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Registering a Nigeria-based subsidiary was typical for global organisations seeking to establish a presence in Nigeria. This kind of subsidiary was frequently established to carry on business in the Nigerian market, and it could have its own workforce, operations, and management system.
Although the subsidiary is treated as a separate legal entity and is governed by Nigerian laws, the parent organisation may have extensive control over the subsidiary's operations.
Abuja, Lagos, Port Harcourt
Nigerian Naira
Yes
30,000 Naira
Nigerian Naira
At will with minimum of one day notice
The process of establishing a subsidiary in Nigeria entails a number of procedures and might be challenging. However, the general steps involved are summarised as follows:
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The process of establishing a subsidiary in Nigeria entails a number of procedures and might be challenging. However, the general steps involved are summarised as follows:
The legal structure you choose for your new subsidiary in Nigeria is among the most crucial decisions you will have to make.
Options include LLCs, partnerships, sole proprietorships, corporations, non-profits, and cooperatives; these entities are sometimes referred to as business ownership structures or business forms. Determine whether you want to establish a branch office, private limited company, or public limited business.
Finding the proper legal structure for your subsidiary will depend on several variables, including liability, taxation, and record-keeping, as different legal and financial obligations, apply to various company types.
File a certificate of incorporation with the Corporate Affairs Commission (CAC) and register the business there.
You will need to submit supporting papers, such as the bylaws, details about the business, Information on the Director(s) and Shareholder (s), the organisation's authorised share capital (if the new company has more than one shareholder), the shareholding formula or percentage of each stakeholder in the organisation, and the goals of the business, for this.
To get a TIN for the subsidiary, register with the Federal Inland Revenue Service (FIRS). The first step after forming your subsidiary is to obtain a TIN because the Nigerian government views paying taxes as a serious matter.
The subsidiary will pay company taxes using its tax identification number, which is also crucial when registering for VAT.
Depending on the kind of subsidiary you intend to operate, you might need to acquire licenses and permits from various government agencies. Before you do anything, you should familiarise yourself with the licensing and permitting procedure.
Although their meanings are frequently muddled and frequently need clarification, licenses and permits are fundamentally two distinct concepts. Licenses are a form of legal contract that permits people who hold them to carry out deeds that would be illegal for those without them.
On the other hand, a "permit" is a legally binding document that enables someone to engage in a particular activity. Additionally, it is a legal document that must be held in order to launch any business or initiative in Nigeria.
Open a corporate bank account in the subsidiary's name and deposit the minimum share capital mandated by the Corporate Affairs Commission (CAC). According to Nigerian laws and banking rules, only a business properly registered in Nigeria is eligible to open a bank account.
As a result, a foreign organisation can only open a bank in Nigeria if its Nigerian subsidiary has been registered. The registered subsidiary is the only one that may submit an application to open a business account.
To help you understand the legal and financial requirements of operating a business in Nigeria, securing the services of an accountant and a lawyer is essential.
A lawyer and accountant should be employed to help with the legal and financial requirements of operating a business in Nigeria. A lawyer can provide guidance on legal matters such as contract evaluation and compliance with laws and regulations.
At the same time, an accountant can assist with bookkeeping, taxes, financial planning, and other financial considerations. Ensure the accountant and lawyer you engage have experience and expertise in the Nigerian market and legal system.
The establishment and operation of a subsidiary in Nigeria are subject to a number of laws.
Registering a subsidiary in Nigeria has its drawbacks. One of this is the complex legal and regulatory framework in Nigeria.
For instance, registering a business and acquiring the required licenses and permits can be a time-consuming and expensive procedure. Organisations must also manage a number of taxes and compliance procedures in order to conduct business in Nigeria.
An Employer of Record (EOR) based subsidiary may be a more attractive choice for businesses wishing to establish a business in Nigeria.
By utilising an EOR provider, a global business can delegate the legal and administrative burdens of being an employer to a third-party supplier with knowledge of the Nigerian business environment.
A level of monitoring and accountability offered by an EOR can also assist a business in reducing the danger of corruption, fraud and non-compliance events that often result in government penalties.
And that’s not all. Leveraging the services of an EoR provider significantly cuts down on the cost of establishing an entity.
This is because you wouldn’t need to register a business in Nigeria (which usually involves several permit fees in addition to the set-up and maintenance of a physical space).
This is particularly useful for startups and other business models that only need to test the Nigeria market in order to validate the business case for whether a full entity registration in Nigeria is necessary.
In conclusion, whether to establish a Nigerian subsidiary or employ an EOR-based subsidiary would depend on the organisation's particular requirements and circumstances.
You can keep the advantages of establishing Nigerian subsidiaries—to explore new markets—while limiting the risks of the same. And that's done by using an Employer of Record’
By limiting the risks associated with registering a subsidiary in Nigeria, you can keep the advantages of entering new markets. And the way to do it is to work with a Nigerian Employer of Record like Workforce Africa.
Workforce Africa assists you in hiring, supporting, managing, and paying employees and contractors in Nigeria without worrying about compliance concerns.
Anywhere in Nigeria you choose to establish a local subsidiary, our employer of record services takes care of all the legal and HR requirements. Schedule a consultation today
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