Business in Nigeria

1

DOING BUSINESS IN NIGERIA

This is a guide to doing business in Nigeria. It is a general overview
of the Nigerian political, economic and legal environment. It is by
no means an exhaustive work on investment in Nigeria. It simply
sets out the basic information on business in Nigeria and recourse
to other research materials is encouraged. We disclaim any
responsibility for any loss or damage suffered by any person on
account of reliance on this work.


I INTRODUCTION
1. A General Overview
2. Political System
3. Economic Overview
4. International Relations

II INVESTMENT IN NIGERIA: REGULATIONS AND REGULATORY
AGENCIES AND OTHER RELATED MATTERS
1. The Laws
2. The Agencies
3. The Incentives
4. Export & Import Policy

III BUSINESS ORGANIZATION AND REGULATION
1. Incorporation
a. Registration with the CAC and obtaining Certificate of
Incorporation
b. Effect of Registration
c. The Company Name
d. Statutory Book
2. Share Acquisitions
3. Business Registrations by Foreigners
a. Business Permit
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b. Expatriate Quota
c. Resident Permit
d. Combined Expatriate Residence Permit and Alien Card
(CERPAC)
e. Registration of securities
f. Registration with the Department of Petroleum Services
g. Registration with National Office of Technology Acquisition
and Promotion (NOTAP)
4. Winding Up

IV TAXATION
A. Tax System
1. Value Added Tax (VAT)
2. Capital Gains Tax (CGT)
3. Education Tax
4. Personal Income Tax
5. Companies Income Tax
6. Nigerian Social Investment Trust Fund (NSITF)
7. Withholding Tax
B. Tax Treaties

V LABOUR
1. Labour Law in Nigeria

VI INTELLECTUAL PROPERTY
1. Patent
2. Industrial Designs
3. Copyright
4. Trade Marks

VII DISPUTE RESOLUTION
1. The Courts
2 .Alternate Dispute Resolution

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VII GENERAL INFORMATION ON NIGERIA
1. Real Estate
2 .Health Care Delivery
3 .Education
4 .Transport System
5 .Social Activities and Entertainment


Introduction
1. A General Overview of Nigeria.

Nigeria is located in Western Africa bordering on the Gulf of
Guinea between Cameroon and Benin. The country is bordered
on the west by the Republic of Benin 773km, and, Cameroon
1,690km, on the north by Niger 1,497km and Chad Republic 80km,
and south by the Atlantic Ocean. Nigeria became an
independent state in 1960, having being under Britain since 1861.
The overall area of the Federal Republic of Nigeria is 923, 768 sq
km.

Nigeria is divided into 4 main political regions, with a further
division into 36 states and 1 territory. The latest national population
census taken in July, 2006 puts the total population of Nigeria at
140 million. The largest population concentration is in Lagos which
is also where most of the economic and industrial activity takes
place in. Other major cities and industrial centres include Port-
Harcourt, Onitsha, Kano, Aba e.t.c

The countrys legal system is based on English Common law,
Islamic law, customary law, Case law, and Statutory law

Nigeria has three major ethnic groups: Hausa, Yoruba and Ibo. The
official language is English. The main religions are Christianity,
Islam, and indigenous beliefs.
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Nigeria is rich in wide range of natural mineral resources which
includes petroleum, iron ore, lead, zinc, hydropower, coal, arable
land, natural gas, limestone, and has her major industries in Oil &
Gas, Tin, Columbite, Palm Oil, Peanut, Cotton, Rubber, Wood,
Hides & Skin, Textile, Cement, Food products, Footwear,
Chemicals, Ceramics and Steel, e.t.c. Agriculture is an important
component of the economy and the cultivation of cash crops like
Cocoa, peanut, Palm Oil, Rubber, is extensively exploited.

The Climate in Nigeria differs depending on the geographical
region. The climate in the north and centre is tropical while that of
the south is equatorial. There are basically only two seasons in the
country: the dry season and the rainy season.
Nigerian time is one hour ahead of the GMT and her currency is
measured in Naira (N).

Nigeria is a member or affiliated to several international
organisations. The list includes but is not limited to: African Union,
ECOWAS, OPEC, UNESCO, UN, UNHCR, WHO, amongst others.

STATUTORY HOLIDAYS
New Years Day ..........................................................................1
January
May Day ........................................................................................1 May
Independence Day ..........................................................................1
October
Christmas Day ................................................................................25
December
Boxing Day ..................................................................................26
December
Democracy Day ...........................................................................29
May
Id-el-Malud*
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Id-el-Fitri*
Id-el-Kabir*

These are movable holidays and are therefore subject to ratification by the
Federal Government.


NOTABLE DATES
Armed Forces Remembrance Day ..............................................15
January
Saint Valentines Day .................................................................14
February
Childrens Day ...........................................................................27 May
Mothers Day ............................................................................18
March
Fathers Day ..............................................................................17 June

2. Political System
The Nigerian political system is constituted three tiers of
government which are distinctive and inter-related. They are the
executive, the legislature and the judiciary. Each level exists
separately and is political independent of the others. The country
is further divided into the national, the state and the local
government.

1.1 The Presidency
The president is the head of state and Commander-in-Chief of the
Armed Forces. The president is elected into office for a term of
four years and is subject to a maximum of 2 terms. The presidents
powers are derived from the Constitution of the Federal Republic
of Nigeria and Legislations passed by the legislative arm of
government.

1.2 The Legislature
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The legislative arm of the Federal government of Nigeria is the
National Assembly. The National Assembly is composed of the
Senate, which is the Upper House, and the House of
Representatives, the Lower House. The senate is made up of 3
members each from the 36 states of Nigeria in addition to 1
member representing the Federal Capital Territory. The Senate is
headed by a president elected from among the senators. The
House of Representatives consists of members elected from the
Federal Constituencies in each state of the Federation. The House
is headed by a Speaker elected from among the members.
Deliberations in the different Houses are conducted in
accordance with the legislative process specified in the
Constitution.

The National Assembly is constituted to ensure the adequate
representation of the people in the various constituencies and to
ensure effective participation by the people in government
policies.
The legislative functions of the National Assembly includes
conducting a national forum for public consideration of issues,
deliberation people oriented bills, scrutinizing and overseeing
executive action and ensuring the continuous growth and
evolution of Nigerian laws. The National Assembly, specifically the
Senate, is empowered by to law to approve certain political
appointments proposed by the Executive.
The members of the National Assembly are elected for a term of 4
years.

1.3 The Judiciary
The Nigerian judiciary is founded on the English Common law, a
result of British colonization. However, Nigerian legislations and
judicial pronouncements have filled the deficiencies of the
Common law as it applies to the specific socio-cultural
environment in the country.
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As previously noted, the sources of Nigerian law today are the
constitution, common law and customary law, case law and
statutory law. While the National Assembly is the sovereign
legislative body, government ministers and other public office
holders have limited powers to promulgate regulations, and each
level of government (the state government and the local
government) can legislate on matters of local interest, in so far as
such laws, regulations, rules or policies are promulgated in the
manner as set out by the Constitution and do not derogate from
or contravene the provisions of the Constitution.
The hierarchy of courts in Nigeria include the Supreme Court,
which is the apex court of the country, the Court has original and
appellate jurisdiction in certain constitutional, civil and criminal
matters as stated in the Constitution. The Court of Appeal hears
appeal from the Federal High Court, the High Court of a State, the
Sharia Court of Appeal of a State, the Customary Court of Appeal
of a State. At the state level, there also exists, native courts,
Magistrate courts.
Nigeria has an independent High Court judiciary which has
jurisdiction to hear and determine both civil and criminal
proceedings. There exists a distinction in the Constitution as to the
jurisdiction of the State High Court as against that of the Federal
High Court.
The practice of law in Nigeria is fused, that is, there is no distinction
between a solicitor and an advocate. Upon being called to the
bar, a legal practitioner is entitled to a right of appearance in any
court in Nigeria and to represent his/her client in the capacity of
either a solicitor or as an advocate.
There also exists specialist courts to deal with certain specific
issues; however, some of these courts have been abolished by
legislation. An example of these courts is the Failed Bank Tribunal.

3. Economic Overview
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The Nigerian economy is primarily based on free market principles,
with some areas of state control. Foreign investment is being
actively encouraged by both the private and public sectors in all
facets of the economy. This is evident from the governments
foreign investment policies and the various regulatory frameworks.
With the exception of banking, insurance and broadcasting
industries, the various regulatory laws impose no restrictions on
foreign ownership of local companies and businesses. The
Nigerian Government is however committed to the economic
empowerment of its citizenry, thus, varied categories of incentives
are incorporated in the various regulatory laws geared at
increasing the number of companies owned by it populace.
The Nigerian economy is dependent mainly on oil exploitation. The
oil and gas sector of the country accounts for over 90% of her
foreign exchange earnings. However, effort is being made to
energize the manufacturing and agricultural sectors of the
country. Mining and industry operate mainly in accordance with
free market principles. There exists state control with regards to the
use of the countrys harbours and airports. There are national
suppliers of electric power, radio and television broadcasting and
telecommunication services. Recently, there has been a
substantial degree of deregulation and some privatisation and
restructuring of state-owned enterprises. In light of this, the
government has opened up the telecommunications market by
awarding licenses for the Global System for Mobile
Telecommunications (GSM). This action has successfully improved
the countrys domestic and international telecommunication
services. The government plans to invest more in the improvement
and maintenance of social and economic infrastructure. In this
vein, priority is being given to the total overhaul of the countrys
power company, the road networks and health care systems.
The Countrys airways are also being expanded with more
international and internal carriers being given licenses to operate
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in Nigeria. The country has established international air links with
most major foreign cities and a number of foreign airlines.

The Nigerian manufacturing industry is capable of producing most
of the requirements of Nigeria and many licenses to manufacture
are held by local businesses from overseas principals. Exports from
and imports into South Africa are comparatively unrestricted,
although a ban exists on the importation of certain products in
other to ensure the growth of the countrys manufacturing
industry.

The countrys financial infrastructure is well developed with
advanced money markets and capital markets. The money
market is predicated on the issuance of short term securities by
the Central Bank of Nigeria. These securities once issued, are
taken up by banks and other financial institutions for placement
with individuals and businesses. The market comprises of, on one
hand, the regulators; the Central Bank of Nigeria (CBN), the
Nigeria Deposit Insurance Corporation (NDIC) and the National
Insurance Commission (NAICOM), and on the other hand, Banks,
and Non-bank Financial Institutions (NBFI). The CBN is charged with
the maintenance of a sound and stable financial system. The
NDIC is responsible of insuring the deposit liabilities of licensed
banks and providing depositors with assistance in the event of any
financial difficulties involving the banks. Finally, the NAICOM is
responsible for the regulation of insurance practice in Nigeria.
The capital market is made up of a regulator, stock exchange
and stock brokers. The Securities and Exchange Commission
regulates the activities in the capital market in accordance with
the Investment Securities Act, LFN 2004. The country boast of a
wide array of financially sound and established commercial,
merchant, and investment banks, both domestic and
international, listed shares and debentures, stocks and bonds and
options on those shares and debentures are traded on the
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Nigerian Stock Exchange (NSE). The NSE is the only exchange
operating in Nigeria with trading floors in the major cities of the
country. The Exchange has undergone major changes in the last
few years with the commissioning of the Central Securities
Clearing System (CSCS), by which transactions are completed in
T+1 day. The Federal Government in 1995 liberalised the Nigerian
capital market to ensure the participation of foreigners in the
Nigerian Market both as operators and investors. This was
facilitated by the abrogation of laws like Exchange Control Act
1962, Nigerian Enterprise Promotion Act, 1989.

The labour market in Nigeria consist of readily available skilled
professional in many technical fields required for the effective
operation of a business, however, there is a gross over-supply
labour and accordingly, a very high level of unemployment. The
government is tackling the issue of unemployment by creating
more jobs and promoting programmes aimed at self employment.
Incentives are given to men and women who are engaged in
small time business and are themselves employers of labour. There
are several governmental and non-governmental organisations
involved in assisting the establishment of new businesses, and in
the funding of projects and schemes among disadvantaged
communities and individuals.
Trade unions are active and ensure the fair treatment of
employees both by the government and other employers of
labour.


4. International Relations
Nigerias foreign policy objectives are closely aligned to its
domestic objectives as a developing nation and her focus is on
the promotion of human rights, the alleviation of poverty, the
advancement of its citizenry, the prevention of conflict and most
particularly on the advancement of sustainable development and
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corporate social responsibility. Nigerian has to a large extent
positioned itself as the Big Brother of the African continent with its
prominent role in international relations and has been involved in
a series of initiatives at both a political and economic level to
promote and advance African interests and peace in Africa,
including brokering peace in African nations torn apart by
religious, social and cultural conflicts. Nigeria is a prominent
member of several international organisations such as the United
Nations, the Commonwealth and African Union, World Health
Organization ECOWAS, G-15, G-77, OPEC, IMF, and has diplomatic
relations with over 150 nations.

NIGERIA AND THE AFRICAN UNION
Nigeria is one of the founding members of the African Union (AU),
which replaced the Organisation of African Unity (OAU) in 2001 as
the main multilateral body in Africa. The objectives of the AU are
essentially the reality of a common African currency, foreign
policy, defence structure and economic empowerment. Its
objectives also include the political and economic advancement
of African countries and the strengthening of relations between
the nations of Africa.

NIGERIA AND THE ECONOMIC COMMUNITY OF WEST AFRICAN
STATES (ECOWAS)
Nigeria is also one of the founding members of the ECOWAS, an
organization comprising of 16 West African States, established in
May 1975. The organization was established to ensure trade
between States in the Western region and to facilitate the
development of the region.





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II. INVESTMENT IN NIGERIA: REGULATIONS AND REGULATORY
AGENCIES AND OTHER RELATED MATTERS
Developments in Nigerias investment policy have been
significantly influenced by foreign investment, both in cash and in
kind, which plays a key role in the development of Nigeria.
There are several laws which regulate investment in the Nigeria
economy. The following are the most important:

1. THE LAWS
Investment and Securities Act (ISA), 1999
The ISA as a law embodies comprehensive provisions on issues
relating to securities and investments in Nigeria. The major
provisions of the ISA are as follows:
i. The ISA provides for the establishment of an Investment
and Securities Tribunal to settle any dispute arising from
the operators of capital market and exchanges in
Nigeria.

ii. The ISA includes a provision for the electronic transfer of
registered shares.

iii. Transfer of shares by private companies with alien
participation no longer requires the approval of SEC
with respect to merger, acquisition or other forms of
business combination.

iv. The ISA further provides for the establishment of an
Investor Protection Fund (IPF), which is used to
compensate investors who suffer any pecuniary loss
from the misuse of assets by a member of a stock
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exchange and any directors/employees of the capital
market operators.
The ISA further provides for the obligatory maintenance of
accounts for clients funds by market operators, dealers, amongst
others, separate from their business accounts. The ISA also covers
the public offer and sale of securities and investments to the
public, mergers, takeovers and acquisition, investment schemes,
registration of securities and registration of interests in securities
and capital market operators, amongst others.

Nigerian Investment Promotion Commission (NIPC) Act, 1995
The NIPC Act established the NIPC as an investment promotion
agency of the Federal Government. The NIPC is charged with the
responsibility of registering foreign investments in Nigeria. It is also
part of its responsibility to maintain close cooperation between
investors and ministers, the relevant government departments,
institutional lenders and other bodies concerned with investments.
With the abrogation of the Nigerian Enterprises Promotion Act,
1989, the ceiling on foreign investment in Nigeria has been
removed with the exception of restrictions relating to items on the
negative list. Items listed under the negative list are within the
exclusive preserve of the government of Nigeria.
Items contained in the negative list are:
· The production of arms and ammunition,
· Narcotics and psychotropic substances, and
· The production of military, para-military, police, customs,
immigration and prison service uniforms and accessories.

Important improvements made by the NIPC Act include:
i. The procurement and repayment of foreign loans and
interest by Nigeria companies without first obtaining
ministerial approval.
ii. Foreign portfolio investment in Nigerian-quoted
companies through the Nigerian Stock Exchange.
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iii. The remittance of dividends, and interests by
guaranteeing to foreigners the unrestricted
transferability of dividends or profits attributed to foreign
investments in Nigeria and the repatriation of capital in
the event of liquidation without the requirement of
approval by the minister.

Companies and Allied Matters Act, LFN 2004
By the provisions of the act, an alien or foreign company may join
in forming a company subject to the provisions of any law
regulating the right and capacity of aliens to engage in trade or
business in Nigeria. Any foreign company intending to trade in
Nigeria must ensure that all the necessary requirements for
incorporation as a separate entity in Nigeria is complied with.
Without such compliance, the foreign company shall not have a
place of business in Nigeria for any purpose other than the
receipts of notice and other documents. There is, however, a
provision for exemption of a foreign company from the
requirement of registration. The Federal Executive Council is
empowered by Section 56 of the Act to exempt a foreign
company eligible for exemption under the conditions listed within
the section. They are as follows:

(a) Foreign companies (other than those specified in
paragraph (d) (below) invited to Nigeria by or with the approval
of the Federal Government to execute any specified loan project;
(b) Foreign companies, which are in Nigeria for the
execution of specified individual loan project on behalf of a donor
country or international organization;
(c) Foreign government-owned companies engaged
solely in export promotion activities; and
(d) Engineering consultants and technical experts
engaged on any individual specialist project under contract with
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any of the governments in the Federation or any of their agencies
or with any other or person, where such contract has been
approved by the Federal government
Exemption from the local incorporation requirement may confer
tax-free status on the beneficiary for the duration of the
exemption.

2. THE AGENCIES
Several regulatory agencies exist under the relevant laws. Only a
few will be highlighted herein.

The Corporate Affairs Commission (CAC)
The Companies and Allies Matters Act established the CAC and
charges it with the responsibility of administering the Act,
supervision and formation, incorporation and registration,
management and winding-up of companies. The CAC is also
empowered to conduct inquiries and investigation into the affairs
of any company in Nigeria in order to ensure the protection of the
interests of shareholders and investors.

The Central Bank of Nigeria (CBN)
The CBN was established by the CBN Act of 1959, which Act was
repealed and replaced by the Act of 1991.
The major responsibilities of the CBN are stated by the Act and the
Banks and Other Financial Institutions Act, 1991. Its functions
include:
i. The issuance of legal tender currency in Nigeria
ii. Maintenance of the countrys external reserve at levels
considered appropriate for the Nigerian monetary
system.
iii. Safeguarding the international value of the Naira.
iv. Granting of licenses, supervision and regulation of the
activities of banking and non-banking financial
institutions.
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v. Financial adviser and banker to the Federal
Government of Nigeria.

Securities and Exchange Commission (SEC)
The functions of the Commission as stated under the Investment
and Securities Act, 1999 includes the regulation of investments
and securities business in Nigeria, registration of Securities
Exchanges, Capital Trade Points and any other recognized
Investment Exchanges, registration of securities to be offered for
subscription or sale to the public. The Commission is also charged
with ensuring the registration and regulation of central depository
companies and clearing and settlement companies, custodians
of securities and such other agencies and intermediaries; acting
as a regulatory apex organization for the Nigerian capital market;
registration and regulation of corporate and individual capital
market operators, amongst others.

Nigerian Stock Exchange (NSE)
The NSE is the recognized market for trading in stocks, bonds,
share and debentures of companies and government. The NSE is
regulated by he rules formulated by the Council members for the
operation of the Exchange.

Nigerian Investment Promotion Commission (NIPC)
The NIPC serves as the investment promotion agency of the
Federal Government and its functions include: the coordination
and monitoring of investment promotion activities in Nigeria;
registration and maintenance of an accurate record of foreign
investments in Nigeria; provision of assistance and aid to incoming
and existing investors; acting as liaison between investors,
government departments, agencies and other institutions
connected with investments in Nigeria.
Every Nigerian company with foreign shareholding is obliged by
law to register with the NIPC before commencing business.
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3. THE INCENTIVES
There are several incentives designed by the Federal Government
to boost investment in Nigeria.

Pioneer Status
Under the Industrial Development (Income Tax Relief) Act, LFN
2004, pioneer status is granted to a company upon the fulfilment
of the following conditions:
i. The company must be incorporated as a public
company
ii. Investment must be related to industry or products
designated as pioneer, e.g., agro-allied, solid minerals,
and
iii. The estimated cost of qualifying capital expenditure on
or before production date is not less than N50, 000 for
an indigenous company and N150, 000 in any other
case.
Pioneer status is granted only to a company upon specific
application to the NIPC. A pioneer status exempts the company
from taxes for an initial period of three years but may be extended
for addition period of two years

Relief in respect of Commonwealth Income Tax
By Section 44 of the Companies Income Tax Act, LFN 2004, a
Nigerian company that is liable to pay commonwealth income
tax will be entitled to relief from tax payable in Nigeria as follows:
i. If the commonwealth rate does not exceed one half of
the rate of tax under this Act, the rate at which relief is
to be given shall be the commonweal th rate of tax;
ii. In any other case, the rate at which relief is to be given
shall be half the rate of tax under the Act.

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Relief in respect of Interest on any foreign loan
Under the Companies Income Tax Act, LFN 2004, where any
foreign loan of an amount not less than N150, 000 is granted by a
foreign company to any person carrying on trade or business in
Nigeria and is repayable within a period of not less than ten years,
the interest derived by the foreign company from the loan shall be
exempted from tax, but the loan is repayable within a period of
not less than five years, the interest accruing on the loan will be
charged half the rate of tax due.

Export Development Fund (EDF)
The EDF is a special fund set up by the government to provide
financial assistance to private sector exporting companies to
cover part of their initial expenses in respect of export promotion
activities, participation in training course, symposia, seminar and
workshops on all aspects of export promotion, etc. The EDF is
administered by the Nigerian Export Promotion Council (NEPC).

Duty Drawback/Suspension Scheme
This scheme is administered by the NEPC. Under this scheme,
exporters/producers can import raw materials and intermediate
products for use in the manufacture of export products free of
import duty and other indirect taxes and charges. The exporter
can also claim a refund of duties already paid on imported inputs
and apply for exemption from or suspension of, import duty prior
to actual importation.

Currency Retention Scheme
Under the Foreign Exchange (Monitoring and Miscellaneous
Provisions) Act, LFN 2004, exporters may open and maintain a
foreign currency domiciliary account into which export proceeds
can be paid and retained. Funds in the account can be sold in
the Inter-bank foreign exchange market (IFEM).

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Investment & Repatriation Mechanisms
The Nigerian Investment Promotion Commission Decree 1995 and
the Foreign Exchange Monitoring & Miscellaneous Provisions
Decree 1995 guarantees foreign investors unrestricted remittance
of dividends or profits (net of applicable tax 10%) derivable from
foreign investment in Nigeria. This is upon production of proper
evidence of Capital Importation usually issued by the banks as
agents of the Central bank of Nigeria. The law further guarantees
the repatriation of the capital at the end of the project (in this
case on liquidation).
Returns on investment, interest payments, dividends, etc can be
repatriated using a combination of the mechanisms allowed
under the existing foreign exchange guidelines through banks as
agents of the Central Bank of Nigeria.

4. Export & Import Policy
Nigeria actively encourages exports and provides assistance and
information to that end, although within the limits required by the
relevant laws. Few restrictions on exports are imposed. However,
certain products are strictly controlled normally by means of an
export ban. Generally, all goods (raw materials or finished
products) are exportable from Nigeria except the following:
· Maize and yam
· Timber (rough or sawn), excluding furniture
components, railway slippers, floor and ceiling titles,
doors, windows, and pallet.
· Raw hides and skin (including wet blue and all
unfinished leather)
· Scrap metals
· Unprocessed rubber latex and rubber lumps
· Artefacts and Antiquities
· Wild life animals classified as Endangered species and
their products e.g. crocodile, Elephant, Lizard, Eagle,
Monkey, Zebra, Lion etc.
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· Raw palm kernel
· Unprocessed rubber and rubber lumps
· Beans
· Rice
· Cassava
Any individual or company doing business in Nigeria may export
goods from Nigeria if duly registered with the NEPC. The NEPC is
responsible for the development of exports, promotion of export
markets, and assistance in securing prompt payment for exports
amongst other things.

In view of the incessant violations of the importation guidelines
into Nigeria, the Foreign Exchange and Trade Relations
Department of the Federal Ministry of Finance in 2007 published
the following guidelines:

The formalities to be observed by importers and other parties in
Nigeria wishing to import and/or pay for goods into the country
are:

(1) All persons intending to import goods into Nigeria are required
in the first instance to process their Form M through any bank
irrespective of the value and whether payment is involved or not.

(2) Consignments shall bear name of products, country of origin,
specifications, date of manufacture, batch or lot number,
standard(s) to which they were produced (e.g. BS, DIN, ISO/IEC,
NIS etc.)

(3) Foodstuff (including drinks), pharmaceuticals and chemicals
should carry expiry dates and/or shelf life and specify active
ingredients where applicable on their packaging. The expiry date
should be at least half the shelf life as at time of inspection.

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(4) All electronic equipment/items and instruments MUST carry
INSTRUCTIONAL MANUAL and diagrams and notations on the
containers.

(5) All electronic equipment/items and other instruments MUST
carry SAFETY information and /or safety signs

(6) All electronic equipment/items and other items where
applicable MUST carry a GUARANTY/WARRANTY of at least six
months.

(7) Computer hardware and software must be year 2000
compliant.

(8) Plant materials, whether for planting consumption or industry
shall be covered with phytosanitary certificate of the country of
export, certifying that the plant material was inspected and found
free from pest and that some treatment has been made where
applicable in line with the International Plants Protection
Convention of FAO.

(9) Every manufactured item including components and spare
parts shall be branded and bear manufacture names.

(10) Electrical appliances (Fluorescent lamps, electric bulbs,
electric irons, kettles etc) are required to carry information about
their life performance whilst cables must carry information on their
rating.

(11) Misrepresentation of product specification will result in delays
and/or seizure.

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(12) Supply of wrong information with an intention to cheat will
also result in delays and/or impoundment/seizure with attendant
consequences.

(13) Blank products will be automatically seized and destroyed.

(14) All goods imported into the country shall be labelled in English
in addition to any other language or render themselves liable to
confiscation.

(15) Manufactured goods and materials are subject to Standard
Organisation of Nigeria (SON) certification in accordance with the
provision of its enabling law.


II. FORM M AND CLEARANCE REPORT OF INSPECTION PROCEDURE

(1) From September 1, 1999 all goods except personal effects,
used motor vehicles and perishables i.e., day-old-chicks, human
eyes, human remains, vaccines, yeast, periodicals/magazines
imported from pre-shipment inspection shall require the
completion of Form M.

(2) Any person importing goods into Nigeria shall process Form M
through any authorised commercial/Merchant banks. The
authorised banks shall be responsible for delivering all Forms M
(including those for imports excluded from inspection) to the
appointed inspection agents liaison office in Nigeria.

(3) The Form M and supporting documents submitted to the
inspection companies through the authorised dealers shall be
clearly marked Valid for Forex or Not Valid for Forex depending
upon whether or not foreign exchange remittance would be
involved.
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(4) The Form M and relevant Performa invoice must contain a
proper description of the goods to be imported, including relevant
specification etc.

(5) Form M shall be in sextuplicate of which three copies shall be
sent to the Pre-Shipment Inspection Agents and one each to the
importers bank, the Nigerian customs Services and NMA.

(6) Form M is obtainable from all the offices of the Pre-shipment
Inspection Agents, Nigerian Embassies, Local Banks, branches of
Nigerian banks overseas and their correspondent banks.

(7) The completed Form M (Not Valid for Foreign Exchange)
original from abroad will be returned through the appropriate Pre-
Shipment Inspection agents abroad to any of the designated
banks or nay bank of importers choice in Nigeria.

(8) Issuance of the CRI or a Discrepancy Report shall be
mandatory for all imports except those exempted from inspection
and those expressly exempted by the honourable Minister of
Finance, provided approval would have been obtained before
shipment of goods.

III. SELLERS RESPONSIBLE

(1) The seller of the goods (i.e. the party with whom the Nigerian
importer has a contractual relationship) shall be required to
arrange for the physical inspection of goods with the appointed
inspection company in the country of supply. The preshipment
inspection agent shall be given at least three working days notice
prior to the expected date of inspection.

Law Allianz. 2010
24

(2) The seller shall make the necessary arrangements for handling
and presentation, of the goods for the purpose of inspection and
any expense incurred therefore shall be for his account. In the
event that the seller has called in the company without having
prepared the goods for the inspection, or in the event that the
goods have been inspected and are found not to be up to
requirements or specifications, the expense of any additional
intervention by the company shall be borne by the seller.

(3) The seller shall provide the appointed inspection agent with a
copy of the packing list, final invoice and any other document as
would be requested by the inspection agent.

IV. IMPORTERS RESPONSIBILITIES.

1. The importer shall advice his supplier on the need to submit after
the completion of inspection, the final or commercial invoice
within 12 hours to the Inspection Agent to facilitate the issuance of
the Clean Report of Inspection (CRI).

2. Importers of cargoes in excess of the declaration on the
manifest will continue to be penalised according to the provision
of the law.

V. IMPORT DUTY PAYMENT AND CLEARANCE OF GOODS.

1. It shall be the duty of the importers bank or the bank which
processed the Form M to issue bank draft in respect of the amount
stated on the CRI to the customer who shall pay same to any of
the designated banks.

2. All commercial imports into Nigeria shall be accompanied by a
final invoice bearing the CRI number with adequate description of
the goods, packing list, transportation document (B/L AWB/Way
Law Allianz. 2010
25

Bill), and manufacturers certificate of the analysis (where
applicable).

3. The CRI number shall be stated on the bill of Lading and also
written against each item on the cargo manifest.

4. The relevant inspection agent shall affix a security label on the
final invoice submitted by the seller attesting the fact that pre-
shipment inspection as been successfully performed. The final
invoice will confirm, in L/C transactions to the negotiating bank
overseas, that the goods have been inspected in accordance
with the import requirement of the Federal Republic of Nigeria.
The final Invoice shall bear the CRI number and the certified
value.

5. Goods imported through neighbouring countries must be
accompanied by relevant CRIs.

6. Importers shall pay a CISS Administrative charge of 1% of free on
Board (F.O.B) value of all imports assessed based on the average
rate of exchange prevailing at the time of inspection of the goods
as submitted by the Central Bank of Nigeria.

7. All imports shall be assessed for duty at the average rate of
exchange prevailing at the time of issuance of CRI of the goods
as submitted to the agents by the Central Bank of Nigeria.

8. The Nigerian Customs Service shall inform the appointed pre-
shipment Inspection agents through the issuance of Form C 101 A
in the event of a discrepancy on duty assessed on the CRI and
duty assessed by the NCS.

9. Payments for Customs Duties and CISS Administrative charge
shall be based on the Clean Report of Inspection (CRI) without
Law Allianz. 2010
26

any amendments. However, the Nigeria Customs Services (NCS)
may with the prior permission of the Minister of Finance assess
additional duties if it is found that the duty on the CRI is not
correct. In such a case, the goods will be cleared on the
assessment of the CRI upon a guarantee for the value of the
differences issued by a designated bank. Additional duty may be
imposed, therefore only after clearance with the Honourable
Minister of Finance.

10. The Issuance of bank draft by the customers bank and the
payment thereof into the designated bank shall be done and
cleared and receipt issued by the designated bank before the
counterpart original CRI for customs purpose is released to the
import for clearance of goods.

11. The bank draft for import duties must be paid to the
designated banks and receipt issued with the number of the SGD
Form stated thereon before goods are cleared.

12. All designated banks are to open branch offices at the ports
where customs duties shall be paid.

13. Where the guidelines are satisfactorily implemented by
importers, the Nigeria Customs Service shall release the goods
within 48 hours.


III BUSINESS ORGANIZATION AND REGULATION
Presently, there are a number of ways in which investments may
be made by a foreigner or foreign-owned company in Nigeria.
The investor can form a partnership with another investor or with a
Nigerian. He/she/it can also establish a business on his/her/its own
as a sole proprietor. Partnerships and sole proprietors do not enjoy
Law Allianz. 2010
27

limited liability in Nigeria. The most common procedure, however,
is to form a company in Ni geria.
Companies and Allied Matters Act (CAMA) regulates the affairs
companies and requires the registration of many of their acts and
transaction. There are three primary types of incorporated
companies; an unlimited liability company, a company limited by
guarantee and a company limited by shares. The most common
of the three is a company limited by shares.
A limited liability company may be either private or public. A
private company must have a minimum of two, and a maximum
of 50 members. Private companies limited by shares are the most
common form of business organization registered by foreign
investors in Nigeria. A public company must also have a minimum
of two members but there is no restriction on the maximum
number. The public company can also invite members of the
public to subscribe to its capital and the shares may be traded on
the Stock Exchange.

1. Incorporation
An alien may operate alone or in joint venture with Nigerians by
means of a company which must first be formed and registered
by the CAC and thereafter be registered with the NIPC before
commencing business. The following is the summary of the
procedure for establishment of business in Nigeria:
1. Securing an address in Nigeria for service of documents and
other matters preliminary to the formation of the Nigerian
company.
2. Prepare a joint venture agreement and any other necessary
pre-incorporation agreement.
3. Take steps to form a company to be registered by the CAC.
4. Apply to the NIPC
5. Apply to the SEC for registration of the foreign
security/investment
6. Application for permits e.g. expatriate quota
Law Allianz. 2010
28

7. Importation of capital through an authorised dealer and
obtaining certificate of importation
8. Application to National Office for Technology Acquisition
and Promotion (NOTAP) for registration of agreement for
transfer of technology
9. Application to the Director of the Industrial Inspectorate
Division of the Federal Ministry of Industry notifying him of
intention to incur additional expenditure of not less than
N500, 000.

e. Registration with the CAC and obtaining Certificate of
Incorporation
Registration of a company is effected by delivering to the
Commission the following documents and paying the appropriate
registration fees as set out in the Companies and Allied Matters
(Fees) Regulations 1995, as amended:

· The Memorandum and Articles duly stamped.
· Notice of Situation/Change of the Registered Address (FORM
CAC 3)
· Particulars of Directors of the company together with the
consent of the directors or any change therein (FORM CAC
7)
· A statement of the share capital and Return of allotment of
shares (CAC 2) signed by at least one director (to be
stamped).
· A statutory declaration by a Legal Practitioner of
compliance with the requirements of the Act (to serve as
sufficient evidence of compliance) (FORM CAC 4)
· Availability check and Reservation of Name form (FORM
CAC 1)
· Any other document required by the Commission to satisfy
the requirement of any law relating to the formation of a
company
Law Allianz. 2010
29

Having complied with the above requirements, the Commission
has no discretion but to register the Memorandum and Articles.
However, there exist within the CAMA grounds for refusal to
register. Thus, if the Commission is of the opinion that the:

(a) Memorandum and Articles do not comply with the Act;
(b) Business or object of the company is illegal;
(c) If there is an incompetent or disqualified subscriber, i.e. an
individual below 18 years except two other qualified persons are
18 and above; an individual found to be of unsound mind by a
court in Nigeria or elsewhere; an individual who is an
undischarged bankrupt; an individual disqualified from being a
director under section 254 i.e. a fraudulent person; a corporate
body in liquidation.
(d) There is non-compliance with requirements of any other law
as to registration and incorporation of a company.
(e) The name conflicts with or is likely to conflict with an existing
trade mark or business name registered in Nigeria.
A company aggrieved by refusal to register should give notice to
the Commission to apply to court for directions.

If the Commission registers the Memorandum and Articles, it will
under its seal certify that the company is incorporated, the type of
limited liability and whether it is private or public. The Certificate of
Incorporation shall be prima facie evidence of compliance with
the Act, that the association is a company authorized to be
registered and is duly registered.

f. Effect of Registration
By virtue of the provisions of section 37 of the CAMA, from date of
incorporation, the subscribers and anyone who later on becomes
a member shall -
Law Allianz. 2010
30

(a) Be a body corporate to be known by the name
contained in the Memorandum
(b) Be capable of exercising all the powers and functions
of an incorporated company including power to hold land
(c) Have perpetual succession
(d) Have a common seal

g. The Company Name
A registered company is required to display its name and country
of incorporation outside of places of business or offices in which its
business is carried on, in a conspicuous manner and in letters
easily legible. Furthermore, a company must have its name,
registration number and country of incorporation in all letterheads,
notices, advertisements, official publications and in all bills of
exchange, promissory notes, endorsements, cheques etc. In
addition, a company after incorporation must have its name
engraved in legible characters on its seal usually with its logo.

h. Statutory Books
A company upon registration in Nigeria is required by law to keep
the certain statutory books. A company in default is guilty of an
offence and may be liable to pay a fine. The books are as follows:
1. Register of members.
2. Index of members.
3. Register of substantial interest in shares.
4. Register of directors share holdings.
5. Register of directors and secretaries.
6. Register of charges.
7. Register of debenture holders.
8. Minute book.
9. Accounting records.

Law Allianz. 2010
31

A public company is required by the CAMA to keep all nine
books, unlike a private company which is required to keep all the
books with the exception of the index of members and the register
of substantial interest in shares.

2. Share Acquisitions
An alternative investment route is to acquire the whole or part of
the shares in the company which conducts the business. The
acquisition of shares in private companies is usually achieved by
agreement with the shareholders. An alien, who does not want to
invest directly in Nigeria by the formation of a company, can
invest indirectly by purchasing shares of an existing company in
Nigeria. A summary of the procedure for the acquisition of shares
is as follows:
1. Application for shares by the alien.
2. Passing of directors resolution allotting shares to the alien
subject to requisite approvals being obtained.
3. Application to the SEC for registration of the security.
4. Importation of capital through an authorised dealer and
obtaining certificate of capital importation.

3. Business registration by foreigners
Where a foreigner incorporates a company, certain permits have
to be obtained before the foreigner can do business in Nigeria.
They are:

h. Business Permit
A business permit is an operational and permanent permit for the
local operation of a business with expatriate investments either as
a branch or subsidiary of a foreign company or otherwise. By the
provisions of the Immigration Act, no person other than a Nigerian
citizen shall on his own or in partnership with another practise a
profession or establish, takeover or register a company or business
without the written consent of the Minister of Internal Affairs.
Law Allianz. 2010
32


i. Expatriate Quota
Expatriate Quota is the permission granted tot a foreigner to
accept employment in Nigeria. It is the official permit to a
company conveying permission to a company to employ
individual expatriates to specifically approved job designations
and also specifying the permissible duration of such employment.
The initial expatriate quota is sought and obtained usually along
with Business Permit. There are two types of expatriate quota:
a) Permanent Until Reviewed Quota (PUR), usually granted to
the post of Chairman of the companys board of directors or
the Managing Director; and
b) Temporary Quota, which is usually granted to the directors
and other employees of the company.

The maximum number of years granted in the first instance is five
years renewable for a further period of two years.

j. Resident Permit
Only aliens with tourist visa may enter Nigeria and stay for a period
of three months without a residence permit. Any person, other
than a citizen of Nigeria, desiring to stay in Nigeria beyond three
months must obtain a resident permit.
Application is by letter accompanied by a valid passport of the
alien from the company requesting permission to employ the
alien, to the Immigration Department.

k. Combined Expatriate Residence Permit and Alien Card
(CERPAC)
Registration permits an expatriate to live and work in Nigeria on a
long-term basis. For an expatriate to obtain Resident permit, he
must obtain employment with a company that has expatriate
quota position. Such a person will be expected to come into the
country with a special type of entry visa know as STR (Subject To
Law Allianz. 2010
33

Regularization) visa after which his resident permit will be
processed. The combined CERPAC scheme was introduced in
2002, providing for foreigners (except ECOWAS citizens accredited
diplomats and children below the age of 15 years) working or
living in Nigeria to carry CERPAC card, the scheme is expected to
simplify the process of acquiring residence permit and alien
registration certificate. It provides a computerized unit at various
points of entries, like airports, that is linked to a central database
centre containing information on every foreigner residing in
Nigeria. The residence permit allows a foreigner and his
dependants or family to reside in Nigeria. Unlike the residence
permit, the alien registration certificate is essentially a movement
chart. Under the CERPAC scheme, registration is valid for one
year, after which application for revalidation must be made.
Foreigners relocating to a different part of Nigeria must inform the
nearest Aliens Office of the move. Also if a foreigner holding an
Aliens Card leaves Nigeria permanently then the Card has to be
handed to the Aliens Office.

Other approvals, that may be required, are:

l. Registration of securities
A foreigner who owns shares in any Nigerian company must apply
to the Security and Exchange Commission (SEC) for the
registration of those shares. The Investment and Securities Act
provides that the SEC must keep a register of foreign direct
investment and foreign portfolio investments.

m. Registration with the Department of Petroleum Services
Registration with the Department of Petroleum Resources may be
necessary where you seek to provide services, equipment supplies
and maintenance services to companies in the oil industry. This
registration can be done in two categories, i.e.

Law Allianz. 2010
34

a) General Purpose Category: These are those companies that
do not render highly specialized or technical services. The
registration process here is basically routine and there is no
requirement to show expertise in any field.
b) Specialized Categories: This is for companies rendering
specialized services such as Equipment Supply services;
Consultancy services; laboratory services; Calibration
services; Applicants in this category will amongst other things
be required to show evidence of expertise and technical
Know-how in the specialized area of activity where their
services will be required.

n. Registration with National Office of Technology Acquisition
and Promotion (NOTAP)
Every contract or agreement involving the transfer of foreign
technology to a Nigerian company must be registered with the
NOTAP within sixty (60) days of execution or conclusion of the
agreement.
An agreement involves transfer of technology if, in the opinion of
NOTAP, it is wholly or partially connected with any of the following
matters:
i. The use of trade marks
ii. The right to use patented inventions,
iii. The supply of technical expertise in the form of the preparation
of plan, diagrams, operating manuals or any other form of
technical assistance of any description whatsoever,
iv. The supply of basic or detailed engineering,
v. The supply of plants and machinery, and
vi. The provision of operating staff or managerial assistance and
the training of personnel.
Registration with NOTAP is necessary, as non-registration will
frustrate transfer of any fees or payment due under the contract
to the account of the aliens outside Nigeria.

Law Allianz. 2010
35

4. Winding Up
Winding up of companies is regulated by several laws including
the CAMA, the Companies Winding Up Rules 2001, Cap C20 LFN
2004, Federal High Court Act, Cap F12 LFN 2004. Winding up may
be effected -
(a) By the court (compulsory); or
(b) Voluntarily; or
(c) Subject to supervision of court.


Certain grounds for winding up a company are specified in the
CAMA. A company may be wound up by the court if -
(a) The company has by special resolution resolved that the
company be wound up by the cour t
(b) Default is made in delivering the Statutory Report to the
Commission or in holding the statutory meeting.
(c) The number of members is reduced below two.
(d) The company is unable to pay its debts.
(e) The court is of opinion that it is just and equitable that the
company be wound up.
It is possible for the shareholders of a company or the creditors of
the company to wind up a company.

IV Taxation

A. Tax System
In Nigeria, taxation is enforced by the 3 tiers of Government, i.e.
Federal, State, and Local Government with each having its sphere
clearly spelt out in the Taxes and Levies (approved list for
Collection) Decree, 1998. The Federal Government has jurisdiction
on Corporate Income Taxes, Petroleum Profits Tax, Capital Gains
Tax, Value Added Tax and Personal Income Tax. With respect to
Personal Income Tax, the jurisdiction of the Federal Government is
limited to the following:
Law Allianz. 2010
36

i. Persons employed in the Nigeria Army, Air Force, Navy,
Police
ii. Officers of he Nigerian foreign service
iii. Residents of the federal capital authority, Abuja; and
iv. Any other non-resident who derives income or profit from
Nigeria.
The States jurisdiction covers the assessment and collection of
Personal Income Tax payable on the income of persons resident
within the respective states; Capital Gains Tax on the profits
derived by individuals from the sale of assets located within the
State jurisdiction; miscellaneous taxes, e.g., tenement rates.
Tax in Nigeria consists of direct taxes as well as indirect taxes.
Direct taxes-
v Corporate income tax
v Personal income tax
v Capital gains tax
v Petroleum profits tax; and
v Miscellaneous taxes

Indirect taxes-
v Value added tax
v Custom duties on imports
v Excise duties; and
v Stamp duty

The following are some of the relevant tax regulations in the
country:

1. Value Added Tax (VAT)
This was introduced by the VAT Act 102 of 1993 but it came into
effect from 1
st
January, 1994, to replace the old sales tax. It is a
consumption tax levied at each stage of the consumption chain,
and is borne by the final consumer. The VAT Directorate of the
Federal Inland Revenue Services (FIRS) periodically issues circulars
Law Allianz. 2010
37

and guidelines on issues in the ACT. VAT paid by a business on
purchases is known as input tax, which is recovered from VAT
charged on companys sales, known as output tax. If output
exceeds input in any particular month the excess is remitted to the
Federal Board of Inland Revenue (FBIR) but a taxpayer is entitled
to a refund of the excess from FBIR where input exceeds output
the though in practice this is not always possible.
A Taxpayer however has the option of recovering excess input
from excess output of a subsequent period. It should be stated at
this point that recoverable input is limited to VAT on goods
imported directly for resale and goods that form the stock-in-trade
used for the direct production of any new product on which the
output VAT is charged.
Taxable persons are manufacturers, wholesalers, importers or
suppliers of VATable goods or services for a charge. A taxable
person is required to register with the Federal Board of Inland
Revenue and upon registration, to charge and collect VAT at a
flat rate of 5% of all invoiced amounts of taxable goods and
services. All goods and services with the exception of those listed
in the Schedule to the Act are subject to the VAT Act. The
following are some examples of exempted goods and services:
v All medical and pharmaceutical products
v Baby products
v Books and educational materials
v Services rendered by mortgage institutions, community
banks; and
v Medical services.

2. Capital Gains Tax (CGT)
The Capital Gains Act of 1967 introduced the CGT into the
Nigerian tax law. This form of taxation applies to all companies,
individuals and non-corporate bodies. The CGT accrues on an
actual year basis and it pertains to all gains accruing to a
taxpayer from the sale or lease or other transfer of proprietary
Law Allianz. 2010
38

rights in a chargeable interest which are subject to a capital gains
tax of 10%, such chargeable assets may be corporeal or
incorporeal and it is irrespective of whether such asset is not
situated in Nigeria or not. It is however different where the
taxpayer is a non-resident company or individual. In such cases,
CGT will only be levied on the amount received or brought into
Nigeria. Computation of capital gains tax is done by deducting
from the sum received or receivable from the cost of acquisition
to the person realizing the chargeable gain plus expenditure
incurred on the improvement or expenses incidental to the
realization of the asset.
Certain charitable organizations are exempted from CGT to the
extent to which any gain is not derived from the disposal of an
asset used for trade or business and the gain is used for the sole
purpose of such organization

3. Education Tax
An education tax of 2% of assessabl e profits is imposed on all
companies incorporated in Nigeria. This is in line with the provisions
of the Education Tax Act No 7 of 1993, which requires every
company registered in Nigeria to pay an education tax of 2%. It
should be noted that non-Nigerian companies are not subject to
education tax.

4. Personal Income Tax
The legal basis for this tax is found in the provisions of the Personal
Income Tax Act No 104 of 1993. Every taxpayer in Nigeria is liable
to pay tax on the aggregate amount of his income whether
derived from within or outside Nigeria, the salaries, wages, fees,
allowances, and other gains or benefits, given or granted to an
employee are chargeable to tax. The residency of a taxpayer
determines the extent of a taxpayers liability in Nigeria. A persons
place of residence as defined by the Act is a place available for
his domestic use in Nigeria on a relevant day, excluding hotels
Law Allianz. 2010
39

and rest houses. A person is deemed resident in Nigeria if he
resides in Nigeria for 183 days in any 12-month period, thus,
expatriates holding residence permits are liable to tax in Nigeria
even if they reside in the country for less than 183days in any 12-
month period. Once residence can be established, the relevant
tax authority of the territory is the tax authority in which the
taxpayer has his place of residence or principal place of business.
Not all income is liable to taxation under the Act, the following are
some examples of income exempted from tax: -
Medical or Dental expenses incurred by the employee;
Retirement gratuities and compensation loss of office;
The cost of passage to or from Nigeria incurred by the
employee;
Interest on loans for developing an owner-occupied
residential house;
Contribution to any pension, provident or other retirement
benefits fund;
· Leave allowance, which is computed as 10% of annual
basic salary.

Several other reliefs exist under the Personal income tax. They
include;
Personal Allowance: This relief is computed as N5000 plus 20% of
earned income.

Child Allowance: A relief of N2, 500 is granted for a child up to a
maximum of four children, provided that:
i. None is above 16 yrs or married.
ii. If a child is more than 16 years of age, the child must be
receiving full time education in a recognised educational
institution or under articles in a trade or profession.

Dependent relative: A relief of N2000 is granted for each
dependent relative up to a maximum of two relatives who are
Law Allianz. 2010
40

widowed or infirm. However, where such dependent relative is
earning income more than N2000, the allowance is not claimable.

Penalties for Non-Compliance
Failure by the employer to deduct tax from the employee attracts
penalty of 10% and Interest at commercial rate (currently 21%)
along with the principal amount payable. Rendering of
incorrect/false returns attracts, on conviction, a fine of N200 and
double the amount of tax undercharged.

5. Companies Income Tax
The Companies Income Tax Act is the legal basis for the imposition
of taxes on the profits of any company in Nigeria, with the
exception of exploration and production companies. Every
company registered in Nigeria is liable to companies income tax.
However, a foreign company may be liability to pay tax is
dependent on the interpretation of its residency. A foreign
company is deemed to be resident in Nigeria for the purpose of
taxation where any of the following conditions is present:
a. If the company has a fixed place of business in Nigeria, to
the extent that profit is attributable to that place
b. If it does not have a fixed place of business in Nigeria, but
habitually operates a trade or business through a dependent
agent
c. If that trade or business involves a single contract for surveys,
deliveries, installation or construction; or
d. Where the trade or business is between the company and
another person controlled by it or which has controlling
interest in it such that the transactions between them are
deemed to be artificial or fictitious.

Tax is payable for each year of assessment of the profits of any
company at a rate of 30%.These include profits accruing in,
derived form brought into or received from a trade, business or
Law Allianz. 2010
41

investment; dividends, interests, royalties, discounts, annuities; fees,
dues and allowance for service rendered.
The current tax rate is 30% but for companies whose annual
turnover is not more than N500, 000 and engaged in agricultural
production or mining of solid minerals, that applicable tax rate is
29%.
As previously noted, companies, which apply for and are granted
pioneer status are eligible for tax holiday under the Industrial
Development (Income Tax Relief) Act, LFN 2004.
Companies engaged in business activities in Nigeria and
assessable to tax under the CITA, irrespective of whether it is a
resident or non-resident company, is obliged to prepare and file
with the Federal Board of Inland Revenue, audited accounts and
income tax computations within 6 months after the end of the
accounting period. With respect to new companies, the returns
must be filed within 18 months from the date of incorporation or 6
months after its first accounting period, whichever occurs first.
Incomes of companies engaged in certain activities are entitled
to exemption from taxation under the CITA. Such companies
include but not limited to the following:
· Statutory or registered friendly societies
· Ecclesiastical, charitable or educational establishments of
public character
· Companies formed for the purpose of promoting sporting
activities where such profits are wholly expendable for
such purposes
· Companies engaged in petroleum operations, so far as
these profits are derived from operation liable to tax under
the Petroleum Profits Tax Act, 1990
· Co-operative societies registered under any enactment or
law relating to co-operative societies.

Law Allianz. 2010
42

However, profits that are derived from a trade or business carried
out by the above mentioned companies are not entitled to
exemptions.
Companies paying dividends to its shareholders are first obliged
to pay tax on its profits at the companies tax rate. Generally in
Nigeria company dividends or other company distribution
whether or not of a capital nature made by a Nigerian company
is liable to tax at source of 10%, however dividends paid in the
form of bonus share or scrip shares to individual share holders are
not subject to tax. Furthermore, where a company is a
shareholder in another company then such dividends are
excluded from the profits of the company for the purposes of
computation of the tax.
A company, under the Nigerian law of taxation, may push forward
its losses for offset against the taxable income of the following 4
years. This does not, however, include offsetting the loss from one
trade/business against the income from another trade/business.
Losses incurred by an agricultural company or a company
engaged in agricultural activities can be carried forward
indefinitely.

6. Nigerian Social Investment Trust Fund (NSITF)
This is governed by the NSITF Decree, and requires everybody
employed in a Nigerian incorporated company to contribute a
certain percentage of their salary to the fund. Foreigners are
excluded from this requirement where they can show proof of a
similar contribution in their home country. The rate of contributions
is defined as follows, where the contributor is an employee, 2.5%
of his salary subject to a maximum of N 1,200 per annum; where
the contributor is an employer, 5% of basic salary subject.

7. Withholding Tax
Nigerian law subjects certain activities and services to Withholding
Tax. What the Withholding Tax means in essence is that where
Law Allianz. 2010
43

during transactions in any of the specified activities or services, a
payment is due from one person to another, the person making
the payment is expected to deduct tax at the applicable rate
and remit it to the relevant tax authority. This should be done not
later than 30 days after the deduction. This is provided for in
sections 68 to 72 of the Personal Income Tax Decree No. 104 of
1993; Sections 60 to 64 of the Company Income Tax Act (as
amended), and Section 51(a) of the Petroleum Profits Tax Act (as
amended).
Some of these activities and Services and their current applicable
rates include:-

It is an offence liable to sanctions not to withhold tax or to fail to
remit the tax deducted to the relevant tax authority.

B. Tax Treaties
Nigeria has a number tax treaties referred to as double taxation
agreements with a number of countries, these are designed to
ensure that the tax payable in Nigeria on the profits of a Nigerian
company being remitted into the country are reduced by the
amount of foreign Tax paid abroad and vice versa where an
Payment Corporate % Individual/Partnership%


Rent 10 10
Construction 5 5
Management
Fees
10 5
Royalties 10 5
Commission 10 5
Professional Fees 10 5
Technical Fees 10 5
Consultancy Fees 10 5
Law Allianz. 2010
44

overseas company receives profits from Nigeria that have already
been taxed in Nigeria. Some of these countries include the UK,
France, the Netherlands, Belgium, Canada and Pakistan.
The importance of tax regulations cannot be over-emphasized, as
most transactions with any Ministry, department, or government
agency cannot be concluded without evidence of tax
clearance, i.e. a Tax Clearance Certificate certifying that all taxes
due for the three immediately preceding years of assessment
have been settled in full. Such transactions include where tax
clearance certificates will be required are:
· Where an applicant seeks to buy state land
· Candidates for appointment as chairmen or members of
public corporations and other institutions.
· From applicants for export licenses
· On application for approval of building plans
· Applicants for permission to remit foreign exchange
· Application for a certificate of occupancy, etc.





V LABOUR
In 1999, Nigeria was estimated to have a labour force of 42.844
million with women comprising 36 percent of that force. In 2000
the estimated unemployment rate increased to 32 percent.
Secondary school graduates and women make up the largest
proportion of the unemployed. Many college graduates have
remained without full employment since the late 1980s. The
government, including federal, state, and local units, is the largest
employer outside the agricultural sector.
Employment in Nigeria is regulated by the law of contract and by
statute. There is a myriad of legislation providing minimum
protection for employees out of which employers and employees
Law Allianz. 2010
45

cannot contract. This legislation is found in a number of Acts that
regulate, inter alia, maximum hours of work, overtime rates,
minimum periods of annual leave, notice of termination, trade
unions, strike law, rights and responsibilities of employers and
workers in the event of retrenchments, protection from unfair
dismissal and the prohibition of unfair discrimination. The following
legislations regulate labour activities in Nigeria; the Labour Act,
Trade Unions Act, Trade Disputes Act, Trade Disputes (Essential
Services) Act, Trade Disputes (Amendment) Act, The Factories Act,
The Workmens Compensation Act, National Minimum Wage
(Amendment) Act.

1. Labour Law in Nigeria
With the exception of employees classified as essentialmembers
of the armed services, the police force, fire fighters, Central Bank
employees, and customs and excise staffNigerian workers may
form or join trade or labour unions. They may strike to obtain
improved working conditions and benefits and bargain
collectively for higher wages; strikes or industrial actions by workers
tend to be frequent in Nigeria. The Trade Unions Act requires that
a trade union be registered prior to its functioning as such in
Nigeria. The Act prohibits staff recognised as a projection of
management within the management structure of any
organisation from being a member of, or holding office in trade
union.
The Nigerian Labour Congress is the central labour organisation in
Nigeria. It is an umbrella for other trade unions and is funded
through government contributions and contributions form unions
affiliated to it. It ensures and protects the collective bargaining
rights between employees and employers; organises strikes and
lockouts; and facilitates dispute resolution. Although plagued by
leadership struggles, ideological differences, and regional ethnic
conflicts, the Nigerian Labour Congress has been able to organize
or threaten nationwide workers' strikes, demanding the retention
Law Allianz. 2010
46

of government subsidies on petroleum products, minimum wages,
and improved working conditions
The Nigerian Employers Consultative Association (NECA) protects
the interest of employers of labour who are its members in matters
concerned with labour and industrial issues. It represents members
in dealings with government agencies.
In Nigeria, trade disputes are required by the Trade Disputes Act to
be settled first at the company level, then by the Ministry and then
to the National Industrial Court whose decision is final. The Trade
Disputes (Essential Services) Act makes it an offence to engage in
acts calculated to disrupt the economy or obstruct the smooth
running of any essential services or for any one to wilfully fail to
comply with the laid down procedure in the Trade Disputes Act.
This Act in effect, prohibits strike actions or lock outs while disputes
are being resolved.
Employees contracts can be terminated by the giving of notice
of termination or payment of salary in lieu of such notice.
Employment may be terminated if the parties to the contract
jointly agree to such termination. An employer may also terminate
the employment of his/her employee where the employee has
committed an act of misconduct.
Employers are to ensure that every workman is insured against
injury or death arising out of, or in the course of employment. This is
entrenched in the Workmens Compensation Act. Where a worker
sustains injury arising out of, or in the course of employment, he is
entitled to compensation from his employer. The compensation is
based on the monthly earnings of the worker. The employer and
the employee can negotiate the amount of compensation
payable but the negotiated amount must not be less than the
statutory provision. Compensation is payable to the worker but
where death results from the injuries it is payable to his
dependants. The Act requires employers to give free treatment to
employees where the employee notifies them of the injuries.
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47

Employers are also required to notify a labour officer of the death
of a workman within seven day of obtaining notice of such death.
The Immigration Act prohibits the employment of any person not
being a Nigerian without the consent in writing of the Minister of
Internal Affairs, except where such employment is by the Federal
or State Governments. The approval is in form of an expatriate
quota approval which must be obtained by a foreigner before he
is employed in Nigeria.

Scope of legislation
All labour law statutes in Nigeria, including the Labour Act and the
Trade Disputes Act, apply only to those persons considered
employees at common law (i.e. those employed under a
contract of service and not a contract for services).
Furthermore, both Acts apply only to those employees who are
defined as workers. The Labour Act defines a worker as any
person who has entered into a contract (of service) with an
employer, whether the contract is for manual or clerical work, or is
express or implied, or oral or written. This definition can be found in
Section 90 of the Act. The courts have n several occasions
interpreted this definition to apply only to manual or clerical
workers. The definition in the Act excludes:

· any person not employed for the purposes of the employers
business (such as domestic staff);
· persons exercising administrative, executive, technical or
professional functions;
· members of the employers family (also excluded by sec. 21
of the LA);
· representatives, agents and commercial travellers, to the
extent their work is carried out outside the employers
permanent workplace; home workers; and
· any persons employed at sea or on an aeroplane, who are
governed by specific legislation.
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48

Additionally, members of the armed forces and police are
excluded from the scope of the Labour Act. It should be noted
that the definition ascribed to a worker in the Trade Disputes Act
reflects the LA definition, except where it is expressly extended to
workers other than manual or clerical workers and to apprentices;
in addition, the exceptions listed above do not apply. However,
again, members of the armed forces and police are excluded
from the TDA.

What is a Contract of employment?
Contracts of employment may be either contracts for an
indefinite period or for a fixed term or fixed amount of work. The
common law position that contracts for a fixed term or fixed
amount of work expire according to their terms is entrenched in
the LA and this rule has not been modified by statute, nor is there
any further statutory regulation of fixed-term contracts.
It should be noted that the term casual worker has no legal
significance in Nigeria.

Termination of employment
In Nigeria the termination of employment other than at the
employers initiative is largely governed by common law.
Contracts of employment may be terminated, other than at the
employers initiative, by:

· mutual agreement, either by an agreement as to the term of
the contract or an agreement that employment should end;
· frustration by a supervening event;
· the employee resigning by giving the requisite notice; and
· the death of the employee.
The Labour Act codifies the common law position that an
employees contract of employment may not be transferred from
one employer to another without the employees consent, and, in
addition, requires authorization of any transfer of employment by
Law Allianz. 2010
49

a government labour officer, who may also require a medical
examination.



Dismissal
In Nigeria there is no general statutory principle against unfair
dismissal and the law of dismissal is largely governed by the
common law, as modified by the LA. However, a dismissal may
constitute a trade dispute under the TDA, in which case the
worker concerned may bring a claim to the National Industrial
Court (NIC) under that Act.
There are specific statutory prohibitions against dismissal on the
grounds of union membership and activity, pregnancy and taking
maternity leave. In addition, the common law has developed the
concept of a constructive dismissal (i.e. behaviour by the
employer which is intolerable, and which forces the employee to
resign, and which is deemed to be a dismissal) and, as part of the
common law, this concept is part of Nigerian law.

The Labour Act specifically retains the common law right of an
employer to summarily dismiss an employee for serious
misconduct. The LA also expressly ensures the employers ability to
dismiss on the grounds of redundancy. Redundancy is defined
by Section 20(2) of the Labour Act to be an involuntary and
permanent loss of employment caused by an excess of
manpower.

Notice and prior procedural safeguards
The Labour Act sets out statutory minimum notice periods as
follows:

· for less than three months of service, one day;
· for three months to two years of service, one week;
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50

· for two to five years of service, two weeks; and
· for more than five years of service, one month.
The above periods are minimum statutory requirements which can
be improved upon by collective agreements or contracts of
employment. The Act permits the payment of consideration in lieu
of notice, and either party is entitled to waive the right to notice.
Where the dismissal is the result of misconduct, the common law
rule is that employers, who, with full knowledge of the employees
conduct, condone such conduct, cannot thereafter rely on the
conduct to justify a summary dismissal. However, the common law
rule that misconduct discovered after dismissal may justify the
dismissal also applies. There are no statutory requirements as to
procedure for dismissals for misconduct, although a breach of any
contractual procedure may constitute a breach of contract
leading to an award of damages. Similarly, there are no statutory
procedural requirements for dismissals on the grounds of
unsatisfactory performance.
The procedures for dismissal of an employee on grounds of
redundancy are set out in the Act as follows:

· the employer is to inform the trade union or workers
representative of the reasons for and anticipated extent of
the redundancies;
· the principle of last in, first out is to be applied, subject to
factors of merit, including skill, ability and reliability; and
· the employer is to use his or her best endeavours to
negotiate redundancy payments.

Severance pay
The relevant legislations do not provide for a general statutory
severance pay, although there is provision in the Labour Act for
the Minister of Labour to enact regulations providing for
severance pay to redundant workers. The National Industrial Court
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51

has, on occasion, awarded severance pay, as additional
compensation, to unfairly dismissed workers.

Compulsory Labour
Nigerian labour laws prohibit forced or compulsory labour. They
also prohibit the employment of children below the age of 15
years in commerce and industry and restrict other child labour to
domestic or agricultural work. In reality however, many children,
hawk goods in markets, streets and junctions of major roads in the
cities and assist their parents in trade and commerce.

Maternity Leave
In Nigeria, a pregnant woman is entitled to maternity Leave of at
least six (6) weeks before the delivery of her child and six (6) weeks
after the delivery of the child. A pregnant woman is also entitled
to 50% of the wage she would have earned if she had not been
absent from her employment by reason of her carrying and
delivering a child. Where the woman, for medical reasons
exceeds the period allowed, she must not be served with a
dismissal notice if she produces a Medical Certificate from a
registered Medical Practitioner informing the employer of her
medical condition. The employee may provide details of the
medical condition if requested by the employer. The law also
stipulates that nursing mothers in employment are entitled under
to half an hour, twice daily, to nurse and feed their infant.




VI INTELLECTUAL PROPERTY

1. Patent
A patent is the grant by the government to an inventor or his
assignee, for a short time, of a right of monopoly to preclude any
Law Allianz. 2010
52

other person from exploiting his invention without his consent. The
law of patents is that branch of intellectual individual property
law, which protects an article of manufacture or process that is
newly invented or is an improvement upon a patented invention.
The patents system is administered by the Patents Registry, which is
under the control of the Registrar of Patents and Designs. The
Patents Registry is located at Abuja. The Patents and Designs Act,
Cap P2 LFN 2004 and Patents Rules are the relevant laws
governing patents and designs in Nigeria.
Section 1 (b) Patents and Designs Act, Cap P2 LFN 2004 states that
an invention is patentable if (a) it is new, results from inventive
activity and is capable of industrial applications. 1 (a), or (b) it
constitutes an improvement upon a patented invention and also
is new, results from inventive activity and is capable of industrial
application. Furthermore, an invention is new if it does not form
part of the state of the art, i.e. if it does not form part of the field of
knowledge already made available to the public anywhere and
at any time (expect at an official or officially recognized
international exhibition within the period of six month preceding
the filing of the application.
An invention results from inventive activity if it does not obviously
follow the state of the art either;
I. As to method
II. The application, or
III. The combination of methods, or
IV. The product which it concerns; or
V. As to the individual results it produces

There is an inventive step if the invention is not obvious to a person
skilled in the art. The Patents and Designs Act stipulates that
principles and discoveries of a scientific nature are not inventions
for the purposes of the Act.

Invention and Discovery
Law Allianz. 2010
53

Discovery is no more than adding to human knowledge by
disclosing something which before had been hidden, invention
goes a step further to indicate how to put that knowledge to
practical use to produce either a new and useful product, or new
result or a new combination for producing an old product or result

"Capable of Industrial application":
The Act defines this phrase to mean that the invention can be
manufactured in any kind of industry, including agriculture.
Certain inventions are regarded as unpatentable Inventions. Thus,
patents cannot be validly obtained in respect of
(a) Plant or animal varieties or essentially biological processes for
the production of plants and animals (other than micro-biological
processes and their products) or
(b) Inventions, the publication or exploitation of which would be
contrary to public order or morality

The right to a patent in respect of an invention is vested in the
statutory inventor i.e. the person who, whether or not he is he true
inventor, is the first to file or validly claim a foreign priority for a
patent application in respect of an invention. The Act, however,
makes provision for the true inventor to be named as such in the
patent application. It should be noted that where an invention is
made in course of the employment or in execution of a contract
for the performance of specified work, the right to a patent in the
invention is vested in the employer or the person who
commissioned the work.
A patent application is made to the Registrar and consists of the
following:

I. A petition or request for a patent with the applicant's full
name and address A 'specification' including a 'claim' or
'claims', in duplicate
II. Plans and drawings, if any, in duplicate
Law Allianz. 2010
54

III. A declaration by the true inventor (requisition that he be
mentioned as such is made in the patent)
IV. 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
V. The prescribed fee, and
VI. Any other matter prescribed by the Registrar from time to
time.

A patent application must relate to only one invention but may
cover claims for any number of products or processes

Convention Application
This is an application claiming foreign priority in respect of an
earlier application to register the same invention in another
country which has been declared to be a convention country
under the Patent and Designs (Convention Countries), Order,
1971. In so far as the application in Nigeria is made within 12
months of the making of the earlier application in the foreign
country, it will be treated as having been made on the same date
on which the corresponding foreign application was made.

The applicant seeking foreign priority should include in his
application a written declaration showing:
i. The date and number of the earlier application;
ii. The country in which the earlier application was made, and
iii. The name of the person who made the earlier application.


The Act further provides that not more than three months after the
filing of the application, the applicant must furnish the Registrar
with a copy of the earlier application certified by the Industrial
Property Office or its equivalent in the foreign country where the
Law Allianz. 2010
55

earlier application was made. The following documents will be
delivered to the Registrar:
a) Form IB - Application form (for each convention
priority claimed)
b) Form 2 - Authorisation of agent (Fee: Nil)
c) Form 3 - Complete specification (in duplicate).
d) A certified copy of the earlier application in the
convention country - to be filed not more than 3
months after filing the Nigerian application.

Applications will be made to the registrar of the Patents and
Design, Federal Ministry of Commerce, Commercial Law Division,
Federal Capital Territory, Abuja. The forms (and documents) will be
signed in the case of:

(a) Joint owners: by all of them or by any other person duly
authorized to sign the document.
(b) A body corporate: by a director or the secretary or other
principal officer of the body corporate or by any other
person duly authorized to sign the document.

Duration, Renewal and Lapse of patent
The period of monopoly granted by a patent is 20 years from the
date of the filing of the patent application. During the 20 years
duration of the patent, it must be renewed annually by lodging
the relevant application together with the prescribed fees not
later than the due date otherwise the patent will lapse. Where the
application for renewal is not made within time, a period of grace
of 6 months is allowed within an application for extension of time
to pay renewal fee may be made together with the extension fee
and the prescribed surcharge.

Cancellation and Surrender of Patent
Law Allianz. 2010
56

A patentee may surrender a patent in respect of all or any of the
claims made by the patent. The application is in the form of a
written declaration, which must be accompanied by the patent if
the application relates to all the claims. The surrender, to be
effective, must be registered by the Registrar who must also notify
the same.

Nullity of Patent
Considering that patents are granted at the risk of the patentee
and without guarantee of their validity, they are liable to be
attacked and set aside for invalidity at any time on the
application of any person including a public officer acting in the
exercise of his functions. A patent may be declared null and void
on any of the following grounds:
(a) That the subject matter is not patentable; or
(b) That the description (specification) of the claim does
not conform with the statutory requirement; or
(c) That a patent has been granted already in respect of
the same invention

Infringement of a Patentees Right
A patent is infringed if a person does or causes to be done any
acts which are reserved to the patentee under sections 6 and 9 of
the Act without the authority or licence of the patentee. An
infringement is actionable at the suit of the patentee or his
assignee. However, a licensee cannot sue in the first instance but
must first of all by registered letter require the licensor to sue to
remedy the signified infringement. Where the licensor (i.e.
patentee) unreasonably refuses or neglects to institute
proceedings, the license may do so in his own name without
prejudice to the right of the licensor to intervene in the
proceedings.
In an action for infringement, all such relief by way of damages,
injunction accounts or otherwise shall be available to the plaintiff
Law Allianz. 2010
57

as is available in any corresponding proceedings for infringement
of other proprietary rights.
The Federal High Court is vested with jurisdiction over legal
proceeding arising under the Patents and Designs Act is vested in.
Furthermore, provisions of the Trade Marks Act in respect of legal
proceedings apply with necessary modifications to legal
proceedings under the Patents and Designs Act.
Note that a patent has the same effect against the State as it has
against an individual subject to the right of the state to use the
patents for the service of government agencies


2. Industrial Designs
The applicable statute regulating industrial design is the Patents
and Designs Act. The Act defines industrial designs as any
combination of lines or colours or both, and any three-dimensional
form, whether or not associated with colours, if it is intended by
the creator to be used as a model or pattern to be multiplied by
industrial process and is intended solely to obtain a technical
result. It should be noted that not all designs are registrable. The
Act specifies industrial designs which are registrable and
designates those that are not registrable under the Act. An
industrial design is registrable if:
(a) it is new, and
(b) it is not contrary to public order or morality.
According to the Act, a design is presumed to be new at the time
of application except in the following cases:
i. Where the design has been made available to the public
anywhere and at any time by means of description, use or in
any other way, unless the creator can show that he could
not have known that it was made so available. A design is
not made available to the public by reason that within a
period of six months preceding filing of the application 'for
Law Allianz. 2010
58

registration, the creator exhibited it at an official or officially
recognised exhibition.
ii. Where the design merely differs in minor or inessential ways
from an earlier design or concerns a type of product other
than the type with which an earlier design is concerned

Designs to be applied to any of the following articles are excluded
from registration:
a) Works of sculpture other than casts or models used or
intended to be used as mode or patterns to be multiplied by
any industrial process
b) Wall plagues or medals;
c) Printed matter primarily of a literary or artistic character,
including book jackets, calendars, certificate, coupons,
dress-making patterns, greeting cards, leaflets plans maps,
post-cards, stamps, trade advertisement, trade forms, etc.

The right to registration of an industrial design is vested in the
statutory creator, i.e., the person, whether or not the true creator,
is the first to file, or validly claim a foreign prior for an application
for registration of the designs. Registration is by the issue to the
applicant of a registration certificate.
Duration and Renewal
Registration of an Industrial design is effective in the first instance
for 5 years from the date of the application for registration but is
renewable on payment of the prescribed fees, for two
consecutive periods of 5 years. A period of grace of 6 months
after the beginning of the renewal period is allowed for the
payment of the renewal fee. The fact of renewal or lapse of a
registered design must be registered and notified.

Nullification of Registration
The court is vested with the authority to declare the registration of
industrial design void under section 22.
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59


3. Copyright
This is regulated by the Copyright Act, Cap. C28 LFN 2004. Literary,
musical and artistic works, cinematograph films, sound recordings,
broadcasts, programme-carrying signals, computer programs and
published editions are all eligible for copyright protection as long
as they are original.
Copyright in a work is the exclusive right to control the doing of
certain specified acts in respect of the whole or substantial part of
the work either in its original form or in any form recognizably
derived from the original, subject to certain statutory exceptions.
Copyright is the right given to artists, literary men, musicians and
performers to exclude others from substantial copying of the
material form of their works. What is protected by the Act is not
the ideas in the works but the form in which the ideas are
expressed.
Section 1 (1) of the Copyright Act lists works that are eligible for
Copyright:
A. (i) Literary Works:
Literary works includes, irrespective of literary quality, such works as
novels, poetical works, Computer programmes, textbooks, lectures
and law reports.

(ii) Musical Works:
Any musical composition, irrespective of musical quality and
includes works composed for musical accompaniment.

(iii) Artistic Works:

These includes, irrespective of artistic quality, works such as;
Paintings, drawings, lithographs, etc, maps, plans and diagrams,
works of sculptures, photographs not compromised in
cinematography films, works of architecture, works of artistic
craftsmanship.
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60


(iv) Cinematography Films:
Cinematography Films includes the first fixation of a sequence of
visual images capable of being shown as a moving picture and of
being the subject of reproduction, and 'includes the recording of
a sound track associated with the cinematography film.

(v) Sound Recordings:
Means the first fixation of sequence of sound capable of being
aurally and of being reproduced but does not include a sound
track associated with the cinematography film.

(vi) Broadcast
Means sound or television broadcasts by wireless telegraphy or
wire or both or by satellite or cable programmes and includes re-
broadcast.

B. Neighboring Rights
The Act provides protection to performers in respect of live
performances (and expressions of folklore. These rights are called
"Neighboring Rights;"

The following are the grounds for granting protection under the
Copyright laws of Nigeria.
(a) Originality
A literary, musical or artistic work will not be eligible for copyright
unless sufficient effort has been expended on making the work to
give it an original character.
(b) Fixation of work
A literary, musical or artistic work shall not be eligible for copyright
unless it has been fixed in any definite medium of expression now
known or later to be developed from which it can be perceived,
reproduced or other wise communicated either directly or with
the aid of any machine or device. This requirement of fixation
Law Allianz. 2010
61

applies equally to cinematographic films and sound recordings
and even broadcasts.
It should be noted that in the case of literary work, publication
does not appear to be essential.

(c) Qualification of Author
The author or one of joint authors must be:
i. A citizen of Nigeria, or a non-Nigerian who is domiciled in
Nigeria or
ii. A body corporate incorporated by or under the laws of
Nigeria

(d) First Publication in Nigeria
Copyright is conferred on every work, other than a broadcast,
which is eligible for copyright and which:
i. Being a literary, musical or artistic work or cinematography
film, is first published in Nigeria.
ii. Being a sound recording, is made in Nigeria

(e) Works of Governments.
Copyright is conferred on every work which is eligible for copyright
and is made by or under the direction or control of the
Government, a state authority and prescribed international body
Unlike other types of intellectual property, there is no registration
requirement for copyright. Copy right is invested automatically by
the Copyright Act on all eligible work which qualify for protection.
The ownership of copyright vests initially in the author and if the
work is commissioned by an independent person, or is made in the
course of employment, copyright belongs in the first instance to
the author, unless otherwise stipulated in writing under the
contract.

Transfer of Rights
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62

Rights under the Copyright law may be transferred in the following
ways; by operation of law - e.g. by transmission on death or
bankruptcy; by will; by assignment; by grant of license which may
be exclusive. An assignment or an exclusive license to do an act in
relation to a copyright which is not in writing is invalid. A non-
exclusive license may be written, oral or may be inferred from
conduct

Infringement of Copyright
Copyright is infringed by any person who without the license or
authorization of the owner of the copyright:
(a) Does or causes any other person to do an act, the
doing of which is controlled by copyright;
(b) Imports or causes to be imported into Nigeria any copy
of a work which if it had been made in Nigeria would be an
infringing copy.
(c) Exhibits in public any article in respect of which
copyright is infringed.
(d) Distributes by way of trade, offers for sales, hire or
otherwise for any purpose prejudicial to the owner of the
copyright, any article in respect of which copyright is
infringed.
(e) Makes or has in his possession, master tapes, machines,
equipment or contrivances used for the purpose of making
infringed copies of the works;
(f) Permits a place of public entertainment or business to be
used for a performance in the public of the work, where the
performance constitutes an infringement of the copyright in
the work, unless the person permitting the place to be used
was not aware, and had no reasonable ground for
suspecting that the performance would be an infringement
of the copyright;
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63

(g) Performs or cause to be performed for the purpose of
trade or business or as supporting facility to trade or business,
any work in which copyright subsists.

Action for Infringement
Infringement of copyright is actionable at the suit of; the owner;
an assignee, or; an exclusive licensee of the copyright, in the
Federal High Court having jurisdiction in the place where the
infringement occurred. Where the owner and an exclusive
licensee have concurrent rights of action, none of them may,
without leave of court, proceed with the action unless the other is
joined as plaintiff or added as defendant.
Civil and criminal actions may be taken simultaneously in respect
of the same infringement. The law allows for both civil and criminal
redress in cases of copyright infringement, differences however
exist in the mode and manner of institution either of these actions.
The copyright owner may enforce his rights directly through civil
proceedings; however criminal proceedings can only be initiated
by the Nigerian Copyright Commission


Relief Claimable
In an action for infringement, all such relief by way of damages,
injunction, accounts of profits or otherwise is available to the
plaintiff as is available in any corresponding proceedings in
respect of infringement of other proprietary rights.

Exemplary Damages
Where in an action, infringement of copyright is proved or
admitted, the court may award additional damages if it satisfied
that effective relief would not otherwise be available to the
plaintiff, having regard (apart from all other factors) to:
(a) The flagrancy of the infringement, and
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64

(b) Any benefit shown to have accrued to the defendant by
reason of the infringement.

Conversion Rights
All infringing copies of a copyright work or part of it and all plates,
master tapes, machines, equipment or contrivance used, or
intended to be used for the production of such infringing copies
are deemed to be the property of the owner, assignee or
exclusive licensee, as the case may be, of the copyright who
accordingly may take proceedings for the recovery of possession
of those articles or in respect of conversion of them. Thus the Act
provides for three causes of action:

(a) Action for infringement of the copyright;
(b) Action for conversation of the offending articles; and
(c) Recovery of the offending articles.

Defence of Innocent Infringement
Where in an action for infringement of copyright it is proved or
admitted that an infringement was committed but that at the
time of the infringement the defendant was not aware and had
no reasonable grounds for suspecting that copyright subsisted in
the work, the plaintiff will not be entitled to any damages, but to
an account of the profits made through the infringement.

Inspection and Seizure
In any action for infringement of any right, where any ex parte
application is made to the court, supported by affidavit, that
there is reasonable cause for suspecting that there is in any house,
or premises any infringing copy or any plates, film or contrivance
used or intended to be used for making infringing copies or
capable of being used for the purpose of making copies of any
infringing article, book or document, the court (FHC) may issue an
order authorizing he applicant to enter the house or premises at
Law Allianz. 2010
65

any reasonable time by day or night accompanied by a police
officer not below the rank of an Assistant Superintendent of Police,
and

(a) Seize, detain and preserve any such infringing copy or
contrivance,

(b) Inspect all or any relevant documents in the custody or under
the control of the defendant.

Duration of Copyright Production
1. Literary, Musical or Artistic Works other than photographs -
Seventy years after the end of the year in which the author dies; in
the case of government or body corporate, seventy years after
the end of the year in which the work was first published.

2. Cinematography Films and Photographs - Fifty years after
the end of the year in which the work was first published.

3. Sound Recording - Fifty years after the end of the year in which
the recording was first made.

4. Broadcasts - Fifty years after the end of the year in which the
broadcast first took place.

In the case of anonymous or pseudonymous literary, musical or
artistic works, the copyright will subsist until the end of the
expiration of seventy years from the end of the year in which the
work was first published. Provided that, where the author becomes
known, the term of copyright given above will apply

Reciprocal Extension of Protection
Copyright law generally operates within the borders of the country
making it and benefits only works made by its citizens or aliens
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66

domiciled therein. In order to remedy this gap, provision is made
for reciprocal extension of protection to persons in other countries.
Where any country is a party to a treaty or other international
agreement to which Nigeria is also a party, and the Minister
responsible for culture is satisfied that the country provides for
protection of copyright in works which are protected under the
Act, the Minister may be order in the Gazette extend the
application of the Act in respect of any or al of the works referred
to in s. (1) of the Act:
a) To individuals who are citizens of or domiciled in that country;

b) To bodies corporate established by or under the law of that
country;

c) To work, other than sound recording and broadcasts first
published in that country; and

d) To broadcasts and sound recording made in that country.

Nigeria is a party to the Universal Copyright Convention 1952
(UCC), the Berne Convention 1886 and 1971 for the protection of
literary and artistic works, and the Rome Convention 1961 for the
protection of performers, producers of phonogram and
broadcasting organizations.

The Berne Convention (1886 and 1971) and The Universal
Copyright Convention (1952).

Both the Berne Convention and the Universal Copyright
Conventions apply only to literary, dramatic, musical and artistic
works and films, but do not apply to sound recording, broadcasts
and neighboring rights.
The Universal Copyright convention provides that the copyright
notice symbol of C inside a circle, the name of copyright owner,
Law Allianz. 2010
67

and year of manufacture, is sufficient formality conferring
copyright. This may be contrasted with the Berne Convention
position that copyright is property flowing "naturally" and without
formality from the act of creation (article 5 (2)) so that neither
registration nor formal notification is required to confer copyright
or the right to sue for infringement.
The main difference, however, between the two Conventions is to
be found in the duration of protection; the Berne convention the
duration of protection is the life of the author plus 50 years, while
for the Universal Copyright Convention, it is the life of the author
plus 25 years.
Other international treaties and international agreements to which
Nigeria is a party or signatory includes; Rome Convention; Trade
Related Aspects of Intellectual Property Rights (TRIPS); and World
Intellectual Property Organisation (WIPO).

Administration
The Nigerian Copyright Commission is vested with the responsibility
for all matters affecting copyright in Nigeria as provided by the
Act.

Jurisdiction
The Federal High Court is conferred with exclusive jurisdiction for
the trial of offence or disputes under the Copyright Act.

4. Trade Marks
Trade Marks Act Cap T13 LFN 2004 and Trade Marks Regulation
are the governing regulations on trade mark law and protection in
Nigeria.

Registration
Registration of a trade mark is effected with the Registrar of Trade
Marks with Office in the Federal Capital Territory Abuja. The
Registrar of Trade mark keeps records of all registered trade marks
and related matters (names and addresses of proprietors and
Law Allianz. 2010
68

registered users, notification of assignment. transmissions etc). The
register kept by the Registrar is divided into two parts; Parts A and
B. A Trade Mark must be registered in respect of particular goods
or classes of goods. It is the duty of the Registrar to determine class
within which any goods falls. For a mark to be registrable in Part A
of the register - it must contain at least one of the following
essential particulars:

a) The name of the company, individual, firm represented in a
special or particular manner.
b) The signature of the applicant for registration or some
predecessor in his business.
c) An invented word or invented words.
d) A word or words having no direct references to the
character or quality of the goods, and not being according
to its ordinary signification a geographical name or a
surname.
e) Any other distinctive mark.

For a trade mark to be registrable under Part B of the register, it
must be capable of distinguishing the goods in respect of which it
is registered from the goods that have no connections with the
Proprietors of the mark. It should be noted that a trade mark may
be registered in Part B notwithstanding any registration in.

Procedure for Application for Registration
1. Fill in a Search Form (entering the name of the mark and the
class you want to search and the specimen of the mark).
Pay search fees and form will be endorsed - then the search
on the register conducted; if there is nothing similar, the mark
may be available.
2. Then fill in and present the required documents, i.e.

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69

(a) Form 2 - This is the application for registration of Trade
Mark. A space is provided on top of the form for pasting one
Bromide of the Mark.
(b) Form 1 - which is the Authorisation of Agent, - i.e. owner
of trademark appointing his agent in respect of the
application.
(c) Form 3 - This is for additional representation of Trade
Mark to accompany application for Registration. It is, except
for the heading, a blank sheet of paper - for pasting the
Bromide.
(d) Filing fees.

3. An acknowledgment fom1 will be given to you (of your
application)
4. The Registrar will examine the application for registrability
under section 9 or section 10 of the Act and also cause a
search (official) to be conducted for similarity of existing
registered trade mark or similarity with any pending
application.
The Registrar is to also ensure that the mark is not deceptive or
scandalous, or is not in any way disallowed under the Act. The
Registrar may then accept or refuse.

5. Refusal or conditional acceptance should be in writing and
within 2 months of receiving notification of the refusal or
conditional acceptance, the applicant should apply for a
hearing or reply to objection in writing otherwise the
application in considered withdrawn. Where the Registrar still
refuses, the applicant can appeal to the court (Federal High
Court).

6. Where the Registrar accepts the application, a letter of
acceptance will be issued. The trademark will be deposited
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70

in the advertising Room for eventual publication in the Trade
Mark Journal.

Within 2 months of publication in the Journal, any person can give
notice to the Registrar of opposition to the registration. The
Registrar is obliged to send a copy of notice of opposition to
applicant who must within one month send a counter-statement,
otherwise the application is deemed abandoned. If counter-
statement is sent, the Registrar is empowered to make a final
decision on which applicant can appeal against to the court.
Where there is no opposition to the application or the decision of
the Registrar is in favour of applicant, the Registrar shall enter the
trade mark on the register in Part A or Part B.

Duration and Renewal
The duration for a trademark is a period of 7 years. Renewal may
be made for a period of 14 years from the expiration of the last
registration. Where a renewal is granted, a renewal certificate will
be issued.
If after 5 years a registered mark is not used, it can be removed
from the register.
Rights Conferred by Registration and Enforcement
Registration confers on the registered owner the exclusive right to
the use of the trade mark in relation to the goods mentioned in
the register.

Convention Country
A person who applied for protection for a trade mark in a
convention country can (within 6 months of such application in his
country) apply personally or through legal representative or
assignee for registration of his trade mark in Nigeria and he shall
have priority to other applicants and his registration in Nigeria shall
have the same date of application as in the convention country.

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71

The registration of a trademark is prima facie evidence of validity
of that trademark.

Infringement
If a person who is not a registered user, uses a mark identical with
or so nearly resembling the mark as to be likely to deceive or
cause confusion in the course of trade in relation to the goods in
respect of which the mark was registered, he is guilty of
infringement.
The Federal High Court is the court vested with exclusive
jurisdiction in matters relating to action for infringement of
trademark. The several actions that may be instituted in the court
are injunction-perpetual/interim; delivery up of the mark and
articles and damages for loss of profit, and where the trade mark
is not registered, resort is had to the common law action of
passing off.




VII DISPUTE RESOLUTION
1. The Courts
Nigerian courts are divided into courts of superior courts which are
the courts of record (e.g. the Supreme Court, the High Court, the
Court of Appeal) and the inferior courts (e.g. the Magistrate
Courts). The Supreme Court of Appeal which sits in the Federal
Capital Territory, Abuja is the highest court in the hierarchy of
courts in Nigeria. The Supreme Court is vested with both original
and appellate jurisdiction. The original jurisdiction is exclusive and
covers any dispute between the Federation and a State or
between States involving any question on which the existence or
extent of a legal right depends. The original jurisdiction of the
court has been extended by the National Assembly to include
disputes between the National Assembly and the President or
Law Allianz. 2010
72

between the National Assembly and a State House of Assembly or
between the National Assembly and a State Government. The
Supreme Court also has exclusive jurisdiction to hear and
determine appeals from the Court of Appeal. The Court of Appeal
is the next court in the hierarchy and has both original and
appellate jurisdiction. There are two High Courts in Nigeria; the
Federal High Court with jurisdiction conferred on it by Section 251
of the Constitution of the Federal Republic of Nigeria, 1999, and
the various High Courts of the States. The High Court of the State
has the widest civil jurisdiction under the Constitution subject to
the jurisdiction conferred on the Federal High Court by Section
251.
The Magistrates Courts jurisdiction varies according to the
Magistrate Courts law of the various States establishing them.
Magistrate Courts exercising civil jurisdiction in Northern States of
Nigeria are known as District Courts.
The National Industrial Court is not one of the courts established
directly by the Constitution. It is a specialized court created by an
Act of the National Assembly; the National Industrial Court Act,
2006. The Court is vested with exclusive jurisdiction in civil cases
and matters relating to the following:
a. Labour, including trade unions and industrial relations,
environment and conditions of work, health, safety and
welfare of labour, and matters related thereto;
b. grant of any order to restrain any person or body from taking
part in any strike, lock-out or any industrial action, or conduct
in contemplation or in furtherance of a strike or lock-out or
any industrial action;
c. determination of any question as to the interpretation of; any
collective agreement ; any award made by an arbitral
tribunal in respect of a labour dispute or an organizational
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73

dispute; the terms of settlement of any labour dispute,
organizational dispute as may be recorded in any
memorandum of settlement; any trade union constitution;
and any award or judgment of the Court.
The Court is also empowered to transfer cases from the court to
the Federal or State High Court where it lacks jurisdiction.

2. Alternate Dispute Resolution
Alternative forms of dispute resolution are on the rise in Nigeria
because the regular courts are usually beleaguered with delays
for diverse reasons. An attempt to combat these delays and
ensure swifter dispensation of justice has seen the emergence of
Alternative Dispute Resolution and the multi-door court house.
Multi-door courthouse is a court-connected Alternative Dispute
Resolution centre which offers a variety of alternative dispute
resolution processes. It is a multi-faceted dispute resolution centre
established to supplement available resources for access to
justice. The methods of alternative dispute resolution in Nigeria are
Negotiation, Mediation, Conciliation, and Arbitration. Arbitration
and Conciliation in Nigeria is governed by the Arbitration and
Conciliation Act, LFN, 2004.
Generally, contracts contain clauses providing for recourse to
mediation or arbitration where a dispute arises. Parties are free to
agree on a governing law and to the jurisdiction of international
arbitration forums.
3. Enforcement of Foreign Judgments
A foreign judgment may be enforced in Nigeria. Specific
procedures laid down in the Foreign Judgment (Reciprocal
Enforcement) Act must be followed to ensure the enforcement of
foreign judgments in Nigeria. Such enforcement is subject to
compliance with the requirements of Nigerian law for the
enforcement of foreign judgments.
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74






VII GENERAL INFORMATION ON NIGERIA

1. Real Estate
The real estate service in Nigeria is comprises of fully serviced
houses and apartments and lands for sale or rental in Nigeria,
ranging in size and value to suit individual needs. Availability and
cost is dependent on which area and also the state within which
the land is situate, with properties in Abuja, Lagos and Port
Harcourt being the most costly. The property market in Nigeria is
booming, particularly in the Federal Capital Territory, due in part
to the scarcity of accommodation and on the other part to its
status as the seat of power in Nigeria.

2. Health Care Delivery
The Nigerian public health care system is currently undergoing
massive overhauling and some state hospitals which are under-
funded and under-staffed are gradually being rehabilitated. The
Ministry of Health is in the process of improving primary health care
in Nigeria particularly in the rural areas and free immunisation is
available to children for tuberculosis, hepatitis B, measles, tetanus
and other illnesses. On the other hand, excellent private medical
care is available throughout the country.


3. Education
Nigeria has many excellent private and state schools, providing
kindergarten to matriculation-level education. There are
coeducational and single-sex institutions, boarding and day
schools, and those that provide tuition in foreign languages. All
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75

schools offer sporting activities varying from tennis, swimming and
athletics to lawn tennis, soccer. Schools also offer and participate
in debates, literary competitions and mathematics competitions.
There exist a wide range of tertiary education options available,
including a number of excellent universities teaching to
international standards, as well as technical training courses
offered by colleges and technical institutions. Tertiary institutions in
Nigeria range from federal universities, state universities as well as
several accredited private universities offering a wide range of
courses.

4. Transport System
The transportation system in Nigeria is reliable and extensive with
varying modes of transportation; motorcycles popularly called
Okada; cabs and buses. However, most corporate employees rely
on their own vehicles to get around in Nigeria.
Nigerias has a well developed and extensive and excellent road
network available which links all major cities although the roads
are poorly maintained resulting in several potholes and gullies
which in turn causes traffic problems. Nigerians drive on the left
hand side of the road and wearing of seatbelts is compulsory and
strictly enforced in some states with sanctions for contravention.
Driving while holding, making or receiving a call on a mobile
phone is also an offence and one can be subject to a fine. The
Country also has several well developed and maintained airports
for both international and local flights.



5. Social Activities and Entertainment
Many Nigerians take an interest in outdoor activities, well suited to
the countrys attractive climate. Membership of a recreation clubs
and gyms are popular and these offer a wide range of facilities
from indoor swimming pools and squash courts to weight training
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76

equipment and aerobic, world-class golf courses and other
classes.
Nigeria is jewel of diverse restaurants and eating establishments,
theatres and cinemas and a popular relaxation activity is a
weekend getaway to an area of the beautiful serene
environment. Nigeria is also a whirlpool of dancing clubs where
the music is fast paced or slow depending on the tastes of the
patrons. There are also live band performances and shows
organized by major breweries and other events organizers both in
and out of the country.
Generally, Nigeria is characterized by marked inequality and
uneven distribution of the countrys wealth, which has, and will,
continue to have an influence on standards of living. These
include unemployment, inadequate state health care and
inadequacy of low-cost housing, civil unrest in some parts of the
country and a severe shortage of schools and teachers in
disadvantaged communities. These problems notwithstanding, the
beauty of the landscape, the climate and the diversity and
hospitality of the people make the good far outweigh the bad. A
visit and stay in Nigeria is always a pleasurable, adventure filled
and wonderful experience
Law Allianz. 2010
All Rights Reserved. No part of this publication may be produced or transmitted in
any form or by any means, electronic, mechanical, photocopying, recording or
otherwise, or stored in any retrieval system of any nature, without the written
permission of the publishers.