Recently, there has been a flurry of activities in the free trade zones (FTZ) in Nigeria, particularly the Lagos FTZ. Accordingly, it is necessary to highlight the required steps for entities seeking to register in any FTZ for the purpose of carrying out approved activities such as trading, manufacturing, and the provision of approved services. Persons may be concerned to know if the modalities for the registration of entities under the Companies and Allied Matters Act (“CAMA”) apply to FTZ entities registered under the Nigeria Export Processing Zones Authority (NEPZA) Act and regulations.
Below are some of the major differences between entities registered either under the NEPZA and CAMA-
1. Under the NEPZA regulations, upon registration of an FTZ Enterprise under the NEPZA act, a license is issued to the entity. Thereafter, an application for a certificate of registration permitting the registered enterprise to operate in a specific FTZ must be submitted by the enterprise. The category of the certificate of registration to be applied for is determined by the objects of the enterprise. On the other hand, a company incorporated under the CAMA and issued with a certificate of incorporation by the Corporate Affairs Commission (CAC) is set to start operations and requires no additional license except for sector specific licenses to be issued by relevant regulatory authorities where it is to operate a specialized business.
2. The authorized share capital of each FTZ Enterprise may be denominated in either local currency (Naira) or the United States Dollars (US$). For a company incorporated under the CAMA, the share capital is required to be denominated in Naira.
3. The share capital of a n FTZ Enterprise may be altered by an “Owner’s Declaration” subject to the prior approval of the FTZ Authority, while the share capital of an incorporated Company under CAMA can only be altered either by way of consolidation, increase or reduction of shares by way of a resolution of the members passed at a general meeting.
4. A registered FTZ Enterprise has no limit regarding the number of its shareholders as it may have one or more shareholders while a company incorporated under the CAMA is always expected to have a minimum of 2 shareholders and a maximum of 50 in the case of a private company and an unlimited number for a public company.
5. In an FTZ establishment, no share may be issued unless the capital is fully paid, while for companies registered under the CAMA, the authorized share capital need not be fully paid up before shares are issued to shareholders.
6. The name of an FTZ Enterprise must end with the acronym of the FTZ within which it is located, such as “XYZ LFTZ” if in Lagos. Additionally, an FTZ Enterprise may change its name by the “Owner’s Declaration” subject to the proposed new name being approved by the Authority. In the case of a company registered under the CAMA its name could either end with Limited or Plc which indicates whether it is a private company or public company, respectively. The name of such a company can only be changed by a special resolution of the shareholders subject to the approval of the Registrar- General of the CAC.
7. In an FTZ enterprise, the licensee has the power to appoint and remove any director and the secretary, while for a Company registered under the CAMA a director and secretary of a company can only be removed by following the procedure laid down by the CAMA which requires the approval of the shareholders and directors respectively.
8. The deregistration of an FTZ Enterprise from the FTZ Authority’s Register may be done either by the Authority in the case of a breach of the Enterprise license terms or voluntarily where the FTZ Enterprise wishes to cease operating in the FTZ. The winding up of a company under the CAMA is effected by either the court, voluntarily by members of the company or subject to the supervision of the court.
Given that FTZ Enterprises are given a number of concessions especially with regard to the payment of taxes, the setting up of FTZs in Nigeria is a useful tool for attracting foreign direct investment into Nigeria. There is however need for the implementation of measures which will ensure that the processes being carried out by the FTZs Authorities are conducted and concluded in a seamless manner.
The contents of this news alert are meant for the general information of our clients and friends and do not amount to legal advice. All enquiries on the subject may be made to: email@example.com
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