Tag: finance

FCCPC Digital Lending Regulations 2025: What Business Leaders Need to Know.

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In July 2025, the Federal Competition and Consumer Protection Commission (FCCPC) introduced the Digital Electronic Online, Non-Traditional Consumer Lending Regulations (DEON Consumer Lending Regulations) 2025. These rules are designed to bring greater transparency, accountability, and consumer protection into a market that has grown rapidly but often without sufficient oversight.

For business leaders, investors, and fintech operators, the regulations are not just about compliance—they reshape how digital lending will work in Nigeria for years to come. Below is a clear analysis of the new framework, its opportunities, and its challenges.

Mandatory Re-Registration and High Compliance Costs

Every digital lender and service provider currently operating must re-register with the FCCPC within 90 days from July 24, 2025. This implies that the deadline for compliance is November 5, 2025. Once registration is granted, approvals are valid until December 31 of the third calendar year and must be renewed by March 31 of the following year.

The cost of re-registration is significant. Beyond the ₦100,000 non-refundable application fee, lenders must pay ₦1,000,000 for registration and approval, which covers two software applications. Each additional application, up to five in total, attracts a fee of ₦500,000. Renewals also come with an annual levy of ₦500,000 after the first three-year cycle.

While this system may help the FCCPC sanitize the market and eliminate rogue operators, it risks excluding smaller or emerging players who cannot shoulder such heavy financial obligations. The effect could be a consolidation of the sector around larger, better-capitalized firms.

Clearer Rules on Interest Rates, Terms, and Consumer Protection

One of the most consumer-friendly provisions requires lenders to disclose all interest rates, repayment terms, and associated fees in plain English before a loan is issued. These details must also be published prominently on fintech websites.

The FCCPC has also reserved the right to periodically review interest rates to prevent exploitative practices. However, the lack of a defined benchmark for what counts as “exploitative” leaves room for regulatory discretion, which may create uncertainty for operators.

Regulatory Overlap with the Central Bank of Nigeria

Not all financial institutions are subject to the same requirements. Banks licensed under the Banks and Other Financial Institutions Act are fully exempt. However, microfinance banks and finance companies, even though they are already regulated by the Central Bank of Nigeria (CBN), must still obtain a waiver from the FCCPC before engaging in digital lending.

This dual oversight introduces regulatory duplication. Microfinance banks already comply with strict CBN rules, adding another approval process could result in inefficiency without delivering proportional benefits to consumers.

Tightened Control of Partnerships and Vendor Relationships

Another striking aspect of the new regulations is the level of scrutiny over partnerships. Digital lenders must now obtain FCCPC approval before entering into agreements related to consumer lending, including vendor contracts. Any amendments to these agreements will also require FCCPC consent. Unauthorized service-level agreements are outright prohibited.

While this move seeks to ensure accountability across the lending value chain, it may also slow down business operations. For fintechs that depend on rapid innovation cycles, the requirement for pre-approval could become a bureaucratic bottleneck.

Approval Timelines and Reporting Demands

The FCCPC has committed to processing complete applications within 30 days. However, it retains discretion to extend the timeline if it chooses, which creates some uncertainty for lenders eager to move quickly in a competitive market.

Compliance does not stop at registration. Lenders and their vendors must submit annual returns that detail lending transactions, consumer interactions, and complaint resolutions. In addition, bi-annual reports must capture transaction numbers, loan values, interest collected, fees charged, and complaint outcomes. The FCCPC also has the authority to demand access to documents at any time, which lenders must provide within 48 hours.

For larger, established companies, these reporting requirements may be manageable. But for smaller fintech startups, the administrative burden could prove overwhelming without significant investment in compliance infrastructure.

Severe Penalties for Non-Compliance

The FCCPC has backed these rules with some of the toughest penalties seen in Nigeria’s fintech sector. Companies found in breach could face fines of up to ₦100,000,000 or one percent of their previous year’s turnover, whichever is higher. Individuals—whether directors, managers, or employees—could face fines of up to ₦50,000,000 and disqualification from holding similar positions for up to five years. Beyond financial penalties, sanctions may include suspension, delisting, or even outright revocation of a lender’s approval.

Such measures are clearly meant to act as a deterrent and align Nigeria’s practices with global standards. However, to be effective, the FCCPC will need to ensure that enforcement is proportionate to the seriousness of violations, rather than becoming a revenue-generation tool.

Consumer-Centric Obligations for Lenders

The regulations also set out strict obligations that redefine how lenders interact with customers. Loan disbursements can only be made upon the explicit request of consumers, eliminating automatic or pre-authorized lending. Data protection rules, in line with the Nigeria Data Protection Act 2023, forbid lenders from accessing sensitive information such as call logs, contact lists, or photo galleries.

Consumer complaints must be resolved within 24 hours. If that is not possible, lenders must communicate a resolution timeline within 48 hours. Channels for lodging complaints must be visible and accessible.

Record-keeping is another area of focus. Lenders must maintain their records for at least five years and produce them within 48 hours when requested by regulators. These provisions strengthen accountability and trust but may stretch the operational capacity of smaller firms.

Striking the Right Balance

The DEON Consumer Lending Regulations 2025 are a bold attempt to professionalize digital lending in Nigeria. They place consumer protection at the heart of lending practices, enforce transparency in loan terms, and introduce severe consequences for misconduct.

Yet, the framework also comes with risks. The combination of steep registration fees, heavy reporting obligations, and dual oversight between the FCCPC and CBN could discourage smaller fintechs from entering or surviving the market. This might unintentionally reduce financial inclusion, leaving consumers with fewer lending options.

For decision-makers, the key takeaway is clear: compliance is non-negotiable. Re-registration must be prioritized, disclosures must be transparent, and complaint-handling systems must be robust. At the same time, there is a strong case for engaging regulators to ensure that enforcement remains fair, proportionate, and supportive of innovation in Nigeria’s fintech sector.

Written by Adeola Osifeko LLB,BL,LLM, ACIS,ABR

Nigeria’s 2025 Tax Reforms: What Technology, Life Sciences & Media Businesses Need to Know.

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On June 26, 2025, President Bola Ahmed Tinubu signed into law four significant tax reform bills collectively referred to as “the Reform Acts.” The first, the Nigeria Tax Act (NTA) also called the Ease of Doing Business Act seeks to streamline the country’s previously fragmented tax regulations. Complementing this is the Nigeria Tax Administration Act (NTAA), which seeks to harmonize legal and operational procedures for tax administration across all levels of government: federal, state, and local. The third, the Nigeria Revenue Service Act (NRSA), replaces the existing Federal Inland Revenue Service Act and establishes a more autonomous, performance-driven national tax authority called the Nigerian Revenue Service. Lastly, the Joint Revenue Board Act (JRBA) creates a formal governance structure to improve coordination and cooperation among tax authorities nationwide. These reforms represent one of the most extensive restructurings of Nigeria’s tax system in decades and are set to take effect on January 1, 2026.

The reforms are designed to streamline compliance, promote fairness, and boost revenue collection, while fostering economic growth. At the same time, these new laws signal the beginning of a more complex regulatory environment—marked by increased scrutiny and the need for strategic adjustments by businesses operating in Nigeria. Here’s what technology, fintechs, healthtechs/life sciences & media/creative arts entrepreneurs and business owners should know.

Consolidation, Repeal, and Update of Nigeria’s Tax Laws

As part of the broader goals of the Nigerian Tax Reforms, the NTA consolidates key fiscal laws into one cohesive framework. It repeals and integrates the core provisions of several major tax statutes, including the Capital Gains Tax Act, Companies Income Tax Act, Personal Income Tax Act, Stamp Duties Act, and Value Added Tax Act. Additionally, it introduces amendments to other important laws such as the Petroleum Industry Act and the Tertiary Education Trust Fund (Establishment, etc.) Act. One notable change is the revocation of the 2021 VAT (Modification) Order. The overarching aim is to simplify Nigeria’s tax landscape, reduce redundancies, and promote clarity for businesses navigating the tax environment.

Creation and Role of the Nigeria Revenue Service (NRS)

A significant institutional shift introduced by the reforms is the replacement of the Federal Inland Revenue Service (FIRS) with a newly established Nigeria Revenue Service (NRS). This development, formalized through the NRSA, marks the beginning of a more autonomous and efficiency-driven tax authority. The NRS not only assumes responsibility for tax collection but is also tasked with overseeing the administration of non-tax revenue. The agency is expected to introduce a standardized legal and administrative approach across the country to ensure consistency and improve compliance in revenue collection.

The New Tax Landscape for Businesses

For businesses, several changes will reshape how taxes are paid and managed. A key update is the introduction of a tax on profits from foreign subsidiaries that could have been paid out as dividends but weren’t, affecting Nigerian companies with overseas operations.

Another major shift involves Value Added Tax (VAT). While the rate remains unchanged at 7.5%, the rules around recovery of VAT have been expanded. Businesses can now recover VAT on all purchases, including services and fixed assets, as long as they relate to taxable sales. This reduces costs for businesses offering respite for many companies by lowering overall operating costs.

Additionally, certain essential items i.e goods and services such as basic food, medical products, educational materials, electricity, and non-oil/gas exports are now zero-rated for VAT, meaning businesses selling these can recover VAT costs, improving cash flow and cost savings.

What Individuals and Employers Should Watch

On the individual side, the government has toughened penalties for tax non-compliance. Failing to file tax returns now comes with steeper penalties- ₦100,000 for the first month rising to ₦530,000 in the second month. This puts pressure on both individuals and businesses to meet deadlines and maintain accurate records.

To make dispute resolution easier, a new Tax Ombuds Office has been established. This independent body will help resolve issues between taxpayers and the tax authorities, providing a more accessible avenue for raising concerns and ensuring fairness in enforcement.

Restructuring and Strategic Planning

Companies considering restructuring or expansion—especially those with international operations—should revisit their tax strategy. The new Controlled Foreign Company rules mean that previously untaxed profits abroad may now trigger tax in Nigeria. Businesses with foreign subsidiaries should evaluate how the new tax on undistributed profits impacts financial planning and corporate structure

Additionally, businesses should take advantage of VAT recovery or zero-rated items and review supply chains for compliance.

Administrative Changes and Compliance

The tax administration system is also undergoing structural reform. The Federal Inland Revenue Service (FIRS) has been renamed the Nigeria Revenue Service (NRS), reflecting its enhanced role. Meanwhile, state-level tax agencies are now autonomous, allowing for improved local tax collection and coordination.

The VAT revenue-sharing model has also shifted. The federal government will now receive 10% of VAT revenue, down from 12%, while states will receive 55% and local governments 35%. These adjustments are designed to strengthen local governance and, potentially, improve infrastructure and services that benefit businesses.

A particularly impactful update is the requirement for all businesses to adopt electronic invoicing. This measure is part of a broader push for transparency and digital compliance. To remain compliant, companies will need to update their accounting systems and ensure they meet the new digital standards.

Industry-Specific Impacts

In the financial services sector, the expanded VAT recovery rules are especially beneficial. Banks, insurance firms, and fintech startups can now claim back VAT on purchases that support taxable services, helping reduce overall costs. However, compliance is more critical than ever, with steep penalties for missed filings. The Tax Ombuds Office could prove particularly useful for resolving disputes in this highly regulated industry.

For life sciences and healthcare, the reforms bring immediate cost relief. Medical goods and pharmaceutical products are now zero-rated for VAT, allowing businesses to recover input VAT and make healthcare more affordable. It’s vital for companies in this space to update their tax processes to take full advantage of the changes.

Technology and media companies also stand to benefit. Many digital exports are now zero-rated for VAT, which supports firms serving international markets. The mandatory adoption of e-invoicing aligns well with tech operations but still requires system upgrades and staff training to stay compliant.

Taking Action: What Businesses Should Do Next.

To navigate these changes effectively, businesses should begin by aligning their leadership, operations, and finance teams around a shared understanding of the implications. Key steps include:

  1. Conducting training sessions and strategic reviews to stay current with the evolving tax landscape. It’s also essential to assess the impact on your company’s structure, supply chains, and financial arrangements.
  2. Updating the tax strategy to take advantage of opportunities such as VAT recovery.At the same time, enhance compliance by modernizing accounting systems—especially for electronic invoicing—to meet new reporting and regulatory requirements.
  3. Embracing technology as a critical enabler. Use tools that not only comply with current regulations but are also adaptable to future changes. A robust tax risk management framework will help identify both compliance gaps and potential efficiencies.

Finally, businesses should stay actively informed. Monitor government updates, tax circulars, and implementation guidelines regularly. While the Tax Ombud’s Office provides support, early engagement and proactive compliance remain the most effective ways to minimize both risk and cost.

Final Thoughts

Nigeria’s new tax laws mark a bold step toward modernising the country’s tax system. They create both challenges and opportunities for businesses. Those that take the time to understand the changes, update their systems, and plan ahead will be well positioned to thrive in the new environment commencing in six months time.

Author

Adeola Osifeko LLB,LLM,ACIS,ABR, Principal Partner. She can be reached on adeola@aeolawpractice.com

The Legal Practitioners Remuneration Order 2023: Will It Strengthen or Strain the Legal Industry?

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The legal industry in Nigeria is undergoing a significant transformation with the introduction of the Legal Practitioners Remuneration (For Business, Legal Service and Representation) Order 2023 (LPRO 2023). This regulatory framework, established under the Legal Practitioners Act (Cap LII, LFN 2004), seeks to standardise fees for legal practitioners across various areas of legal practice. While its objectives include ensuring fair compensation for lawyers and preventing fee undercutting, the broader economic and business implications of this regulation are profound. Against the backdrop of Alternative Legal Service Providers (ALSPs), this Order raises questions about its potential to strengthen or strain the legal profession in Nigeria.

Economic and Business Implications of LPRO 2023 on the Legal Profession

LPRO 2023 introduces minimum fees for various legal services, including consultations, incorporation of companies, litigation, property transactions, and other commercial dealings.1 By establishing prescribed fees, the regulation aims to curb price undercutting, which has historically affected law firms, particularly small and mid-sized firms. This structured pricing model ensures that practitioners receive adequate remuneration commensurate with their experience and the complexity of legal services rendered. However, the regulation also introduces rigid constraints on pricing flexibility, potentially impacting market competitiveness.

For established law firms, particularly those operating in corporate commercial law and litigation, the LPRO 2023 provides a more predictable revenue stream2. Firms that cater to high-net-worth clients or corporate entities may find this beneficial as it aligns with international best practices. However, for younger lawyers, solo practitioners, and small firms that rely on competitive pricing to attract clients, the LPRO 2023 presents a challenge. Many clients, especially startups, SMEs, and individuals seeking legal representation for minor matters, may opt for ALSPs, online legal platforms, or non-traditional legal service providers offering more affordable solutions.

The rigidity in the Order also poses concerns in dispute resolution practices. Given the increasing global shift towards flexible billing arrangements such as contingency fees, fixed retainers, and subscription-based legal services, the LPRO 2023 appears to constrain such innovations.3 While it does allow for percentage-based fee arrangements, it does not permit any arrangement below the prescribed hourly rate, thus limiting lawyers’ ability to tailor their services to market demands.

The Rise of Alternative Legal Service Providers (ALSPs) and the LPRO 2023

The global legal market has witnessed a surge in Alternative Legal Service Providers (ALSPs), which offer legal solutions outside the traditional law firm model.4 These entities, ranging from legal tech companies, document review services, online dispute resolution (ODR) platforms, contract automation providers, and freelance legal consultants, leverage technology and process efficiencies to deliver cost-effective legal services.

In Nigeria, ALSPs are emerging as formidable competitors to traditional law firms, particularly in areas like legal research, contract drafting, compliance, and regulatory advisory services.5 With the advent of artificial intelligence (AI)-driven legal research tools, automated document generation platforms, and online corporate registration services, ALSPs are addressing clients’ needs faster and at lower costs.

The LPRO 2023 inadvertently favours the rise of ALSPs by making traditional law firms less attractive to cost-conscious clients. A small business seeking corporate registration, for instance, may find online incorporation services preferable to engaging a law firm that charges statutory minimum fees as stipulated in the Order.6 Similarly, businesses needing contract review and compliance services may opt for subscription-based ALSPs rather than law firms constrained by hourly rate requirements.

Furthermore, ALSPs often operate in a less regulated environment compared to traditional law firms. While law firms must adhere strictly to professional ethics rules and LPRO 2023’s fee structure, ALSPs may offer customised, on-demand pricing models.7 This regulatory gap could create an uneven playing field, where ALSPs thrive while traditional law firms struggle with compliance costs.

The Role of the NBA and Regulatory Bodies in Shaping ALSPs within the Legal System

The Nigerian Bar Association (NBA) and the Legal Practitioners Remuneration Committee (LPRC) play crucial roles in shaping the legal market, particularly regarding ALSP operations. LPRO 2023, by its design, primarily regulates traditional legal practitioners but does not comprehensively address how ALSPs fit into the legal ecosystem.8

The NBA has an obligation to define the regulatory boundaries for ALSPs, ensuring that while innovation is encouraged, it does not undermine the traditional legal profession. Possible regulatory responses include:

  1. Bridging the Regulatory Gap: The NBA could introduce specific regulations to cover ALSPs, ensuring they operate within a defined legal framework. This could include licensing requirements, ethical codes, and restrictions on certain reserved legal activities.9
  2. Collaboration Between Law Firms and ALSPs: The NBA could encourage synergy between ALSPs and law firms, rather than fostering direct competition. By permitting law firms to integrate ALSP models (such as automated legal research tools and contract lifecycle management solutions), practitioners could enhance efficiency while remaining within the LPRO 2023 framework.10
  3. Reforming Fee Structures for Greater Flexibility: The rigid minimum fees imposed by the Order may require periodic review. The NBA could consider allowing alternative fee structures, such as tiered pricing models for SMEs, startups, and social enterprises, to ensure legal services remain accessible while sustaining law firm profitability.11
  4. Addressing Ethical Concerns and Consumer Protection: Given the rise of unregulated online legal services, the NBA must establish consumer protection policies to prevent unauthorized practice of law (UPL) and data privacy breaches in tech-driven legal services.12
  5. Promoting Technology-Driven Legal Services within the Traditional Bar: The NBA can train and support law firms in adopting legal tech solutions rather than allowing ALSPs to dominate the market. By incorporating document automation, e-discovery tools, and AI-based research, traditional law firms can compete effectively without violating the LPRO 2023 pricing model.13

Conclusion

The Legal Practitioners Remuneration Order 2023 presents both opportunities and challenges for Nigeria’s legal industry. While its intent is to promote fair remuneration and standardise fees, its economic impact could inadvertently drive clients towards ALSPs and alternative legal solutions. Traditional law firms, particularly smaller firms and solo practitioners, may struggle to retain clients in a market where cost efficiency and flexible pricing are increasingly prioritised.

The NBA and regulatory bodies must therefore strike a balance between protecting traditional legal practice and embracing the innovations brought by ALSPs. Through strategic regulatory reforms, collaboration with ALSPs, and modernising fee structures, Nigeria’s legal profession can evolve without losing its competitive edge. The future of legal practice in Nigeria will depend on how well regulators and practitioners navigate this complex intersection between standardisation, innovation, and market competitiveness.

Author: Adeola Osifeko LLB, LLM, BL,ACIS,ABR

Endnotes

  1. Legal Practitioners Remuneration Order 2023, s 1.
  2. ibid.
  3. 2023 LPRO, s 8.
  4. Nkemakonam Umeadi-Onyedika, ‘The Rise of Alternative Legal Service Providers: Threat or Opportunity’. BusinessDay Newspaper, 13 March 2025 Page 21.
  5. ibid.
  6. 2023 LPRO, Schedule 2.
  7. 2023 LPRO, s 10.
  8. 2023 LPRO, s 14.
  9. ibid.
  10. ibid.
  11. ibid.
  12. ibid.
  13. ibid.

Recent Tax Reforms: The Economic Stabilisation Bill and The Nigeria Revenue Service (Establishment) Bill.

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Recent Tax Reforms: The Economic Stabilisation Bill and The Nigeria Revenue Service (Establishment) Bill.

  1. The Economic Stabilisation Bill

On 23 September 2024, the Federal Executive Council approved the Economic Stabilisation Bill (ESB), with focus on amending tax, fiscal, and establishment laws, required for the enhancement of economic stability and growth.

The bill, driven by recommendations from the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Mr. Taiwo Oyedele, is set to deliver the Federal Government’s accelerated stability and advancement plan.

The following amendments were proposed as provisions for the Economic Stabilisation Bill:

  • Amendments to income tax laws to facilitate employment opportunities for Nigerians in the global value chain, including the digital economy. With focus on the Companies Income Tax Act amongst others, Nigerians will be able to provide services to foreign companies without requiring them to be incorporated in Nigeria. It is anticipated that the development will create new employment, income and entrepreneurship opportunities.
  • Amendments to the Foreign Echange Act, to facilitate electronic transactions over cash to increase liquidity and empower the Central Bank of Nigeria to attract international funds through foreign exchange transactions and remittances to Nigeria.
  • Zero-rated VAT and improved incentive regime to promote exports in goods, services, and intellectual property.
  • Amendments to facilitate investment in the gas sector and simplify local content requirements to ensure competitiveness.
  • Tax reliefs for private sector employers in respect of wage awards and transport subsidies provided to their employees.
  • Tax relief to companies that generate incremental employment and retain such employees for a minimum of three years.
  • Fiscal discipline and enhancement of remittances from government agencies and corporations to the Consolidated Revenue Fund of the Federal Government.
  • Collaboration with states to suspend certain taxes on small businesses and vulnerable populations, including road haulage levies and other charges on transportation of goods.
  • Introduction of a “Tax Identification Consolidation and Collaboration (TICC)” initiative to expand the tax base and create level playing field for businesses.
  • Provision of additional funding for the Students Loan Scheme.

These reforms approved by the FEC are set to be transmitted to the National Assembly for passage into law and if enacted, are expected to play a pivotal role in stabilising Nigeria’s economy and fostering long-term sustainable growth.

Additionally, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, revealed that the Fiscal Responsibility Act will be overhauled to guide government owned companies on how to share surpluses and build reserve funds from their revenues.

B. The Nigeria Revenue Service (Establishment) Bill

Furthermore, on 3 October 2024, President Bola Ahmed Tinubu introduced four critical fiscal bills to the National Assembly titled “The Nigeria Revenue Service (Establishment) Bill. The Bill is designed to modernize tax administration, enhance revenue collection efficiency, and create a comprehensive, unified tax legislation for Nigerians as enumerated below:

1. 1 Nigeria Revenue Service Bill

The Nigeria Revenue Service (NRS) Bill replaces the Federal Inland Revenue Service (Establishment) Act, 2007 (“FIRS Act”). Key reforms introduced in this Bill include:

  • Tax Collection Assistance

The NRS can now assist States, Local Governments (LGs), or other government entities in collecting taxes, provided there is mutual agreement. This provision aligns with the federal structure of Nigeria, allowing collaborative revenue generation.

  • Separation of Tax Administration.

The bill establishes tax administration as a distinct legislative framework, previously consolidated under the FIRS Act. This highlights the importance of a dedicated statute for tax governance.

1.2  Joint Revenue Board Bill

The Joint Revenue Board (JRB) Bill succeeds the previous Joint Tax Board (JTB) framework and seeks to streamline tax coordination across all levels of government. Notable provisions include:

  • Integrated Taxpayer Database

The JRB shall be responsible for maintaining a comprehensive and integrated database of all taxable persons in Nigeria, working alongside the NRS, State Internal Revenue Services (SIRS), Local Government Revenue Committees (LGRC), and other government agencies. This is a significant step toward a more centralized and efficient tax system.

  • Tax Tribunal and Ombudsman.

The Tax Appeal Tribunal (TAT), which existed under previous tax legislation, remains in place. Additionally, the Bill introduces a Tax Ombudsman—an independent arbiter to mediate disputes between taxpayers and revenue authorities, promoting transparency and fairness in tax administration.

1.3 Nigeria Tax Administration Bill

The Nigeria Tax Administration Bill outlines detailed procedures for tax registration, reporting, and compliance. Significant elements of this Bill include:

  • Mandatory Tax Identification Number (TIN).

All Ministries, Departments, and Agencies (MDAs), including non-resident entities, are now required to obtain a TIN. This mirrors provisions in the Companies Income Tax Act (CITA) and the Personal Income Tax Act (PITA), reinforcing the importance of a centralized identification system for taxpayers.

  • Upstream Oil & Gas Taxation.

Companies in the upstream oil sector are required to file both estimated and actual tax returns, enhancing transparency and predictability in tax obligations. Furthermore, they are to pay taxes on a monthly installment basis, a shift from the annual payment system previously in place.

  • VAT Fiscalisation System: The Bill introduces a Value-Added Tax (VAT) Fiscalisation System, a new electronic platform for recording and reporting taxable supplies. This is a progressive step towards improving VAT collection efficiency and reducing evasion.

2.    Nigeria Tax Bill

The Nigeria Tax Bill represents the most comprehensive reform, overhauling Nigeria’s tax system by repealing 11 existing tax laws. It consolidates various tax provisions into a unified framework. Key reforms include:

  •  Presumptive Tax Regime.

The Bill introduces a presumptive tax regime for individual taxpayers, a significant reform which shall focus on improving tax compliance from the informal sector, in line with provisions under the PITA.

  • Changes to Corporate Income Tax (CIT).

The CIT rate for small companies will be pegged at 0%, while other companies will face rates of 27.5% in 2025 and 30% from 2026. Large companies, including Multinational Enterprises (MNEs) with turnovers above ₦20 billion, will be subject to an effective tax rate of 15%, regardless of deductions or allowances. This echoes global trends in taxing MNEs based on economic activity within the jurisdiction.

  • Personal Income Tax Reforms

The Bill revises individual income tax bands, with progressive rates that increase with income. The highest marginal rate stands at 25% for income above ₦50 million.

  • Development Levy

A phased Development Levy is introduced, starting at 4% in 2025 and reducing to 2% by 2030. This levy will replace existing levies such as the Tertiary Education Tax Fund (TETFUND), NITDA, and NASENI levies. The Student Loan Fund will be the sole beneficiary of the Development Levy from 2030.

  • Tax Deductions

The Bill expands the range of eligible deductions, including interest on mortgage loans, adding to previously allowable deductions such as contributions to the National Housing Fund (NHF), National Health Insurance Scheme (NHIS), and pension funds.

3.   Tax Refund Timeline

Tax refunds are now to be processed within 90 days, while VAT refunds are to be settled within 30 days. This provision aligns with global best practices and emphasizes the government’s commitment to a fair tax system.

4.    Incentives for Tax Revenue Assistance.

Individuals or entities assisting tax authorities in generating revenue are now entitled to rewards, incentivising participation in revenue generation and compliance enforcement.

5.    Revenue Distribution and Deduction Powers.

The Accountant-General of the Federation (AGF) now has the authority to deduct funds from MDAs at source following a warrant issued to the NRS. Additionally, VAT revenue is to be distributed with 10% to the Federal Government, 55% to the States, and 35% to Local Governments, with the states and LGs sharing based on a 60% derivation formula, benefiting high-revenue states like Lagos and Rivers.

     Conclusion

The Economic Stabilization Bill is crucial for addressing Nigeria’s fiscal challenges, promoting economic resilience, curbing inflation, stabilising currency, and fostering growth by implementing measures to boost revenue, spending efficiency, and job creation while the Nigeria Revenue Service (Establishment) Bill proposed by President Tinubu serves the purpose of streamlining tax administration, enhance revenue collection, and improve fiscal accountability in Nigeria.

Author

Adeola Osifeko Esq LLB, LLM ACIS

Partner AEO Law Practice

Email: adeola@aeolawpractice.com LinkedIn: https://www.linkedin.com/in/adeola-osifeko/

THE LEGAL REQUIREMENTS FOR THE ACQUISITION OF A NIGERIAN COMPANY’S SHARES.

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Introduction.

Under the Companies and Allied Matters Act (CAMA) 2020, acquiring shares in a company, whether a private limited liability company (Ltd) or a public limited liability company (Plc) follows distinct legal procedures. Shares represent ownership in a company, and acquiring them grants an investor rights, such as dividends and voting power.

For private companies limited by shares, share acquisition requires internal approval due to limitations on public trading. Conversely, public companies limited by shares offer more flexibility, allowing shares to be acquired through stock exchange purchases for listed public companies, public offerings, rights issues, and private placements. Understanding the specific provisions for allotment and other forms of trading of shares is essential for any investor or stakeholder seeking to acquire shares in a Nigerian company.

1.    Acquiring Shares from a Private Limited Liability Company (Ltd) Under CAMA 2020

Private companies limited by shares, as governed by CAMA 2020, are subject to specific rules on how shares can be acquired. They have restrictions on the transfer of shares, as shares are not freely transferable in comparison with public companies limited by shares.[1] Below are ways in which shares are acquired in companies limited by shares.

1.1    By Allotment (Issuance of New Shares)[2]

Allotment refers to the issuance of new shares by a company, including the conversion of any security into shares in the company other than shares so allotted. By virtue of Section 149, the power to allot new shares is vested in the company, and in relation to private companies, allotment of new shares may be offered to either existing shareholders or new investors subject to the authorisation of directors as provided in the articles of association or as authorised by the directors following a special resolution passed at the company’s general meeting. Here are steps to follow:

1.1.1  Application by the Subscriber

For new companies, shares are allotted to the subscribers of the Memorandum and Articles of Association at the point of registration.[3] Subsequent investors or shareholders wishing to subscribe to the newly issued shares must apply for them by submitting a formal application. This application is typically made in response to the company’s invitation to subscribe and the subscriber shall state the number of shares s/he (in respect to an individual) or it (in respect to a corporate entity) wishes to acquire.

1.1.2  Acceptance of Application and Board Approval

On receipt of the application for allotment of shares,[4] the company shall wholly or partly allot shares to the applicant within 42 days after the receipt of the application and inform the intending investor of the number of shares allotted. Under Section 151, when an application for shares is made and subsequently accepted by the company, this acceptance constitutes a legally binding contract. The acceptance signifies the company’s agreement to allot a specific number of shares to the applicant in exchange for the consideration (payment/payment other than cash) outlined in the application.

1.1.3 Payment for the Shares

Section 152 provides that payment for shares must be made in accordance with the terms specified in the company’s articles with respect to the share allotment and section 160 wherein it further provides that the shares of a company and any premium on them shall be paid up in cash, or where the articles so permit by valuable consideration other than cash or partly in cash and partly by valuable consideration other than cash.

Typically, payment for shares must be made on or before the date specified in the allotment notice.

1.1.4 Return of Allotment to CAC

The legal requirement is that within one month after making the allotment,[5] the company must file a return of the allotment with the Corporate Affairs Commission (CAC). The return includes details of the allotment, such as the names, address and description of the allottees, and the number of shares allotted to each shareholder/investor.

1.1.5 Issuance of Share Certificate and Update of the Register

Once payment is received and the shares are allotted, the company is obligated to:

  • Register the allotment with the Corporate Affairs Commission within one (1) month as required by law.[6]
  • Issue within two months after the allotment of any of its shares, a share certificate to the subscriber as proof of ownership[7]  and;
  • Update the register of members to reflect the new shareholder.[8]

1.2   Acquisition of Shares by Transfer (Purchase from an Existing Shareholder).[9]

   Share transfers in a private limited company is primarily governed by section 175. This involves the sale of shares by an existing shareholder to another individual, subject to certain restrictions.

  1. Restriction on Transferability:

Section 175(1) provides that a transfer of shares shall be effected by an instrument of transfer and except expressly provided in the articles, transfer of shares restriction and the instrument of transfer shall include electronic instrument of transfer. In subsection 4, it is provided that notwithstanding the restriction of a company’s article, the shares to be transferred whether wholly or partly shall also be effected by any other form which may be approved by the company’s director.

1.2.2 Requirement of the Instrument of Share Transfer

The instrument of transfer of shares shall be executed by and on behalf of the transferor and transferee and the former shall be deemed to remain a holder of shares until the name of the transferee is entered in the register of members in respect of the share

  1. Conditions in which a share transfer may be refused:

By law, a share transfer of a share not being fully paid as well as share on which a company has a lien may be refused registration.[10]

On the other hand, the company shall recognise the instrument of transfer and register same where the following conditions are being satisfied:

  • the fees determined by the company is paid in respect of the instrument of transfer
  • the instrument of transfer is accompanied by the certificate of the shares to which it relates and as such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer.
  • the instrument of transfer is in respect of only one class of shares: and
  • If a company refuses to register a transfer of any share, it shall, within two months after the date on which the transfer was lodged with it, send notice of the refusal to the transferee.
  1. Transmission of Shares[11]

The law provides for the transmission of shares in cases where a shareholder passes away or becomes incapacitated. This process occurs by operation of law and differs from the voluntary transfer of shares, which is initiated by a shareholder during their lifetime.

1.3.1   Transmission in the Case of a Deceased Shareholder

When a shareholder dies,[12] it is required that the company only recognizes the following individuals as having the authority to deal with the deceased’s shares:

  • The legal representative of the deceased shareholder (in the case of sole ownership of shares); or
  • The surviving joint holder (if the deceased was a joint holder of shares).These individuals are recognized by the company as being entitled to inherit or manage the shares of the deceased/bankrupt shareholder.

1.3.2  Evidence of Transmission

According to Section 179(2), the company may require the legal representative or surviving joint holder to provide evidence to the directors of the company that proves their right to act on behalf of the deceased or bankrupt/incapacitated shareholder. Such evidence could include a death certificate, grant of probate, or letters of administration, depending on the circumstances and the company’s requirements, judgment for a bankrupt shareholder or a medical report for an incapacitated.

The provision further provides that the legal representative or surviving joint shareholder has the right to nominate either themselves as the holder of the shares; or another person to be registered as the shareholder in place of the deceased.

If the legal representative chooses to nominate themselves, they must provide written notice of their intention to the company and sign the necessary documents.[13] If they wish to nominate someone else, they must execute a transfer of shares instrument on behalf of the deceased/bankrupt/incapacitated person in favour of the nominated person.

1.3.3 Company’s Rights Regarding Transmission

Under Section 179(4), all the limitations, restrictions and provisions of CAMA 2020, the company’s articles relating to rights to transfer and the registration of transfer of shares, are applicable to such notice as mentioned in subsection (3) as if the death or bankruptcy or incapacitation of member had not occurred and the notice or transfer was signed by that member. The company retains the right to refuse or suspend the registration of the transmission of shares. This refusal can be based on the same grounds that would apply to the transfer of shares, such as failure to comply with the company’s articles of association or other conditions. This section ensures that companies maintain control over the entry of new shareholders, even when the transmission arises by the operation of law.

2.   Acquiring Shares from a Public Limited Liability Company (PLC) Under CAMA 2020

Public limited companies (Plcs) can issue and trade shares depending on if it listed or unlisted, and various methods exist for these acquiring shares. Under CAMA 2020, public companies can offer their shares to the general public through several avenues, including public offerings, rights issues, private placements, and buying on the stock exchange for publicly listed companies.

2.1     Public Offering (IPO)[14]

A Public Offering or Initial Public Offering (IPO) is when a company offers shares to the public for the first time. Public offerings are regulated by the Investment and Securities Act (ISA) and the Securities and Exchange Commission (SEC).

2.1.1     Review the Prospectus:

When a company issues shares to the public, it must issue prospectus, which contains all the accurate and necessary information about the company and the share offering. Investors can use this document to make informed decisions about purchasing the shares.

  • Application and Payment:

If you wish to purchase shares based on the IPO, you must submit an application form along with payment. The shares are usually priced per unit in the prospectus.

  • Allocation and Issuance of Share:

After the IPO closes, the company will allocate shares to the applicants. If successful, the shares will be credited to your Central Securities Clearing System (CSCS) account, and you will become a shareholder.

2.2     Rights Issue[15]

A rights issue allows a company whether public or private company limited by shares to raise additional capital by offering more shares to its existing shareholders, often at a discounted price. This process is governed by Section 142 on pre-emption rights. Notwithstanding, the following steps are required for rights issue:

2.2.1 Rights Circular: The company will send a rights circular to existing shareholders, informing them of the number of new shares available and the price at which they can be purchased.

2.2.2 Subscription to Rights: As an existing shareholder, you have the right to purchase additional shares in proportion to your current shareholding by subscribing to the rights issue. Once the rights issue is complete, the company will a subsequent share certificate evincing the issue the new shares.

2.2.3 Renunciation and Trading of Rights: If you do not want to participate in the rights issue, you can renounce your rights and sell them to another investor.

2.3  Private Placement[16]

Private placement refers to the sale of shares to a select group of investors, typically institutional or high-net-worth individuals. This method is often used by public companies to raise funds quickly and is governed by Securities Exchange Commission Rules

Rule 339 defines private placement as the issuance of securities by a public company to a select group of persons. Rule 340 further outlines the conditions under which public companies must comply for SEC approval.

2.4   The private placement process involves several key steps:

Board Resolution: The company’s board of directors passes a resolution to hold a general meeting to authorize the private placement.

General Meeting: The general meeting is held, and a special resolution is passed by the shareholders to approve the private placement, specifying the number of shares and the price.

Publication of Notice: The notice of the general meeting is published in two national daily newspapers.

Application to SEC: The company applies to the SEC for approval, attaching necessary documentation such as proof of the general meeting notice and the special resolution, and evidence supporting the need for the private placement.

Offer to Subscribers: The offer is made to a limited number of subscribers (not exceeding 50) for a period not exceeding 10 working days unless otherwise extended by the SEC.

Compliance with Rule 341: The private placement must not be advertised or discussed in the media. Any breach of this rule could result in the suspension or withdrawal of SEC approval, and capital market operators advising on the placement may also face sanctions.

Issuance of Shares: After the placement is complete, the company issues the shares to the selected investors, and they are entered into the register of members.

2.4 Stock Market Purchase[17]

Once a public company is listed on the Nigerian Exchange (NGX) , its shares can be bought and sold freely in the primary and secondary market.

NGX operates a fair, transparent, and orderly market, connecting top African enterprises with global investors. Investors can participate in the market by acquiring securities either through the primary market (during new offerings by issuers) or by trading existing listed securities on the secondary market via the NGX platform.[18]

To invest in either the primary or secondary market, an investor must engage a securities dealer/stockbroker who is a registered Trading License Holder of NGX. This broker will facilitate both account opening and trading activities. As part of the account opening process, investors are required to submit documents to their broker that fulfill the Know-Your-Client (KYC) regulatory requirements.

Both domestic and foreign investors who wish to trade on NGX can opt to hold their assets with the Central Securities Clearing System Plc (CSCS), which serves as the central depository for clearing and settling transactions in the Nigerian capital market. Investors may do this through their appointed stockbroker or a licensed domestic custodian of their choosing.

Checklist Under CAMA 2020:

Pre-emption Rights: Existing shareholders in both private and public companies have the right to be offered new shares before they are made available to others (Section 142).

Register of Members: After any share acquisition (whether by allotment, transfer, or transmission), the company must update the register of members as provided in section 109 CAMA 2020 for private companies or the index of members for public companies pursuant to section 111 CAMA 2020.

Share Certificate: After a transfer, transmission or allotment of shares, the company must issue a share certificate.

Written by Adeola Osifeko Esq LLB, LLM, ACIS

Partner at AEO Law Practice, Corporate Commercial Group

[1] Companies and Allied Matters Act 2020 s22

[2] CAMA 2020, s149

[3] CAMA 2020, s27(1),(2),(3) & (5)

[4] CAMA 2020, s150(1)(c)

[5] CAMA 2020, s154(1)

[6] CAMA 2020, s156(1)

[7] CAMA 2020, s171(2)

[8] CAMA 2020, s109

9. CAMA 2020, s171, 175,176 & 177

[10] CAMA 2020, s176(3)

[11] CAMA 2020, s179

[12] CAMA 2020, s179(1)

[13] CAMA 2020, s179(3)

[14] Investment and Securities Act 2007 (ISA), s67

[15] CAMA 2020, s142

[16] Securities Exchange Commission Rules & Regulations 2013, rr339 & 340

[17] Nigerian Exchange Group, “Becoming A Member” < https://ngxgroup.com/exchange/trade/becoming-an-investor/> Accessed on 30 September 2024.