The law of the land has provided a fair and even ground for all persons, nationals, and non-nationals, to prospect, actualize and carry on business in Nigeria subject to the applicable regulations. Foreign direct investment and protection are essential to the economic growth of any country. There are two viable options an investor has in its choice of foreign investment; Foreign direct investment and foreign portfolio investment.
In recent times, investors have plowed capital and machinery into Nigeria. Investing in a country like Nigeria comes with its challenges. These challenges are such that if they are not confronted with solutions, both the investor and the host country would record irreparable losses.
This article seeks to highlight how foreigners who have businesses in Nigeria can have it protected under the relevant regulatory laws and bodies.
When a foreigner chooses to invest physically in Nigeria, we term it a foreign direct investment (FDI). Foreign direct investment entails a lot, from seeking legal advice from professionals and registration of such business under the Corporate Affairs Commission where business does not fall under the exemptions as provided for in S. 80 of Companies and Allied Matters Act 2020; Nigerian Investment Promotion Commission and other relevant bodies.
Until a foreign business/company is incorporated, such cannot have a physical place of business, at best, a virtual place such as Twitter as we have today.
Failure to comply with relevant regulations can incur the wrath of the law on such foreign business. Hence, the first protection a foreigner seeks to enjoy in their business is timely compliance.
These regulations put in place have all the protections needed for a foreign company to thrive successfully. Expositions will be made in subsequent lines, highlighting features of the laws.
Where a foreigner complies with this statutory directive, such has started enjoying the protection it deserves but the same exemption can be revoked by the minister where the foreign company contravenes the provision of the act.8
1. Protection against nationalization and expropriation except where such acquisition is in national interest, where this is the case,
2. There shall be prompt, fair ad adequate compensation.
3. Investors are entitled to approach judicial establishments for remedy.
4. Investors are also entitled to explore mutual discussion, international arbitration, depending on the nature of the contract.
Where the agreement is between an investor and the government, adequate steps to amicable settlement must be taken as first option, where dispute is between a Nigerian investor and government – the rules of procedure for arbitration are in the Arbitration and Conciliation Act12. Where it is a dispute between a foreign investor and government – if Nigeria have any bilateral or multilateral treaty with the country of the investor, then they can agree to use any machinery for settlement of investment dispute13. In any other case, the aggrieved party can seek international help from the International Centre for Settlement of Investment Disputes14.
The ISA establishes the Securities and Exchange Commission. It seeks to protect the investment, securities of foreign companies that wish to become public, having its securities listed on the Exchange for public subscription, in areas of mergers, acquisitions, takeovers and collective investment schemes.
This act established the National Office for Technology Acquisition and Promotion otherwise known as NOTAP. It provides for the registration of agreements, contracts as it relates to the transfer of technology into Nigeria. It is necessary and commercially expedient for a foreign investor who wishes to import, invest technical aid in Nigeria to register such so as evade sanctions.
This act establishes the Central Bank of Nigeria. The apex bank is saddled with management and regulation of monetary, foreign exchange and reserve of Nigeria. It oversees the dealing of the Authorized Capital Importers which are the commercial banks.
This act provides for the regulation of foreign exchange transaction in Nigerian either nationals or aliens.
Section 15 of this act provides for the importation of capital by persons through an authorized dealer, having done this, the investor is entitled to a certificate of capital importation. This section also guarantees unconditional repatriation of funds accrued from investments in Nigeria.
Being the mother of all existing laws in Nigeria, the constitution in chapter IV guarantees protection properties, persons, fair and just treatment of all persons in the country. This protection suffices for both Nigerians and non-Nigerians in the country, and by extension to their properties within the country.
This act provides for, regulates the egress and ingress of person in Nigeria. It also provides to requisite directives regulating employment of aliens in Nigeria. In promoting foreign participation, the section 5 of immigration Act provides for Investors Visa for aliens who have met the required annual minimum threshold of capital into Nigeria. Where this visa is approved, it can last five (5) years with option to renew. The new visa policy 2020 also provides more ease for aliens to invest in Nigeria.
This act seeks to restore, rectify and resolve disputes amongst parties. It is a viable option, advisably the first option to explore where the need arises which can evade the patronage of the regular courts. Investors are allowed to insert relevant terms of the act in their contracts. Arbitral awards are enforceable by any competent court around the world.
Other salvaging tools can be found in the tax reliefs under industrial development income tax relief act21 that provides for PIONEER STATUS exempting tax payment in the first three (3) with another extension of two (2) to make a total of five (5) years22. The Companies Income Tax Act further provides for investment tax credit for companies involved in fabrication of spare parts and equipment for local consumption and export shall be allowed 25% investment tax credit on its qualifying capital expenditure23, 15% investment tax credit on fixed asset of companies that purchase locally manufactured plant, machinery for its business24, 50% of chargeable profit on petroleum investment allowance for companies in production sharing contract with NNPC25, rural investment allowance for companies that provide amenities as water, electricity, tarred roads located at least 20 kilometers away from the facilities26, entitlement to 1% of the tax payable for companies that file returns within the time stipulated for filing27.
There is the relief for local raw material utilization.
Also, provisions and protections are made for labor intensive mode of production.
Investment tax relief is available to companies without pioneer status but this doesn't exceed three (3) years.
Conclusively, a foreigner is entitled to protection of business under agreements to which Nigeria is a signatory. There are lateral, bilateral, multilateral treaties and pacts that Nigeria is a party to. The essence of this agreement is to protect foreign investment and encourage more inflow of investors.
1. Repealed 1990 (CAP C20, LFN 2004)
2. Section 80(2) (a-h) CAMA 2020
3. Section 80(1) CAMA 2020
4. Section 80(1)(b) CAMA 2020
6. Section 80(1)(c) CAMA 2020
7. Section 80(1)(d) CAMA 2020
8. Section 80(5) CAMA 2020
9. Cap N117 L.F.N 2004 (NIPC Act)
10. (a) production of arms, ammunition, etc
(b) production of and dealing in narcotic drugs and psychotropic
(c) production of military and para-military wears and
accoutrement, including those of the Police and the Customs,
Immigration and Prison Services
(d) such other items as the Federal Executive Council may,
from time to time, determine
11. Ss. 25 & 26 NIPC Act
12. Cap. A18 L.F.N. 2004
13. An examples is the (UNCITRAL) Conciliation Rules of 1980
14. ICSID is the world's leading institution devoted to providing facilities for conciliation and arbitration of international investment dispute settlement. It has extensive experience in this field, having administered the majority of all international investment cases. States have agreed on ICSID as a forum for investor-State dispute settlement in most international investment treaties and in numerous investment laws and contracts.
15. (“ISA 2007”) and Regulations.
16. Cap N62 L.F.N 2004
17. Act no. 7 (2007)
18. Cap. F34 L.F.N 2004
19. No. 8 2015 and Immigration Regulations 2017.
20. Chapter A18, L.F.N, 2004
21. Income Tax Relief Act, No 22 of 1971
23. Section 38 CITA
24. Section 30 CITA
25. Section 22 Petroleum Profits Tax Act
26. Section 34 CITA
27. Section 56 CITA
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.
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