nigeria/?utm_source=rss&utm_medium=rss&utm_campaign=how-to-obtain-international-money-transfer-operators-imto-license-from-the-central-bank-of-nigeria Tue, 25 Feb 2025 09:27:54 +0000 https://goldsmithsllp.com/?p=8966 An International Money Transfer Operator (IMTO) is a company approved by the Central Bank of Nigeria (CBN) to facilitate the transfer of funds from individuals or entities residing abroad to recipients in Nigeria. Cross-border money remittances into Nigeria by any financial institution are regulated by the CBN.

Therefore, any person or entity desiring to provide inbound cross-border money remittance in Nigeria is required to be licensed as an IMTO with the CBN. Under the previous regime provided by the Guidelines on International Money Transfer Services in Nigeria, 2014, IMTOs were able to engage in both inbound and outbound international money transfer but this is no longer the case following the new Guidelines issued by the CBN in January 2024 which restrict IMTOs only to inbound international money transfers.

To obtain an IMTO license in Nigeria, an applicant must meet specific eligibility requirements. These requirements would usually include share capital, policies and other documentary requirements.

The key regulatory framework applicable to IMTOs in Nigeria is the CBN Guidelines on International Money Transfer Services in Nigeria, 2024. These Guidelines outline the permissible and non-permissible activities for IMTOs, requirements to obtain IMTO license, etc.

Permitted Operations for IMTOs

IMTOs are now permitted to process only inbound international money transfer transactions.  This means that IMTOs can only accept and transfer monies to persons resident in Nigeria or render money transfer services towards family maintenance or in favour of foreign tourists visiting Nigeria, etc.

Non-Permitted Operations

IMTOs are prohibited from engaging in outbound transactions and purchasing foreign exchange from the domestic foreign exchange market for settlement. IMTOs are strictly limited to the permitted activities and any activity beyond the permitted operations is prohibited.

Procedure for Obtaining IMTO License from the CBN

The application for IMTO license is made in two stages which are Approval-in-Principle (AIP) and Final Approval.

  1. Approval-in-Principle

An applicant of an IMTO license is required to first apply to the CBN for the grant of an Approval-in-Principle. The application is made to the Director of the Trade and Exchange Department of the CBN. At this stage, the applicant is required to pay a non -refundable application fee to the CBN and submit the required supporting documentations. The documents required for the purpose of obtaining Approval-in-Principle include:

  1. Approval to operate in other jurisdictions or agency agreement
  2. Evidence of tax clearance and incorporation documents in Nigeria
  3. Ownership structure of the IMTO
  4. Board of Director’s approval to operate international money transfer services
  5. Profile of the company which shall include the Curriculum Vitae, biodata and contact details of the board and management of the company.
  6. Credit reports on shareholders and other key officers obtained from a licensed credit bureau
  7. Minimum share capital requirement of $1,000,000 (One Million USD) for foreign IMTOs and the equivalent in Naira for local IMTOs.
  8. Any other information or documents as may be required by the CBN.

The CBN will review the application together with the supporting documents and decide whether or not to grant Approval-in-Principle. The grant of Approval-in-Principle by the CBN does not authorize the commencement of business operations but only allows the applicant to proceed to open bank account and process pre-operational requirements and processes.

  1. Final Approval

No later than three months of obtaining Approval-in-Principle, an IMTO is required to apply to the CBN for a final approval to enable it commence business operations. To obtain final approval from the CBN, the applicant must submit the following information and documents to the CBN:

  1. Names of Authorized Dealer Banks
  2. Detailed business plan which addresses the nature of business, internal control systems and monitoring procedures, security features, three years financial projections, illustration of transaction flows, dispute resolution mechanism, information technology policy, etc.
  3. Enterprise risk management framework
  4. Business continuity plan
  5. Project deployment plan
  6. Any other information which the CBN may require.

If the CBN is satisfied that the applicant has met the requirements for the grant of a final licence, a licence shall be granted for a period of one year.

Renewal of IMTO License

IMTO licenses are subject to renewal annually upon the payment of the license renewal fee to the CBN on or before 31st January of the year. The CBN allows the IMTO’s agent bank to cease further transactions with the IMTO where the IMTO fails to make a copy of its renewal license available to the agent bank within the first quarter of the year.

Prohibited Entities

The prevailing CBN IMTO regulations prohibit all banks and financial technology (FinTech) companies from providing IMTO services. However, banks can act as agents to IMTOs. The implication is that banks and FinTech companies cannot apply to the CBN to obtain IMTO licenses.

Under the previous IMTO regulatory regime, banks and FinTech companies were eligible to obtain IMTO license and provide IMTO services.

Conclusion

International money transfer services in Nigeria are regulated by the CBN and it is required that IMTO license is obtained from the CBN before any person or entity can provide international money transfer services in Nigeria. The CBN has set the minimum shared capital and documentations required for applicants of IMTO license in Nigeria. Banks and FinTechs are prohibited from operating an IMTO License.

IMTOs can now only engage in inbound international money transfer services and are prohibited from outbound money transfers. IMTO license is processed in two stages of “Approval-in-Principle” and “Final Approval”. The IMTO license is valid for one year and subject to renewal on or before the 31st of January each year. 

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

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