Nigeria’s business registration and regulation agency, the Corporate Affairs Commission (CAC) has unveiled a substantial amendment that will impact startups with foreign involvement. The new regulation by the agency is stipulating a minimum paid-up capital requirement of N100,000,000 (one hundred million naira).
The move, which was released via a memo and is under the Revised Handbook on Expatriate Quota Administration (2022), aims to regulate and standardise the involvement of foreign entities within Nigerian startups.
In the announcement, the CAC officially declared the commencement of the implementation of the N100,000,000 minimum paid-up capital prerequisite for companies with foreign participation.
Furthermore, the CAC highlighted the significance of compliance with this requirement, stressing that the processing of incorporation applications for companies with foreign involvement will strictly adhere to the prescribed minimum paid-up capital threshold.
For existing companies already operational but falling short of the stipulated minimum paid-up capital, the CAC has provided a grace period. The commission has granted a grace period of six (6) months from the date of the notice for existing companies to align with the revised financial mandate.
These companies, which have foreign participation and currently possess less than N100,000,000 in paid-up capital, are urged to ensure compliance within a specified timeline.
Failure to meet this requirement within the stipulated timeframe will lead to the initiation of proceedings for the compulsory winding-up of such companies under Section 571 (e) of the Companies and Allied Matters Act of 2020.
The CAC’s move signifies a significant shift in the regulatory framework, aiming to balance foreign participation with financial stability within Nigeria’s startup ecosystem. The ensuing months will witness how this regulation shapes the ecosystem for startups with foreign engagements and influences investment dynamics within the Nigerian business realm.
Just recently, the commission said it was going to delist over 100,000 registered companies from its database.
This will come as a consequence for organizations that fail to live up to the requirements of registered companies. This was revealed by the Registrar-General and Chief Executive of the commission, Alhaji Garba Abubakar during a training.
