Category: Legal

FIVE (5) REASONS WHY NIGERIAN STARTUPS ARE INCORPORATING A PARENT COMPANY IN DELAWARE, UNITED STATES

The Delaware Flip

INTRODUCTION

Why do Flutterwave, Paga, Paystack, Kuda, Cowrywise, Andela, Ulesson, Shuttlers and a host of others have their Parent/Holding Company in Delaware, United States?

Interestingly, over 70% of StartUps that are incorporated outside Africa are based in Delaware, United States (Disrupt Africa).

According to Forbes Advisor, Delaware has become internationally recognized as a corporate paradise and is “home” to such famous firms as Amazon, Google, Tesla, Walmart, American Express and Disney, to name just a few. Interestingly, 68% of Fortune 500 companies and 93% of all U.S.-based initial public offerings are registered in Delaware United States.  

So, what is the fuss about Delaware, United States?

1. CONDITION PRECEDENT TO FUNDING: To get funded, most Venture Capital (VC) requires your Company to be incorporated outside Nigeria, and form a Holding-Subsidiary Relationship, the Delaware Company becomes the Holding Company and the Nigeria Company a subsidiary.

Here is an extract from Y Combinator FAQ Page

What if we incorporated as a non-US corporation?

If your company is already incorporated somewhere other than the United States, Canada, Singapore or the Cayman Islands, in order to participate in YC you will need to create a parent company that is in one of those jurisdictions. The existing company will then become a subsidiary of the new United States, Canada, Singapore or Cayman parent company.  

2. FUNDING OPPORTUNITIES

Undoubtedly, the US has the biggest funding institution, with $63 billion in 2022 and positioning is synonymous with funding. So, asides from being a condition precedent, the need to attract investors and VC firms will drive StartUps to incorporate in the US and perhaps Delaware.

3.   TAX BENEFITS

According to Forbes Advisor, the most famous reason Delaware has attracted the eye of corporations across the world is the lenient taxes imposed by the state. Corporations registered in Delaware that do not do business in the state do not pay corporate income tax. Delaware also does not have a sales tax, investment income taxes, inheritance taxes or personal property taxes. While companies do have to pay a franchise tax to register in Delaware, this can be pennies compared to the income tax other states would charge. Nationwide companies that do conduct business in Delaware can still skirt the in-state income tax by establishing subsidiary or shell companies that hold various intangible assets but do not directly run business operations.

4.   CORPORATION COURT

Instead of a traditional trial system, corporate lawsuits in Delaware are resolved by the Court of Chancery, a court made up of judges who specialize in corporate law. Because of this, Delaware has well-developed and predictable legal precedents that may benefit corporations. While the average civil lawsuit may take a number of years to resolve, Delaware’s use of judges instead of juries and prioritization of corporate-related cases means similar cases can be decided more quickly.

5. PRIVACY

As with registering a business in most states, companies must assign a registered agent who maintains a physical address to be the official address and to receive mail and collect paperwork. Unlike most states, however, in Delaware, the registered agent is the only name that must be disclosed in association with the company. Other officers and directors are not required to disclose their names, allowing an extra degree of anonymity. Because of this lack of reporting, officers, directors and shareholders are also not required to maintain residency in Delaware.

For Delaware Company Formation and how to form the Holding-Subsidiary structure between the Delaware Company and the Nigeria Startup, feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

REQUIREMENTS FOR THE REGISTRATION OF TRADEMARKS IN NIGERIA

Trademarks Registration in Nigeria

According to Investopedia, the term trademark refers to a recognizable insignia, phrase, word, or symbol that denotes a specific product and legally differentiates it from all other products of its kind. A trademark exclusively identifies a product as belonging to a specific company and recognizes the company’s ownership of the brand.

REQUIREMENTS FOR THE GRANT OF TRADEMARKS IN NIGERIA

TRADEMARK SEARCH: This is to confirm the registrability of the mark if it doesn’t infringe on any existing mark or is similar to any already registered mark.

APPLICANT INFORMATION

  • Owner of Mark (Company or Individual)
  • Address of Mark Owner
  • Phone Number
  • E-Mail Address

TRADEMARK INFORMATION

  • Trademark (Name, Sound or Device)
  • Class of Specification of Goods/Services
  • Specification of Goods/Services Description
  • Attach Power of Attorney

Upon Approval/Acceptance, a Trademark Acceptance Letter is issued.

  • TRADEMARK CERTIFICATE: Kindly note that Acceptance Letter should not be misconstrued as a certificate. Not until the mark has been published in the Trademark Journal and not opposed within two months can an application be made to the Registrar for a Trademark certificate.  

Regville Associates offers end-to-end legal, tax and secretarial service for companies. We are an Accredited Agent of the Ministry of Trade and Investment, Department of Commercial Law, where Intellectual Property such as Trademarks, Patents and Designs are registered. We will be happy to hear from you regarding your Intellectual Property protection.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

ABERRANT DEBT COLLECTION PRACTICES: JANUARY 31ST, 2023 DEADLINE FOR THE REGISTRATION OF DIGITAL MONEY LENDERS WITH FCCPC

Digital Money Lenders

INTRODUCTION

The Federal Competition and Consumer Protection Commission (FCCPC), is primarily saddled with the responsibility of protecting and advancing the interest and well-being of consumers in Nigeria.

THE NITDA SANCTION ON SOKOLOAN

On August 17th 2021, the National Information Technology Development Agency (NITDA) sanctioned an online lending platform, Soko Lending Company Limited (Soko Loans), for privacy invasion, unauthorized disclosures, failure to protect customers’ data and defamation of character. The action was taken after a series of complaints from the public. The Company has imposed a monetary sanction of NGN 10,000,000.

THE INTER-AGENCY

In November 2021, the Federal Competition and Consumer Protection Commission (FCCPC) alongside 5 other agencies, set up an Inter-Agency Joint Task Force to look into the practices of Digital Money Lenders (DMLs) including privacy invasion, failure to protect personal data, data abuses and other aberrant debt collection practices.

STEPS TAKEN

On August 18, 2022, Inter-Agency Joint Task Force, conducted enforcement actions in Lagos with respect to Digital Money Lenders (DMLs) in addition to the enforcement action the task force established a mutually adopted Limited Interim  Regulatory/Registration Framework and Guidelines for Digital Lending, 2022.

In light of the Registration Framework and Guidelines, the Commission commenced the registration of DMLs. By an Order and Notice of the Commission on August 17, 2022, existing DMLS were required to comply within ninety (90) days. The payment gateways used by the DMLs are needed to demand FCCPC Approval from the DMLs to continue to provide their services. In a big step, Google Play has requested digital lenders to provide evidence of their compliance with FCCPC within 30 days from November 16, 2022, or be removed from the platform.

CHECKLIST OF DOCUMENTS TO BE SUBMITTED FOR REGISTRATION AND APPROVAL OF DMLs

  1. A certified copy of the certificate of incorporation of the digital lender;
  2. Evidence of compliance with Form DLG 001 – FCCPC Interim Digital Lending Guidelines Form;
  3. Terms of use;
  4. Privacy policy;
  5. Code of conduct;
  6. Any and all previous defamatory messages sent to customers and any and all new templated messages;
  7. Proof of disciplinary action against erring staff;
  8. A brief description of the business and where relevant, its groups;
  9. Organogram showing the role players, and location of key role players and any operational approving authority;
  10. Name and address of a person within the business who is authorized to accept all the correspondence and accept service on behalf of the business;
  11. Evidence of membership of any trade or professional associations;
  12. Any service level agreements with any service providers with respect to operations but excluding administration;
  13. Proof of tax payments or tax waivers where applicable.
  14. Evidence of all applicable fees associated with service.
  15. Evidence of compliance with Form DLG 002 – Declaration for Digital Lending Businesses in Nigeria.

STATUS OF DMLs

The FCCPC on November, 15th 2022 provided a list of DMLs who has been granted approval and those with conditional approval.

FULL APPROVAL

  1. SYCAMORE INTEGRATED SOLUTIONS LIMITED
  2. TRADE DEPOT 
  3. TAJOW INVESTMENT
  4. BLUE RIDGE MICROFINANCE BANK LIMITED
  5. GROLATECH CREDIT LIMITED
  6. BRANCH INTERNATIONAL FINANCIAL SERVICES LIMITED
  7. BRANCH INTERNATIONAL FINANCIAL SERVICES LIMITED
  8. P2VEST TECHNOLOGY LIMITED
  9. CREDITWAVE FINANCE LIMITED
  10. KEENEST TECH SERVICE LIMITED
  11. FAIRMONEY MICRO FINANCE BANK
  12. ALTRACRED FINANCE INVESTMENT LIMITED
  13. CREVANCE CREDIT LIMITED
  14. MENACRED COMPANY LIMITED
  15. AFROWIDE DEVELOPMENT LTD
  16. RED PLANET NIGERIA LIMITED
  17. AFROFIRST MOBILE AND TECHNOLOGY COMPANY LIMITED
  18. RANKCAPITALS LIMITED
  19. IBS GOLDEN INVESTMENT COMPANY LIMITED
  20. LENDVISERY SERVICES LIMITED
  21. CREDITWAVE FINANCE LIMITED
  22. RENMONEY MICROFINANCE BANK LIMITED
  23. SWIPEBILL TECHNOLOGIES NIGERIA LIMITED.
  24. HOMETOWN FINTECH LIMITED
  25. GIASUN TECHNOLOGY NIGERIA LIMITED
  26. BE RESOURCES LIMITED
  27. ROCKIT LENDERS NIGERIA LIMITED
  28. PIVO TECHNOLOGY LIMIED
  29. YES CREDIT COMPANY LIMITED
  30. FUBRIL CENTURY LIMITED
  31. IRORUN TECHNOLOGIES LIMITED
  32. CSENSE LIMITED
  33. SUPREME HELP COOPERATIVE SOCIETY LIMITED
  34. ORCOM AND ORCOM BUSSINESS SUPORT LIMITED
  35. PAYHIPPO LIMITED.
  36. EASYCHECK FINANCE INVESTMENT LIMITED
  37. QUARK FINANCIAL NIGERIA LIMITED

CONDITIONAL APPROVAL

  1. TRIPPDBASE LIMITED
  2. BLACKCOPPER SERVICE 
  3. OWOAFAR FINTECH SERVICE
  4. PAYLATER HUB
  5. WINDVILLE FINANCIAL NIGERIA LIMITED
  6. AFROFIRST MOBILE AND TECHNOLOGY COMPANY LIMITED
  7. ORCOM AND ORCOM BUSINESS SUPPORT LIMITED
  8. OTP INTERNET TECHNOLOGY LTD
  9. RED HARBOR FINTECH LIMITED
  10. BERYL SPRING GLOBAL LIMITED
  11. HOMETOWN FINTECH LIMITED
  12. AJAX LENDING LIMITED
  13. RACEOVA NIG. LIMITED
  14. LANTANA TECHNOLOGY LIMITED
  15. THE PLATFORM DIGITAL NETWORK LIMITED
  16. ZIPPY CAPITAL LIMITED
  17. NEO-LINK TECHNOLOGY LIMITED
  18. TRIPOBASE LIMITED
  19. BESTFIN NIGERIA LIMITED
  20. POCKETFUEL FINANCE LIMITED
  21. LENDING EDGE LIMITED
  22. TED ROCKET LIMITED
  23. PENAID LIMITED
  24. ALTARA CREDIT LIMITED
  25. NEW CREDAGE NIGERIA LIMITED
  26. LENDHA TECHNOLOGIES LIMITED
  27. DOJA LEMAIRE GLOBAL LIMITED
  28. PAYDAYHUB ONLINE NIGERIA LIMITED
  29. RETAIL BOOSTER LIMITED
  30. FINNEW FINTECH LIMITED
  31. FEZOTECH NIGERIA LIMITED
  32. ORANGE LOAN & PURPLE CREDIT LIMITED
  33. CITADELE CAPITALS LIMITED
  34. FEWCHORE FINANCE COMPANY LIMITED
  35. A1 CAPITAL SOLUTION LIMITED
  36. ONE PAYOUT LIMITED
  37. LINKPARK TECHNOLOGY NIGERIA LIMITED
  38. LIDYA GLOBAL LIMITED
  39. PHOENIX PAYMENT SOLUTIONS LIMITED
  40. RED PLANET NIGERIA LIMITED
  41. KWABA INTERNATIONAL LIMITED.
  42. MAYWOOD LENDING LIMITED.
  43. PRINCEPS CREDIT SYSTEM LIMITED
  44. LINKPARK TECHNOLOGY NIGERIA LIMITED

EXTENSION OF REGISTRATION DEADLINE

In light of the progress made by the Inter-Agency and the need to create a mutual working relationship with the DMLs, the Commission has not extended the deadline to January 31st, 2023, to enable all DMLs to comply with the Order.

Tolulope Oguntade 
Regville Associates
compliance@regville.com
08065111667

STEPS TO REGISTERING A SECURITY COMPANY IN NIGERIA

Private Security Company

Introduction

When it comes to protecting the safety of lives and properties in Nigeria, several private companies out there have played significant roles over the decades. It should be noted that this industry has been very competitive in the aspect of providing job opportunities for Nigerians.

According to certain records, the National Bureau of Statistics in 2019 recorded over 1,110 registered private companies, employing around 828,502 applicants in Nigeria from 2013 to 2018. As a result, this shows how several people consider this job as a good-paying one.

Moreover, the information regarding the number of people employed by various companies was compiled and supplied by the Nigeria Security and Civil Defence Defence Corps (NSCDC), which serves as an agency that was authorized by law for the purpose of supervising private security guard companies in Nigeria.

This article offers relevant information that relates to the legal requirements for setting up a private security guard company by virtue of the Private Guard Companies Act, CAP P30, LFN 2004.

FIRST STAGE: REGISTRATION OF A LIMITED LIABILITY COMPANY

You should know that a security company has to be registered at the Corporate Affairs Commission (CAC) as a limited liability company. This is because the company is expected by law to have a minimum share capital of N10,000,000 (Ten Million Naira) with the object as the provision of private security services.

Requirements for registration at the Corporate Affairs Commission

  1. Two proposed names have to be provided which stipulate the preferred name of the company or an alternate name.
  2. The address of the head office and branch offices has to be provided.
  3. There should also be a share capital and shareholding formula among the shareholders.
  4. The company must have the particulars of at least three directors. This will their phone numbers, email addresses, residential addresses, passport photographs, copies of any of their identity card (driver’s license/voters card, national passport/national identity card)

It is also imperative to note that one or most of the directors of the company must be retired military or paramilitary personnel, and their rank must be the rank of Major or Commissioner. This is how the process works as no foreigner is allowed to become or act as a director.

  1. Secretaries of the company must have particulars of the company, passport photographs, and any other possible means of identification.
  2. Shareholders must also have particulars, who will act as the first subscribers of the company.
  3. The Corporate Affairs Commission has A Memorandum and Articles of Association (MEMART) irrespective of new companies to employ and adopt. On the other hand, it is best to seek a legal practitioner to draft an article, due to the peculiarities coupled with setting up a security company in Nigeria.
  4. Applicants are required to pay the filing fees to the CAC and Stamp Duties to the Federal Inland Revenue Services (FIRS). This is based on share capital. It is also important to make a budget for professional fees for the legal practitioner in offering assistance during the course of the process.

All these requirements as stated above should be in place, the statutory CAC forms will be filled online and the company will be duly registered. The next stage would be to focus on obtaining a Private Security Licence from the NSCDC.

SECOND STAGE: REGISTRATION OF THE COMPANY WITH THE NSCDC

Registering with the NSCDC is very vital for any security company before a license can be granted for operation. However, the NSCDC outlined the requirements every security company must meet before obtaining a private security license. They are stated below;

  1. An application for a private guard license must be tendered to the NSCDC, which must be addressed to the Commandant General of the NSCDC.
  2. There must be evidence of a company’s registration which involves a minimum of N10,000,000 paid up share capital and a minimum of 3 directors.
  3. Every security company must provide certified True Copies of the Memorandum and Article of Association.
  4. Photocopies of the Certificate of Incorporation must be provided.
  5. Must provide Tax Clearance Certificate.
  6. Must Obtain a statement of account from a bank.
  7. A letter from a legal advisor has to be provided.
  8. A letter from an Auditor must be provided.
  9. Letter from Bankers.
  10. Proposed training program.
  11. The proposed salary structure must be provided.
  12. Veterinary certificate (Optional) Applicable if security animals are used.
  13. All directors must obtain Personal History Statements (PHS) forms. The price is One Hundred Thousand Naira (N100,000), which is very important for all directors to have one. This form has to be filled by the directors stating ‘Nil’ or ‘Not Applicable’ at portions they do not have specific answers to, and every column should be filled.
  14.  There should also be two copies of the Academic credentials of directors to be attached to the PHS form.
  15. Each director has to provide eight passport photographs.
  16. This eight full photographs postcard should be sized 5 x 7 inches with a white background, five fingerprints, and a signature signed on the back of the postcard.
  17. Must provide a photocopy of the signature page of the Directors in the International Passport, Drivers License, or National ID Card.
  18. Every director must provide attestation letters from 3 referees each.
  19. There should be one uniform sample. This involves how the security officer will be dressed when discharging duty. They include; a complete set of shoes, clothes, and a cap) Additionally, a photograph of a guard in uniform would serve as a sample, and all uniforms must not have the same appearance as any governmental agency or any other Private Guard Companies.
  20. An application fee of Five Hundred Thousand Naira (N500,000) must be provided.

All the requirements mentioned above must be completed during the assessment of applications by the NSCDC which would be forwarded onward to the presidency.

THIRD STAGE: OBTAINING A PRIVATE SECURITY LICENCE

Note that all requirements stated in stage two will be presented by the NSCDC to the Presidency for final check and clearance of all the directors.

Additionally, the President will issue a letter containing security clearance to the NSCDC and the stated company will be invited to make payments as regards the license fees.

However, there are two categories of licenses for private security guard companies which will be stated below;

THE LICENCE CATEGORIES

Category A: Note that the company can have the capacity to have more than 3000 guards. The license fee is N3,000,000 (Three Million Naira Only)

Category B: Under this category, the company’s maximum amount of guards is only 3000 guards. The license fee here goes for N3,000,000 (Three Million Naira Only)

Importantly, A license may be approved by the Ministry and issued by the company if the payment for a license under any of the categories is completed and the Commandant General of the NSCDC recommends the company.

UNDERSTANDING THE LICENSING AUTHORITY

According to Section 2(1) of the Private Guard Companies Act, (PGC Act) A formal application for a license is submitted to the Minister of Internal Affairs through the licensing authority. Section 3 of the Act allows the Minister to give a permit only if he believes it is justified in terms of national security and public interest.

Private security guard operations are currently managed by the Ministry of Interior. The NSCDC helps the Ministry do this. By virtue of Section 3 of the NSCDC Act, the NSCDC is required to recommend to the Ministry the registration of private guard companies.

The NSCDC functions through its Private Guards Companies Department to be effective in its duties. The licensing process only involves the agencies mentioned above, so it is important for license applicants to be aware of this. Therefore, applicants should watch out for scammers.

RENEWAL OF A LICENSE

The security company must renew its license three months before it expires following the first issuance of the license to the company.

Section 11 (2) provides that “where the holder of a license fails to renew such license within the specified period, the license shall stand revoked upon its expiry and the such holder shall thereupon cease to operate as a private guard company”.

REQUIREMENTS FOR RENEWAL

Below are the requirements for the renewal of a license, which will be stated below;

  1. Application Letter for Renewal of Operational License.
  2. Last Letter of Renewal or Copy of License.
  3. Annual Performance Report (Report of activities of the company in the preceding year).
  4. Current Tax Clearance Certificate.
  5. Evidence of Payment for renewal of the license. Note that this payment method must be transacted into a designated bank account.
  6. Current statement of Audited Account of the Company.
  7. Staff Return (Staff list, Designation, and Salaries).

Conclusion

There are strict rules and regulations when registering and running a private security company in Nigeria which every company must comply with. These rules are strict to the extent that even when there is a slight departure from the established regulations stated, it could lead to the disintegration of the company or revocation of the operating license.

Therefore, every company should make a smart move by retaining the services of a legal practitioner to assist them concerning issues of regulatory compliance and filing of yearly returns/reports with the appropriate agencies.

Tolulope Oguntade 
Regville Associates
compliance@regville.com
08065111667

SETTING UP A PAYMENT SERVICE BANK IN NIGERIA

Source: GSMA Mobile for Development

BACKGROUND STATISTICS

36% of Nigerian adults are unbanked. CBN aims for 95% financial inclusion by 2024. 92% of the nation’s adult male population have mobile phones while 88% of the adult female population have mobile phones.

RATIONALE

CBN aims “To enhance financial inclusion in rural areas by increasing access to deposit products and payment/remittance services to small businesses, low-income households and other entities through high-volume low-value transactions in a secured technology-driven environment.”

PSBs IN NIGERIA

As at the time of writing this article, there are five (5) PSBs in Nigeria namely 9 PSB (a subsidiary of 9Mobile), Hope PSB (A Subsidiary of Unified Payments) , Money Master PSB (A Subsidiary of Globacom), Momo PSB (A Subsidiary of MTN Nigeria), SmartCash PSB (A subsidiary of Airtel Nigeria).

REGULATORS OF PSB

The Central Bank of Nigeria is the main regulator of PSBs in Nigeria, Deposits are also Nigeria Deposit Insurance Corporation (NDIC) insured.

SERVICES PSBs CAN CARRY OUT

  • Accept deposits from customers and small businesses
  • Hold funds in an electronic wallet
  • Invest in an interest-bearing FBN and CBN securities and offer saving products
  • Provide POS and ATM Services
  • Build a network of physical banking agents for deposits, payments and withdrawals
  • Issue prepaid and debit cards
  • Provide inbound remittance services
  • Engage in different forms of local payments including merchant payments, bill payments ad person-to-person transfers.

SERVICES PSBs CAN NOT CARRY OUT

  • They are not to issue loans, advances and guarantees.
  • They are also not allowed to trade in foreign exchanges except for remittances
  • They are also not allowed to issue insurance products.

REGISTRATION REQUIREMENTS FOR PSBs

Steps to obtain a PSB license from CBN

  • Obtain the Grant of Approval-in-Principle (AIP)
  • Obtain the Grant for a Final Banking License

REQUIREMENTS FOR THE GRANT OF APPROVAL IN PRINCIPLE (AIP)

  • Formal application for the grant of a Payment Service Bank license addressed to the Governor of the CBN attached with a proposal to be submitted to the Director, Financial Policy and Regulation Department (FPRD), CBN. The proposal shall contain the business case, vision and strategy, corporate governance arrangements, risk management, compliance; and financial viability.
  • A non-refundable application fee of N500,000 (five hundred thousand Naira only) in bank draft, payable to the Central Bank of Nigeria or such other amount as the CBN may specify from time to time
  • Evidence of capital contribution made by each shareholder
  • Evidence of name reservation with the Corporate Affairs Commission (CAC)
  • Detailed business plan or feasibility report
  • The draft copy of the company’s Memorandum and Articles of Association (MEMART)
  • A written and duly executed undertaking by the promoters that the bank will be adequately capitalized for the volume and character of its business at all times, and that the CBN shall have powers to supervise and regulate its operations
  • Shareholders’ agreement providing for disposal/transfer of shares as well as authorization, amendments, waivers, reimbursement of expenses
  • Statement of intent to invest in the bank by each investor
  • Technical Services Agreement
  • Detailed Manuals and Policies, particularly

For corporate investors as the promoters shall forward the following additional documents:

  • Certificate of Incorporation and certified true copies of other incorporation documents
  • Board resolution supporting the company’s decision to invest in the equity shares of the proposed bank
  • Names and addresses (business and residential) of owners, directors, and their related companies, if any; and
  • Audited financial statements & reports of the company and Tax Clearance Certificate for the immediate past 3 years.

Where all the above requirements have been met, the CBN shall notify the applicant of its decision within 90 days. When the CBN is pleased with the application, it will grant the applicant an Approval-in-Principle (AIP).

Afterwards, the Applicant shall register the PSB with the Corporate Affairs Commission with a 5 Billion minimum share capital.

REQUIREMENTS FOR THE GRANT FOR A FINAL BANKING LICENSE

The applicants of a planned PSB must apply to the CBN for the grant of a final license not later than six (6) months after receiving the A.I.P. The application shall be accompanied by the following:

  • A non-refundable licensing fee of N2,000,000.00 (Two Million Naira Only) in bank draft payable to the Central Bank of Nigeria
  • Certified True Copy (CTC) of Certificate of Incorporation of the bank
  • CTC of MEMART
  • CTC of Form CAC 1.1
  • Evidence of the location of the Head Office (rented or owned) for the take-off of the business
  • Schedule of changes, if any, in the Board and Shareholding after the grant of AIP;
  • Evidence of ability to meet technical requirements and modern infrastructural facilities such as office equipment, computers, and telecommunications, to perform the bank’s operations and meet CBN and other regulatory requirements;
  • Copies of letters of offer and acceptance of employment in respect of the management team;
  • Detailed resumes of top management staff;
  • Completed Fitness and Propriety Questionnaire; and sworn declaration of net worth executed by top management staff; 
  • Bank Verification Number (BVN) and Tax Clearance Certificate of each top management staff;
  • Comprehensive plan on the commencement of the bank’s operations with milestones and timelines for the roll-out of crucial payment channels; and
  • Board and staff training program.

Following that the above requirements have been met, the central bank of Nigeria shall conduct other inspection, which includes: checking the physical structure of the building, verifying the capital contributions of the promoters, meeting with the Board and Management team whose resumes had earlier been submitted to the CBN, check the original copy submitted in support of the license.

For bespoke consultation on setting up a Payment Service Bank in Nigeria

Regville Associates                                                                                                                    08065111667                                                                                                   info@regville.com

AN OVERVIEW OF THIRD-PARTY INSURANCE IN NIGERIA

Car Insurance

There are different kinds of circumstances in life that man cannot prevent. On the other hand, we can protect ourselves from incidents such as financial fallouts and other unfortunate losses, which is where insurance comes in. However, selecting a specific type of insurance is essential based on the situation. Insurance comes in various styles, but this article will focus on third-party insurance.

What is Third Party Insurance?

Third-party insurance aims to protect the insured if a loss or damage is sustained by a third party other than the insured. Third-party insurance has to do with car insurance. Other expenses, such as medical expenses of the third party, are covered by this insurance up to the sum of 3 million naira for a private motor, according to a new circular from the National Insurance Commission (NAICOM), effective 1st of January, 2023. So as you know, this kind of insurance is the most common form of auto insurance.

This is called third-party insurance because it doesn’t protect you from damages caused to yourself in the event of an accident or any other incident. It also doesn’t include coverage for claims related to drunk driving or driving without a license.

Third-Party Insurance in Nigeria

Having third-party insurance in Nigeria is compulsory. This law is backed up by the Motor Vehicle (Third Party) Insurance Act of 1950, which is part of the six mandatory classes of insurance under the laws of the Federal Republic of Nigeria.

One of the reasons most vehicle owners in Nigeria third-party insurance is that they want to get cleared by law enforcement agencies in case anything happens. Another primary reason is that third-party insurance is cheaper than a comprehensive insurance policy.

Therefore, all insurance companies in Nigeria are being supervised by the National Insurance Commission (NAICOM) This is done to stabilize the insurance industry by contributing optimally to Nigeria’s economy.

Third-Party Insurance Policy; How Does It Work?

Third-party insurance works in a way that shields the policyholder from legal responsibility or liability if the use of the vehicle causes the death or injury of a third person.

Roles of the National Insurance Commission (NAICOM)

NAICOM discharges several functions, known as mandates, as specified in the NAICOM Act of 1997. These functions apply to every insurance company in Nigeria. They are stated below;

● To develop standards for the conduct of insurance companies in Nigeria.
● Act as transaction regulators between insurers and reinsurers, which includes those outside Nigeria.
● Approves warranties, standards, and conditions applicable to every class of insurance business.
● Approves premium insurance rates to be paid for all insurance business classes.
● NAICOM also acts as a counsellor or adviser to the Federal Government on every issue related to insurance.

How to Get Third-Party Insurance in Nigeria

In Nigeria, Third-party insurance can be obtainable in any company with a license from the National Insurance Commission (NAICOM), which should serve as general or for composite insurance companies. Note that there are procedures to buy such an insurance policy. Applicants must fill out the following forms;

● Know Your Customer (KYC) Form
● Insurance Physical Inspection Form
● Motor Proposal Form

However, applicants can get this done in any insurance company around Nigeria offering Third-Party Insurance. Some of these companies will be listed below;

● NEM Insurance
● Mutual Benefit Insurance
● Leadway Assurance
● Consolidated Hallmark
● Custodian Insurance Plc
● Axa Mansard
● Allianz Nigeria Insurance
● AIICO Insurance

What is the Cost of Third-Party Insurance?

The National Insurance Commission raised the premium for third-party motor insurance premium from N5,000 to N15,000, effective January 1, 2023.

Why is Third-Party Insurance Important?

This insurance policy favors only a third party and not the insurer to some extent. Nevertheless, the insurer gets protected from having to sort out the cost of repair or replacements of third-party damages. The following reasons below will state the importance of having third-party insurance.

● The insurance policy provides protection against liability based on damages suffered by a third party.
● Protection from facing the punishment of the law.
● Compared to comprehensive insurance, third-party insurance is cheaper.
● Serves as the primary form of auto insurance with lower premiums.
● Several third-party companies, like Leadway Assurance, offer hybrid plans.
● Also offers protection from further complications with the law in the event of an accident.

Frequently Asked Questions

What Happens if I Have an Accident on Third-Party Insurance?
You will be required to pay for your vehicle’s damages if they determine that you are at fault. Send any correspondence or claim forms you receive from the other driver or their insurer after an accident to your own insurance company.


What are The Disadvantages of Third-Party Insurance?
If there is an accident, a third-party auto insurance policy will not cover the cost of any damage done to the vehicle or any possessions within. Additionally, it won’t cover your car or if your goods are lost or destroyed.

Why is it called Third-Party Insurance? It is necessary to have third-party liability insurance, the lowest level of protection you may get. A person involved in a car insurance claim who is not you is referred to as a “third party” (the policyholder or the driver).

Conclusion

Third-Party insurance has played a significant role based on how road users have prevented themselves from emergencies and costs. However, lots of people need to be made aware of the fact that third-party insurance exists and has several benefits. Understanding the policy and the conditions attached to third-party insurance will help you lay claims and reports.

TO AVOID LIRS WAHALA, 3 THINGS YOU SHOULD NOTE AND DO  

PHOTO: ISTOCK/GETTY IMAGES
  1. UNDERSTAND AND PLAN YOUR TAXES: As a business owner or Manager, you need to understand the basics and basis of taxation. The State Revenue Service majorly concerns itself with the following:

a. PAYE should be remitted on or before the 10th day of the month following the month in which salaries were paid.

Also, an Annual Developmental Levy of NGN 100 (One Hundred Naira) per Taxpayer applies.

b. DIRECT ASSESSMENT: Business owners who are not on salaries opt for Direct Assessment, it is similar to PAYE, only that it is paid annually on or before the 31st of March 2022. The calculator highlighted earlier can help calculate your Direct Assessment.

c. WITHHOLDING TAX: When individuals (including Business Name) are given contracts or jobs you are mandated to deduct between 5% – 10% (Depending on the nature of the transaction) as Withholding Tax from their submitted invoice and remit the same to the State Government. Examples include Rent paid to Individuals or Business Names.

d. BUSINESS PREMISES: Flat rate of NGN 10,000 for the first year and NGN 5,000 for the subsequent year.

e. OTHERS: Other not too common or not generally applicable include Consumption Tax for Hotels, Event Centers, Restaurants etc, and Capital Gains Tax rate of 10% of Gains from the disposal of yielding assets.

  1. KEEP RECORDS: It is not enough to pay taxes, you must have evidence of the taxes paid and supporting documents to show you paid the appropriate taxes eg for PAYE, the schedule of payment should be kept, Withholding Tax – project/service invoices should be kept safely etc
  2. ENGAGE A TAX CONSULTANT: As your business grows, the need to have a tax consultant cannot be over-emphasized. The more your business grows, and income grows the more you become prone to tax and compliance issues. Engage Tax Consultants, Lawyers with in-depth knowledge of taxation, or Accountants with expertise in taxation.

For your Tax and Compliance Issues

Tolulope Oguntade 
08065111667
compliance@regville.com