As one of Africa’s largest economies, Nigeria presents compelling opportunities for both local and foreign investors. With a population exceeding 200 million, abundant natural resources, and a rapidly growing consumer base, the country continues to attract significant business interest. The current administration, through various policy reforms and initiatives, has reaffirmed its commitment to improving the ease of doing business. Nevertheless, entering the Nigerian business environment requires careful navigation of a complex legal and regulatory landscape.
This guide offers a foundational overview of the legal and compliance requirements that must be considered prior to setting up a business in Nigeria.
1. Legal Structure: Understanding Company Types under CAMA 2020
The Companies and Allied Matters Act (CAMA) 2020, the principal legislation governing corporate affairs in Nigeria, provides for four distinct types of companies under Section 21:
- Private Company Limited by Shares (Ltd)
- Public Company Limited by Shares (Plc)
- Company Limited by Guarantee
- Unlimited Company
Selecting an appropriate company type depends on the nature, size, and scope of the proposed business. For most commercial ventures, a Private Company Limited by Shares is the preferred vehicle, particularly for small and medium-sized enterprises. However, businesses intending to raise capital from the public or operate in regulated sectors may require a Public Company structure.