By Elton Chizindu Mpi, Esq.

The Nigerian Companies and Allied Matters Act(CAMA) 2020 requires that every foreign company that is incorporated outside Nigeria, and having the intention of carrying on business in Nigeria, shall take all necessary steps to obtain incorporation as a separate entity in Nigerian for that purpose , but until so incorporated, the foreign company shall not carry on business in Nigeria or exercise any of the powers of a registered company and shall not have a place of business or an address of documents or processes in Nigeria for any purpose other than the receipt of noticed and other documents, as matters preliminary to incorporation.

An alien or a foreign company is not precluded from joining or forming a company in Nigeria. This is in line with Section 20(4) of CAMA which provides that:”subject to the provisions of any enactment regulating the rights and capacity of aliens to participate or undertake in trade or business, an alien or a foreign company may join in forming of a company”.

However, a foreign company may be exempted from incorporating as a Nigerian company if the company falls under the category of Section 56 CAMA.

Section 56 provides for Power to exempt foreign companies.

56(1) A foreign company may apply to the President for exemption from the provisions of section 54 of this Act if that foreign company belongs to one of the following categories, that is‐

(a) foreign companies (other than those specified in paragraph (d) of this subsection) invited to Nigeria by or with the approval of the Federal Government to execute any specified individual project;

(b) foreign companies which are in Nigeria for the execution of specific individual loan projects on behalf of a donor country or international organisation;

(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 any of the governments in the Federation or any of their agencies or with any other body or person, where such contract has been approved by the Federal Government.

VARIOUS LAWS REGULATING FOREIGN PARTICIPATION IN BUSINESS IN NIGERIA

1. Companies and Allied Matters Act (CAMA), Cap. C.20 LFN 2004 – Sections 148 and 155 of CAMA.  Section 148 of the Act requires the production of a document, which is by law sufficient evidence of probate of a Will or letters of administration of an estate.  Section 155, on the other hand, deals with transmission of shares

2. Nigerian Investment Promotion Commission (NIPC) Act, Cap N 117 LFN 2004 – Section 17 of the Nigerian Investment Promotion Commission Act which requires aliens to register with the Commission before commencing business in Nigeria.

3. Immigration Act Cap I 1 LFN 2004 – Obtaining business permit under Section 8 of the Immigration Act, 1963.

4. Investments and Securities Act (ISA) 2007 – Section 8 of the Investments and Securities Act which empowers the Securities and Exchange Commission (SEC) to keep and maintain Foreign Direct Investments (FDI) and Foreign Portfolio Investments (FPI) in Nigeria.

5. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, Cap F.34 LFN 2004.

6. Industrial Inspectorate Act Cap. I 8 LFN 2004.

7. National Office for Technology Acquisition and Promotion Act, Cap N. 62 LFN 2004.

8. Central Bank of Nigeria: Certificate of importation of capital.

Step 1

Obtain the requisite approvals

Every alien or foreign company that wishes to participate in Nigerian oil and gas sector must obtain the requisite approvals and permits. This includes visas, resident permit, work permit, etc.

Expatriate quota: authorisation of foreigners to come and work in the country particularly in management position.

CERPAC: A foreigner who is granted cable visa to visit Nigeria WITHIN THREE MONTHS on Subject to Regularisation (STR) is to regularise the visa by changing his status from that of a visitor to that of a Resident. Application is by letters (2 copies) accompanied by a valid passport of the alien. This gives the alien a CERPAC- Combined Expatriate Residence Permit and Alien Card. CERPAC is compulsory for expatriates staying in Nigeria for more than 56 days. Advantage of CERPAC is that everything is together (residence, expatriate quota.

Step 2

Incorporation of foreign company into a Nigerian company-

This step is very fundamental as its in conformity with Section 54 of CAMA. The services of a lawyer should be engaged during this procedure. All relevant instructions/information like name of the company, business of company, particulars of the foreign investor, share capital; 1st Directors, Proposed Registered office, subscribers to Memo and Articles etc. should also be disclosed to the lawyer.

This procedure all involves;

i. Obtaining incorporation forms.

ii. Availability and Reservation of name should also be carried out.

iii. Preparation of Incorporation documents.

Iv. Submission of 2 copies each for memo and Articles with two copies of the statement of share capital at the Federal Board of Inland Revenue Service for stamping.

v. Filing of incorporation documents (stamped) at the CAC.

v. The Certificate of Incorporation is issued by CAC.

Or by Joint venture agreement with an existing Nigerian company.

Step 3

Obtaining Oil Licences

This steps involves obtaining all oil licenses such as the Oil Exploration Licence(OEL), Oil Prospecting Licence(OPL) and Oil Mining Lease(OML)

Section 1 of the Petroleum Act vests ownership and control of all petroleum on the Federal government. What this means is that before any company can carry out oil exploration, licences must first be obtained from the Federal Government.

Section 2(1)(a)-(c) of the Petroleum Act 1969 require that companies seeking to engage in prospecting, exploring and extracting crude oil and gas must obtain a Licence to be known as oil exploration Licence, to explore for petroleum; a Licence , to be known as oil prospecting Licence, to prospect for petroleum ; and a lease, to be known as oil mining lease, to search for, win, carry away and dispose of petroleum.

Oil Exploration Licence(OEL)

Petroleum licensing or exploration license is the act of giving licenses (geographical areas at land or sea) to a company or a joint venture allowing them to search for commercially feasible deposits for the extraction of petroleum.

This is the first Oil Licence any oil company must obtain, whether there is oil on the land or not . Section 2(1) of the petroleum Act empowers the minister to grant this Licence. This Licence allows the foreign company to explore oil on the land and is non-exclusive and granted in respect of areas of unproven reserves for the exploration of petroleum.

Oil Prospecting Licence(0PL)

An Oil Prospecting license is granted by the Federal Government to a Company or Joint Venture to prospect for petroleum resources

This Licence allows the oil company to drill to the point where the oil is, and or take sample of the oil to the lab to test whether it is potent or not. In this stage, you can only capture but not sell. This Licence can only be granted to companies incorporated in Nigeria.

The Oil Prospecting License, OPL, shall be granted in inland basins for an initial period of three (3) years with the option of renewal for a maximum period of two (2) years. For the deep water blocks and frontier basins, the exploration period is ten (10) years, broken into two five-year periods which automatically roll over unless otherwise withdrawn due to non-performance.

Oil Mining Lease(OML)

This is the third Licence that is obtained after oil has been found in commercial quantity.

This Licence grants the company terms of years within which to capture, sell and dispose of petroleum Products.

It allows full-scale commercial production in a lease area.

It is granted to oil prospecting licence holders on the discovery of oil in commercial quantities (at least 10,000 barrels per day)

REQUIREMENTS/DOCUMENTS FOR APPLICATION

(l) Every application for an oil exploration licence, oil prospecting licence or oil mining lease shall be made to the Minister in writing on the appropriate form as set out in the Schedule to these Regulations.

(2) Every application shall be accompanied by-

(a) the prescribed fee as set out in Part VI of these Regulations (the fee in question

not being refundable in any circumstances);

(b) ten copies of a map on a scale or scales specified by the Director of Petroleum Resources upon which is delineated in red the boundaries of the area in respect of which the application is made;

(c) an adequate survey description of the boundaries of that area (at least one boundary corner being tied, in the case of an application for an oil mining lease, to an official survey control beacon, or an existing survey mark itself previously tied to an official survey grid) or, where the area has been blocked out or delineated and described by or on behalf of the Minister, a reference to the particulars of identification used by him or on his behalf;

(d) evidence of the financial status and technical competence of the applicant;

(e) details of the work which the applicant is prepared to undertake or a pro-

gramme for carrying out any minimum working obligations imposed;

(f) details of the annual expenditure which the applicant is prepared to make on

each area applied for;

(g) the date on which he is prepared to begin operations after the grant of the oil exploration licence, oil prospecting licence or oil mining lease to which the application relates;

(h) details of a specific scheme for the recruitment and training of Nigerians;

(i) evidence of the applicant’s ability to market any petroleum produced;

(j) annual reports in respect of the applicant’s oil exploration and production ac- tivities in the preceding three years; and

(k) any other information which the Minister may call for by notice in the Federal Gazette or otherwise.

(3) The applicant shall furnish such further evidence relating to the matters men- tioned in paragraph (2) of this regulation as the Director of Petroleum Resources may require.

For legal consultation, contact Ace Juris Attorneys: Phone: 08028175777, 09018572928 or send a mail at chizyelton@gmail.com