Compliance Obligations Of Foreign-Owned Companies Operating In Nigeria

INTRODUCTION

Nigeria remains an attractive destination for foreign direct investment due to its large market, strategic location, and evolving regulatory environment. Foreign investors seeking to carry on business in Nigeria typically do so through companies incorporated locally, even where ownership resides wholly or partly with non-Nigerian individuals or entities.

For the purpose of this article, a “foreign-owned company” refers to a company incorporated in Nigeria in which ownership is held entirely or substantially by foreign persons or entities. This may be distinguished from companies with “foreign participation,” where foreign involvement is limited to a minority shareholding or the presence of a foreign director, without necessarily conferring control of the company. Although the Companies and Allied Matters Act, 2020 (CAMA) (which is the primary legislation governing companies in Nigeria) does not expressly classify companies along these lines, the distinction is recognised in practice, particularly within Nigeria’s investment and immigration regulatory framework.

Regardless of the degree of foreign involvement, companies with foreign ownership or participation are subject to a range of statutory and regulatory obligations designed to ensure transparency, accountability, and proper integration into the Nigerian business environment.

This article examines the key compliance obligations applicable to foreign-owned companies operating in Nigeria, with particular emphasis on the provisions of CAMA and other applicable legal and regulatory frameworks.

INCORPORATION REQUIREMENTS UNDER CAMA

A fundamental requirement under CAMA is that a foreign company shall not carry on business in Nigeria unless it is incorporated with the Corporate Affairs Commission (the “CAC”) as a separate legal entity except exempted as provided under CAMA. A foreign company may be exempt from the requirement to incorporate in Nigeria where it is:¹

1. a government-owned entity engaged solely in export promotion activities;
2. invited or approved by the Federal Government to execute specified individual projects;
3. an engineering consultant or technical expert engaged in individual specialist projects under contract with government bodies or approved by the Federal Government; or
4. executing specific loan-funded projects on behalf of a donor country or international organisation.

MINIMUM SHARE REQUIREMENTS CAPITAL

While CAMA prescribes a minimum issued share capital of ₦100,000.00 for private companies and ₦2,000,000.00 for public companies², companies with foreign participation or foreign-owned companies are subject to higher capital thresholds under immigration and investment regulations. Section 3 of the Federal Ministry of Interior’s Revised Handbook on Expatriate Quota Administration 2022 provides that both types of companies must maintain a minimum paid-up capital of ₦100,000,000.00³ as a condition to obtain a business permit and expatriate quota approvals (which are mandatory requirements for both types of companies).

Prior to this revision, regulatory practice under the Ministry of Interior and the Nigerian Investment Promotion Commission framework required a minimum share capital of ₦10,000,000.00 for companies with foreign ownership. The increase reflects the government’s policy to ensure that foreign-owned entities or entities with foreign participation demonstrate sufficient financial capacity before commencing business operations in Nigeria.

REGISTRATION WITH THE NIGERIAN INVESTMENT PROMOTION COMMISSION

Foreign-owned companies are required to register with the Nigerian Investment Promotion Commission (the “NIPC”) prior to commencing business operations in Nigeria, as provided under Section 20 of the NIPC Act 2004⁴. This registration enables lawful operation and access to investment protections, including guarantees against unlawful expropriation and access to investment incentives.⁵ The NIPC also issues a Business Registration Certificate, as evidence of such registration and recognition of foreign investment.

ANNUAL RETURNS FILING UNDER CAMA

Foreign-owned companies like every entity incorporated in Nigeria, are required to file annual returns with the CAC within 18 months of incorporation⁶. Subsequent annual returns are to be filed not later than 42 days after the annual general meeting. Annual returns serve as confirmation that the company remains active and compliant. Failure to file annual returns may result in penalties and could ultimately lead to the company being struck off the register of companies by the CAC.

IMMIGRATION AND EXPATRIATE EMPLOYMENT COMPLIANCE

Foreign-owned companies employing expatriates must comply with immigration regulations administered by the Nigeria Immigration Service.

Key requirements include without limitation the following:

1. Obtaining expatriate quota approvals⁷;
2. Securing Combined Expatriate Residence Permit and Aliens Card (CERPAC) ⁸; and
3. Ensuring expatriates possess valid work permits⁹.

These approvals enable foreign nationals to legally reside and work in Nigeria.

SECTOR SPECIFIC REGULATORY COMPLIANCE

Foreign-owned companies operating in regulated sectors such as banking, telecommunications, oil and gas, or capital markets are subject to additional compliance obligations imposed by sector regulators such as the Securities and Exchange Commission, Central Bank of Nigeria, Nigerian Data Protection Commission (the “NDPC”), and other relevant regulatory authorities.

Such compliance obligations may include licensing requirements, reporting obligations, operational approvals, and adherence to sector-specific regulatory guidelines. In particular, where foreign-owned companies process personal data in Nigeria or handle the personal data of Nigerian data subjects, they are required to comply with the provisions of the Nigeria Data Protection Act, 2023 and the General Application Implementation Directive, 2025, including registration with the NDPC where applicable, data protection impact assessments, and ongoing compliance audits.

CORPORATE GOVERNANCE AND STATUTORY RECORD-KEEPING

Foreign-owned companies must maintain statutory registers and records as required under CAMA. These are not limited to the following:

1. Register of members of the company¹⁰;
2. Register of directors ¹¹;
3. Register of directors’ residential address;¹²
4. Register of persons with significant control¹³;
5. Minutes of meetings¹⁴; and
6. Accounting records¹⁵.

Where a foreign company fails to maintain required statutory registers or records, the company and every officer in default are liable to a penalty as may be prescribed by CAMA or by regulations issued by the CAC.

TAX REGISTRATION AND COMPLIANCE OBLIGATIONS

Upon incorporation, foreign-owned companies must register with the Nigeria Revenue Service (NRS) for tax purposes. Key tax compliance obligations include:

1. Registration for companies income tax;
2. Registration for value added tax;
3. Filing of annual tax returns;
4. Maintaining proper accounting records; and
5. Deducting and remitting withholding taxes where applicable.

The Nigeria Tax Act 2025 provides that tax is payable on the profits of any company accruing in, derived from, brought into or received from Nigeria.¹⁶ Failure to comply with tax obligations may result in penalties, interest, and potential regulatory sanctions.

Where a foreign-owned company operates in a regulated sector such as oil and gas, it must comply with the relevant sector rules, including paying petroleum profits tax.¹⁷

CONCLUSION

Foreign-owned companies operating in Nigeria must comply with a clear legal and regulatory framework that ensures transparency, accountability, and good corporate governance. Compliance is important not only to avoid penalties but also to ensure smooth business operations and maintain good relationship with regulators. Foreign investors are therefore advised to engage competent legal and regulatory professionals to ensure full compliance with applicable laws and regulations.

By maintaining proper compliance structures, foreign-owned companies can effectively establish and sustain their presence within Nigeria’s dynamic business environment.

Footnotes

1 Section 78(1) of the Companies and Allied Matters Act 2020

2 Section 27(2)(a) of the Companies and Allied Matters Act 2020

3 Section 3 of the Federal Ministry of Interior’s Revised Handbook on Expatriate Quota Administration 2022

4 Section 20 of the Nigerian Investment Promotion Commission Act 2004

5 Section 24 -25 of the Nigerian Investment Promotion Commission Act, 2004

6 Sections 417-419 of Companies and Allied Matters Act 2020

7 Sections 1 & 2 of the Revised Handbook on Expatriate Quota Administration 2022

8 Section 38(1) of the Immigration Act 2015, Regulation 9 of the Immigration Regulations, 2017

9 Section 37(1) of the Immigration Act 2015

10 Section 109 Companies and Allied Matters Act 2020

11 Section 318(1) Companies and Allied Matters Act 2020

12 Section 320(1) Companies and Allied Matters Act 2020

13 Section 119(3) Companies and Allied Matters Act 2020

14 Section 266(1) Companies and Allied Matters Act 2020

15 Section 374(1) Companies and Allied Matters Act 2020

16 Section 6(1) Nigeria Tax Act 2025

17 Section 78 Nigeria Tax Act 2025

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.