How To Start An Investment Company In Nigeria (2024)

This article is about how to start an investment company in Nigeria currently in this year 2024. Consider launching an investment business if you believe you can put together a group of people who can handle, manage, and invest securities on behalf of investors. There are procedures in Nigeria for establishing an investment business. Please ontinue reading to find out more.

GUIDE ON HOW TO START AN INVESTMENT COMPANY IN NIGERIA 2024 

The following are the step by step processes on how to start an investment company in Nigeria this 2024:

GET YOUR PROPOSED COMPANY’S MEMORANDUM AND ARTICLES OF ASSOCIATION READY

Even before seeking to register the company with the Corporate Affairs Commission (CAC), the first step in establishing an investment company in Nigeria is to write the Memorandum and Articles of Association. During the business registration procedure, companies wishing to incorporate in Nigeria are required to submit Memorandum and Articles of Association, which are legal papers. The memorandum paper is a formal declaration endorsing the formation of your planned investment business, signed by all of the guarantors or shareholders.

The name of the company, its purpose, the type of the company, the number of shares, the names of the shareholders, the number of shares subscribed for, signatures, and the name of a witness and their signature should all be included in the memorandum for your proposed investment company. However, your proposed investment company’s written regulations, approved by the directors, company secretary, and shareholders or guarantors, are outlined in the Articles of Association, a legal document.

The following is a list of things that the articles of association must contain:

• Notice, such as meeting notices and the means by which they will be distributed to the company’s directors and members.
• The seal, that is, the provision, use, and custody of the company seal.
• Voting
• Meetings
• Alteration of capital
• Commission and brokerage
• Restriction on transfer of shares
• Class of shares
• Interpretation
• Names of subscribers
• Witness

Please note that in order for investment companies to be incorporated in Nigeria, stakeholders must provide a minimum of ₦5 million in share capital in accordance with the regulations of the Corporate Affairs Commission (CAC).

REGISTER YOUR INVESTMENT COMPANY WITH THE CORPORATE AFFAIRS COMMISSION (CAC)

Using the commission’s official website, begin this phase by doing a name search on the suggested name for your investment company. You will be required to buy a set of incorporation forms as soon as the company name for your suggested investment firm has been approved. Keep in mind that CAC registration will cost you ₦10,000. To have your investment company incorporated with the Corporate Affairs Commission, you will need to fill out and submit the following incorporation forms:

• Form CAC 1.1 Application for Registration
• Memorandum and Articles of Association
• Proficiency Certificate (where applicable)
• Recognized form of identification for directors, shareholders, and secretary of your proposed investment company

Once the aforementioned documents are prepared, they must be submitted to the Federal Inland Revenue Service (FIRS) in order to cover the cost of stamping and stamp duties. The FIRS stamp duty is equivalent to 0.75 percent of the company’s share capital. After that, send the completed, stamped paperwork to the Corporate Affairs Commission for final approval and verification together with the relevant permits. You would receive a Certificate of Incorporation along with certified true copies of all pertinent documents after the CAC verifies and approves the documents you filed.

REGISTER YOUR COMPANY WITH THE NIPC

Applying for Nigerian Investment Promotion Company (NIPC) registration is the next step after receiving the Certificate of Incorporation from the CAC. After incorporating with the CAC, all-foreign owned companies and Nigerian businesses looking to receive government investment incentives must register with the NIPC. In addition to benefits, NIPC registration offers Nigerian businesses access to information, legal protection, Pioneer status, help obtaining licenses, and investment promotion.

The following documents are required for the registration of your investment company with the NIPC:

• Properly filled out NIPC form, available for download at https://www.nipc.gov.ng
• The association’s articles and memorandum
• CAC Form 1.1
• Letter of Authority or Power of Attorney (if applicable)

When the aforementioned conditions are met, you can deliver the scanned copies of the documents to osicinfodesk@nipc.gov.ng or turn them in at the NIPC One Stop Investment Centre. The registration fee, which is ₦15,000, must be paid via Remita once the aforementioned documents have been submitted. The NIPC certificate is typically issued within 1 to 5 days, depending on the correctness and completeness of the supplied documentation.

GET A LICENCE FROM THE SECURITIES AND EXCHANGE COMMISSION (SEC)

In Nigeria, a company that wants to operate as an investment must hold a Securities and Exchange Commission (SEC) license. The prerequisites listed on https://sec.gov.ng/check-lists/requirements-for-registration-as-securities-exchange/ must be met in order to obtain an SEC license. These are as follows:

PAYMENT

• Proof of Payment for ₦50,000 Application/Filing Fee;
• Proof of Payment for ₦200,000 Processing Fee;
• Proof of Payment for ₦1 million Registration Fee;
• Proof of payment of the ₦50,000 sponsored individual fee for each sponsored individual

FORMS

• Properly Completed Form SEC 5-For the Business
• The Sponsored Individuals/Compliance Officers listed on Form SEC 2 and 2D are the Exchange’s principal officers, which include the Managing Director and Principal Officers. (To be filled out in two copies); (Note that each applicant manager must have a minimum of four sponsored individuals; one of these must be a Compliance Officer tasked with overseeing adherence to the ISA 2007, Rules and Regulations, notifications, guidelines, instructions, and other materials provided by the Federal Government or the Commission)
• Directors of the Company Form SEC 2 and 2D (must be completed in duplicate).

MINIMUM PAID-UP CAPITAL AND FIDELITY INSURANCE BOND

• Proof of the ₦500 million minimum paid-up capital requirement, such as bank accounts, fixed assets, or investments in quoted securities;
• Current Fidelity Insurance Bond as required by the Rules and Regulations of the Commission, covering a minimum of 25% of the minimum paid-up capital.

SPONSORED INDIVIDUALS AND DIRECTORS

• Four sponsored individuals at minimum, one of whom will serve as a compliance officer
• The company’s managing director will be one of the sponsored persons
• Complete mailing addresses of current account holders, bankers, and designated referees for sponsored individuals
• Comprehensive curriculum vitae of directors and sponsored individuals, including information on events planned from secondary school to the present, along with dates. Any gaps in work and educational background should be explained
• Copies of sponsored individuals’ credentials, such as their high school diploma and their discharge from the NYSC; the SEC will need to see the originals
• Proof from the Sponsored Individuals that they have four years or more of experience after graduating in order to carry out the Function in accordance with the Commission’s rules and regulations
• Each Sponsored Individual’s police clearance report. To begin the procedure, each sponsored individual must report to the Lagos zonal office or the SEC head office in Abuja with two recent passport photos
• Documents such as international passports, tax returns, or utility bill copies serve as identification for the company’s directors and sponsored individuals.

APPLICANT COMPANY

• A summary of the company’s history, its organizational and ownership structure, its major officers, and information about its recent and prior operations should all be included in the corporate profile
• The title, address, and percentage ownership of the company’s affiliated and subsidiary businesses
• An electronic version of the General Undertaking Form for Members
• Two copies of what are known as the “Rules of the Exchange,” which are current or planned bylaws, rules, codes of conduct, code of dealing, etc.
• Details about its composition, the roles and responsibilities of its Council or Board, and its policies
• Comprehensive details regarding the Exchange’s major officers and promoters
• Proof of payment for the shares that the shareholders are allocated
• A copy of the Exchange’s procedures, as well as the finished full documentation for the Trade Guarantee Fund and Investor Protection Fund
• Forward Instruction and Inspection manuals of members’ activities
• A duplicate of the data concerning the market’s facilities, such as the trading floors and facilities, the quotation board, the information board and ticker tape, the computerization, and the phone systems
• Personnel Policies and Procedures copy
• Two copies of the Exchange’s listing requirements
• Comprehensive details of the trading system that will be used
• Committing to send copies of any changes to its rules and listing requirements to the Commission for approval
• The company’s organizational chart and operational handbook.

BUSINESS PLAN

• Bank statement for the company’s last six months’ worth of accounts;

CORPORATE DOCUMENTS

• Certificate of Incorporation
• Memorandum and Articles of Association: these should grant authority to carry out the designated duty;
• CAC Form(s) displaying the Directors’ Details, Return of Allotment, and Statement of Share Capital

Please bear in mind that in order to be viewed by an authorized SEC official, the original copy of the certificate must be submitted.

• Most recent audited statement of affairs or audited accounts for the business. Keep in mind that 60% of the cash assets must be liquid, and 40% must be fixed or other assets
• Sworn commitment, to be notarized, signed by a director or the company secretary, to maintain accurate records and submit returns as may be required from time to time by the Commission;
• Sworn promise by a director or the company secretary to abide by the Investments and Securities Act No. 29 of 2007 and the SEC’s rules and regulations (to be notarized);
• Sworn affirmation (notarized) by members of the Company’s Board of Directors who are also Directors or have an interest in Companies whose securities are traded or may be traded on the Exchange;
• Sworn declaration to follow the Commission’s rules and regulations and the Investments and Securities Act (ISA) No. 29 of 2007 (notarized);
• A notarized sworn pledge to adhere by the terms of the Investment and Securities Act (ISA) 2007 and the Commission’s rules and regulations, as well as to ensure compliance by its members.

BUY THE APPROPRIATE INVESTMENT COMPANY TOOLS AND EQUIPMENT OR LEASE IT

Upon incorporation and SEC licensing, the following step is to equip your newly formed investment company with the appropriate tools. Aside from the obvious necessity for an office, you would also need to purchase one or more computers, set up an internet connection, purchase office supplies, and acquire any additional items that are required for launching an investment company. For your investment company, you might also need to buy and set up software. Programmes for customer relationship management, accounting, and financial analysis are among the suggested ones.

HIRE STAFF

To run a firm as a newly established investment company, you need employees. When selecting experts, make sure they meet the requirements of your investment company. Any or all of the following competencies should be possessed by the employees you hire for your investment company:

• Portfolio management
• Record keeping
• Custodial services
• Accounting
• Tax management
• Knowledge of investing pool capital into financial services

As the business expands over time, you might need to hire additional employees.

PROMOTE YOUR INVESTMENT COMPANY TO DRAW INVESTORS

Now is the time to go public with your investment company in order to draw in investors. Investors that are prepared to put money into a business or other entity in exchange for a profit are your potential clients. Therefore, your business as an investment company is to invest the total capital of your investors in financial assets. Usually, an open-end or closed-end fund—also known as a mutual fund—is used for this. An investment company’s main responsibilities are to manage, market, and sell funds to the general public. Other services that it provides include accounting, tax administration, recordkeeping, custodial services, and portfolio management.

When promoting your investment business, you should use the following marketing techniques:

• Utilize social media to connect with possible investors
• Use market data to accurately target your clientele
• Define the comparative advantage of your investing company
• Design a useful and informative website and offer prospective customers something of worth
• Word of Mouth advertising.

CONCLUSION

We hope that this post has given you, our esteemed readers a comprehensive overview of the process of establishing an investment company in Nigeria, enabling you to make informed decisions.