Recent developments at the Federal Ministry of the Interior regarding the administration of business permits and expatriate quotas


The Federal Ministry of the InteriorMFI”) recently published a revised manual on expatriate quotas (“equalizer”) Administration on its website (the “Revised manual”). The revised manual has not yet been launched by the Honorable Minister of Home Affairs, rendering its content currently ineffective as of the date communicated by the IMF. It should be noted that the power to issue trade licenses and to stipulate and/or vary the conditions for obtaining such licenses (as contained in the Revised Handbook) rests with the Minister in accordance with the relevant provisions of Nigerian law.1

The revised manual outlines the services offered by the IMF’s Citizenship and Affairs Department, general rules and documentation requirements for business permits and expatriate quota positions, violations, penalties/ penalties for violations and fees payable for its services.

In addition to the above, we have highlighted key developments in the revised manual below for your general information:

a. Increase in the minimum share capital for the granting of an operating permit

The revised handbook contains provisions that the minimum paid up share capital requirement for Nigerian companies with foreign shareholders (who may be natural or legal persons) seeking to obtain a business license would be NOT100 million (one hundred million naira). The revised manual further provides that the value of equipment or machinery imported into the country for the purpose of doing business could also form part of the NOT100 million paid-in capital.

Once in force, this new requirement would result in an increase in the current minimum share capital of NOT10 million (ten million Naira) to a minimum paid-up share capital of NOT100 million (one hundred million naira) an increase of 90 million naira (ninety million naira).

It would appear that the MFI can now require this capital to be ‘freed up’ contrary to the provisions of the current manual where the requirement is simply the minimum share capital of NOT10 million (ten million naira), which need not be paid. However, we note that the words “issued” and “released” have been used interchangeably in different sections of the revised manual with respect to business license applications and expect the MFI to update the document before its launch date to clarify whether such share capital should simply be issued to shareholders or should also be paid up by such shareholders.

In addition to the above, it should be noted that companies receiving EQ grants seeking to upgrade or revalidate them to Permanent Until Review (PUR) status are required to have a minimum paid up share capital of NOT100 million (one hundred million naira).

b. Lifetime of Expatriate Quota Approvals

The total lifetime of the expatriate quota (“equalizer”) business grants have been reduced from ten (10) years to seven (7) years. While the grant period remains three (3) years initially, EQ positions are now renewable every two years for two (2) consecutive terms of two (2) years each, over an overall lifespan of seven (7) years. However, for companies in the oil and gas sector, the approval will be for an initial period of (2) years and renewable once in a lifetime of four (4) years only.

vs. Documentation required for business license and expatriate quota renewal applications

Business license applications

The revised manual introduces the following documentary requirements for business license applications:

I. Bank statement showing tangible inputs that support the feasibility study/business plan. Unfortunately, there was no definition of what constitutes “tangible input,” which indirectly gives IMF officials discretion to interpret this term, possibly on a case-by-case basis. -case by case ;

II. License/permit/certificate from relevant government ministries, departments or agencies to engage in petroleum exploration/services, health care services, fishing, mining, engineering services, etc. ; and

III. Evidence of work in progress, its duration and the value attached to the contract(s) if the company is engaged in building, civil engineering, construction and other sectors.

Requests for renewal of the expatriate quota

The manual outlines the following requirements for EQ renewal applications:

I. national identification numbers or tax identification numbers, telephone numbers and email addresses of Nigerians who track each expatriate and Nigerian management personnel;

ii. Certified copy of the current audited report/state of affairs of the company, together with the letter of acknowledgment issued by the Corporate Affairs Commission (“CAC”) attesting to the filing of this document with the CAC;

iii. Certificate of Conformity issued by the Industrial Training Fund; and

iv. Proof of indigenization/location of expatriate quota position (if applicable).

Companies intending to apply for a business license and/or EQ grants/renewals are therefore advised to take the necessary steps to ensure compliance with the above, where applicable, in order to avoid associated penalties for non-compliance.


Comments are closed.