The Corporate Affairs Commission (CAC) of Nigeria recently issued an important public notice that introduces more stringent capital requirements for companies with any amount of foreign ownership or participation.
As per the notice, the CAC will now mandate a minimum paid-up capital of 100 million Naira (around $124,000 USD) for any newly incorporating company that has foreign investors or shareholders. This ten-fold increase from the previous cut-off intends to ensure foreign companies have sufficient capital to fund serious and substantial operations that align with Nigeria’s economic agenda.
In addition, existing companies that currently fall below the new 100 million Naira threshold will have a grace period of six months to raise additional capital and comply. Failure to do so within this timeline risks the CAC commencing compulsory winding up procedures under Section 571(e) of Nigeria’s Companies and Allied Matters Act of 2020. Such a dissolution would require these companies to petition for reinstatement in order to legally continue local business activities.
The impetus for this paid-up capital increase comes from guidance in Nigeria’s revised Expatriate Quota Administration Handbook from 2022. The Handbook provides direction across various aspects of foreign direct investment, work visas, and incorporation governance. As Nigeria continues positioning itself as an attractive frontier market for multinationals in industries like financial services, logistics and renewable energy, enhancing minimum capital standards aligns with attracting substantial, compliant foreign firms rather than those seeking to exploit needs for profit.
While stark, this 100 million Naira benchmark and strict enforcement timeline reaffirms Nigeria’s stand on stemming historically lax compliance. The CAC expects minimal substantive impact, though experts emphasize that undercapitalized foreign companies should immediately consult advisors and access funding channels to decisively meet the six-month roadmap. Those succeeding will find themselves strengthened in a nationally prioritized business environment with rewards outweighing growing pains.
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