Legal Matters in The Operation of Foreign Agribusiness Companies in Nigeria

For a business to partake in any agribusiness activity, either regarding ownership or transacting with establishments in another country, there must be a legal procedure. This article discusses the guidelines for foreign participation in the Nigerian agribusiness domain.

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Operation of Foreign Agribusiness Companies in Nigeria

Apart from Nigerian-grown business organizations, the Nigerian agribusiness environment also allows foreign companies to operate. Non-Nigerians are encouraged to invest and participate in the operation of any agribusiness enterprise in Nigeria.

However, the promoters or investors would have to register a company in Nigeria. This company will be a separate and distinct entity from its parent company.

Until incorporated, a foreign company may not carry on agribusiness in Nigeria or exercise any of the powers of a registered company, although this does not exclude the company from enjoying legal and legitimate rights (i.e., suing or being sued).

A foreign agribusiness investor may incorporate a Nigerian branch or subsidiary of the parent company by giving a Power of Attorney to a qualified solicitor in Nigeria for this purpose.

The incorporation documents would disclose that the solicitor is merely acting as an "agent" of a "principal," whose name(s) should also appear in the document.

The Power of Attorney should be designed to lapse, thus indicating that the appointed solicitor shall cease to function upon the conclusion of all registration formalities. When this is accomplished, the locally incorporated branch or subsidiary company must then apply to the Nigerian Investment Promotion Commission (NIPC) for a Business Permit, Expatriate Quota, and other requisite approvals and licenses.

The incorporation policies of CAMA are not without exceptions. According to the General Rule, where exemption from local incorporation is avoidable, a foreign agribusiness company may apply.

In accordance with Section 56 of the Companies Act, to the National Council of Ministers for exemption from incorporating a local subsidiary if the foreign agribusiness company belongs to one of the following categories:

1. Foreign agribusiness companies invited to Nigeria by or with the approval of the Federal Government of Nigeria to execute any specified individual project.
2. Foreign agribusiness companies in Nigeria for the execution of a specific individual loan project on behalf of a donor country or international organization.
3. Foreign government-owned agribusiness companies engaged solely in export promotion activities.
4. Agricultural engineering consultants and technical experts engaged in any individual specialist project under contract with any government entity in the Federation or any other body or person, where such a contract has been approved by the Federal Government.

It is also worth noting that a foreign-registered agribusiness company can set up a representative office in Nigeria solely for the purpose of serving as a promotional point, which must be registered with the CAC.

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Requirements for Legalizing a Foreign Agribusiness Company in Nigeria

In a review of the requirements for the legalization of a company in Nigeria, Kenna & Associates (2011) observed that the following should be delivered to the Corporate Affairs Commission (CAC):

i. Availability/Reservation of Name Form.

ii. Memorandum & Articles of Association, duly stamped by the Commissioner for Stamp Duties, and duly subscribed to by at least two Nigerians or persons of foreign nationalities who have been granted a Business Permit.

In the absence of a Business Permit, a foreign agribusiness investor could authorize a Nigerian citizen or organization, by means of a Power of Attorney, to subscribe on its behalf pending the grant of a Business Permit. Additional documents required include:

i. A copy of the Business Permit if the subscribers are of foreign nationalities.

ii. A duly completed form showing the address of the company.

iii. A duly completed form showing the first directors, as well as consent letters to act as a director, duly signed by each individual director.

iv. A statement of the authorized share capital on the prescribed form, and duly stamped by the Commissioner for Stamp Duties.

v. A duly completed form showing the share allotments.

vi. A statutory declaration of compliance by a Nigerian legal practitioner engaged in the formation of the company.

vii. Bank drafts for the amounts for CAC filing fees and stamp duties.

The CAC shall register the Memorandum and Articles of Association, unless, in their opinion:

i. They do not comply with the provisions of the Companies Act.

ii. The agribusiness the company is to carry on, or the objects for which it is formed, are illegal.

iii. Any of the subscribers to the Memorandum and Articles is incompetent or disqualified.

iv. There is non-compliance with the requirements of any other law relating to the registration and incorporation of companies.

v. The proposed name conflicts with, or is likely to conflict with, an existing trademark or business name registered in Nigeria.

Usually, this process could take between 2 to 4 weeks from filing all the requisite documents to obtaining the certificate of incorporation.

Steps for a Foreign Agribusiness to Operate in Nigeria

A foreign agribusiness interest will have to follow specific steps in order to be permitted to do business in Nigeria. There are procedures for registering a foreign agribusiness company, and there are individuals who can act on behalf of a foreign agribusiness in Nigeria.

Additionally, there are documents that need to be completed by a representative of a foreign agribusiness concern in Nigeria.

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Frequently Asked Questions

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