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- The Corporate Affairs Commission (CAC) has reviewed and commenced the implementation of the requirement of ₦100 million in minimum paid-up capital for companies with foreign participation.
- Before now, the minimum paid-up capital for such companies was ₦10 million.
- This new development is consistent with the Ministry of Interior's revised Handbook on Expatriate Quota Administration (2022).
The commission made this announcement on Tuesday, December 5, 2023, on its official website, with accompanying flyers on X and Instagram.
This directive will affect new and established Nigerian companies with non-Nigerian partners (individuals or corporations) who own shares in the company. An example includes Bujeti, a Nigerian corporate card issuance and expense management platform with Y Combinator (YC) as its lead investor.
It will also impact Nigerian companies that are subsidiaries of non-Nigerian companies, such as Paystack, a Nigerian fintech startup owned by the US fintech company Stripe.
What does this mean for companies with foreign shareholders?
Henceforth, new companies seeking to incorporate with at least one foreign shareholder will not be able to do so unless they have ₦100 million in paid-up capital — the amount the company has received from shareholders in exchange for shares.
On the other hand, the CAC directed existing companies with foreign shareholders that currently have less than ₦100 million in paid-up capital to raise it to ensure compliance “not later than six (6) months from the date of this notice [December 5, 2023], failing which the Commission shall commence proceedings for the compulsory winding-up of the companies under Section 571 (e) of the Companies and Allied Matters Act 2020.”
Does this mean that such companies must bring ₦100 million into Nigeria?
According to Aluko & Oyebode, since the guidelines don’t categorically say that the foreign partner alone must issue the entire ₦100 million share capital, the foreign shareholder may own only a part of the shares. Therefore, only that portion will be required to come into Nigeria to satisfy the requirement for a business permit.
Following the Corporate Affairs Commission's announcement on the minimum paid-up capital for companies with foreign participation on Tuesday, December 5, 2023, the commission released a follow-up notice today to disregard its initial notice.
“We shall issue an amended notice with regards to the above in due course,” the commission said.
Last updated: December 8, 2023, 4:06 p.m. WAT
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