EEL Amount and Payment Cycle

An annual sum of $15,000.00 (Fifteen Thousand USD) is payable for each director and an annual sum of $10,000 (Ten Thousand USD) is payable for other categories of expatriates. This payment applies to any expatriate that is employed for 183 days or more.

Liability to pay the EEL

There appears to be no distinction on the size of the company and any company which employs expatriates (defined as non-Nigerians citizens) within Nigeria are liable to pay the EEL. This includes multinational companies, small and medium size enterprises (SMEs).

EEL Coverage

The EEL applies to private sector companies utilizing foreign workforce or relying on expatriate labour. These companies include but not limited to construction, agriculture, oil and gas, telecommunication, maritime and shipping, etc. It should be noted that the coverage of the EEL is in no way limited to the aforementioned industries as the coverage covers all industries engaging expatriate talent.

Duration of Residency/Employment

To be liable to pay the EEL, an expatriate worker must have been employed for a period not less than 183 days within a year. The 183 days may be calculated and spread across a period exceeding one fiscal year.

An employer would still be liable to pay the EEL in a situation where the expatriate is temporarily seconded or assigned to work in a foreign country provided the concerned expatriate occupies a Quota Position in a company operating in Nigeria.

Exemption from the EEL

The EEL does not apply to all accredited staff of diplomatic missions and government officials.

The Role of the Nigerian Immigration Service (NIS)

The NIS is responsible for determining the expatriates which fall within the purview of EEL. It is also responsible for enforcing the EEL in line with the provisions of the Nigerian Immigration Act, 2015 and the applicable Nigerian Visa Policies.

Reporting and Compliance

The Government is required to provide online platforms for employers of expatriates in Nigeria to report employment details of expatriates electronically.

Both the employers and expatriate employees have reporting and compliance obligations. Employers are required to maintain comprehensive records which include salary details, work permits, etc. on expatriate employees. The employers are also mandated to provide timely reports to government and notify any change in expatriate employment circumstances to the appropriate government agencies. There is also a need for employers to comply with filing deadlines.

The expatriate employee has the responsibility to ensure that accurate personal information and employment details are reported to employers and government.

Compliance Audits

The government agencies responsible for EEL enforcement may conduct compliance audits for accuracy of information provided to it and may also crosscheck the information provided with data from other sources such as immigration records and tax filings.

Offences, Sanctions and Penalties

Sanctions and penalties have been provided for various infractions relating to the EEL as follows:

1. Providing false information, returns, statements or representations to an immigration officer is punishable with imprisonment for a term of five years or a fine of N1,000,000 or both.
2. Failure to file EEL within 30 days attracts a fine of N3,000,000
3. Failure to register new employees within 30 days attracts a fine of N3,000,000.
4. Submission of forged or falsified information attracts a fine of N3,000,000.
5. Failure to renew EEL within 30 days to the expiry date attracts a fine of N3,000,000.

Conclusion

The EEL has been introduced to regulate and balance the benefits of expatriate employment with the protection of Nigeria’s local labour markets. The EEL is payable by any company employing expatriate employees in Nigeria. The EEL is enforced by the NIS and there are reporting and compliance obligations imposed on employers and expatriate employees. Sanctions and penalties also apply where there is a failure to comply with obligations imposed by the EEL handbook.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post What you Need to Know about the New Nigeria Expatriate Employment Levy first appeared on Goldsmiths Solicitors.

2023 was election year in Nigeria. It therefore was no surprise that we saw a lot of activities in the legal space in Nigeria, not least in the enactment of new laws, handing down of judicial decisions and the like. In our 2023 legal recap, we have highlighted some of the major legal, regulatory, and judicial changes that occurred.  This recap is divided into four parts representing four quarters of the year. In each quarter, we deal with all the major legal changes that occurred therein.

1^st Quarter (January – March 2023)

A remarkable and significant part of the first quarter was the signing into law of the Business Facilitation (Miscellaneous Provisions) Act 2023 and the Copyright Act 2023. The courts also handed down judgements on important issues surrounding which court should be the court of first instance for investments matters and the power of the Federal Inland Revenue Service (FIRS) on tax collections.

• On 20 January 2023, the Federal High Court sitting in Lagos declared in the suit between Wheatbaker Investment and Properties Limited v. EFCC and FIRS, that the Economic and Financial Crimes Commission (EFCC) lacked the statutory power to assume the power for the assessment, collection and enforcement of payment of taxes in Nigeria. The court held the appropriate agency with the power to do so is the Federal Inland Revenue Services (FIRS).
• The Supreme Court in the case between Mufutau Ajayi v. SEC and Ors., declared that the Investment and Securities Tribunal (IST) is the court of first instance for the resolution of capital market issues and not the Federal High Court.
• On 13 February 2023, former President Muhammadu Buhari assented to the Business Facilitation (Miscellaneous Provisions) Bill 2022. The Business Facilitation Bill was aimed at ensuring the ease of doing business in Nigeria.
• On 7 March 2023, the CBN issued the Operational Guidelines for Open Banking in Nigeria. It provides a framework that defines the principles for data sharing across the banking and payments system to promote innovations and broaden the range of financial products and services available to bank customers.
• The former President, Muhammadu Buhari signed the Fifth Alteration to the Nigerian Constitution, 1999 Bills into law. One of the significant changes made by this was for the financial independence of States House of Assembly and States Judiciary. Another of the bills which is the Fifth Alteration (Bill) No.33, allows states to generate, transmit and distribute electricity.
• On 17 March 2023, former President Muhammadu Buhari signed the Copyright Act 2023 which repealed the extant Copyright Act. The new Copyright Act aims to bring Nigerian copyright in tandem with 21^st century developments and protect the rights of authors among other innovative provisions.

2^nd Quarter (April – June 2023)

The second quarter saw the enactment of laws and the issuance of key financial regulations and guidelines by the Central Bank of Nigeria. Some of the laws enacted in this quarter include the Data Protection Act and the Electricity Act. The government also issued and launched national policies such as the National Dairy Policy to ensure the stability and sustainability of the sector. The courts also handed down some important judgements. Below are some of the highlights of the 2^nd quarter:

• On 5 April 2023, former President Muhammadu Buhari inaugurated the National Council for Digital Innovation and Entrepreneurship, a body established by the Startup Act 2022 and tasked with the responsibility of implementing the provisions of the Nigerian Startup Act, 2022.
• On 18 April 2023, the Federal High Court delivered judgement in Emmanuel Ekpenyong v. National Assembly & Ors which nullified sections 839, 842. 843, 844, 845, 846,847, 848 and 851 of the Companies and Allied Matters Act (CAMA) 2020 for being inconsistent with the provisions of the Constitution of Nigeria, 1999 particularly sections 36 (1), 38 and 40. The court held that the power granted to the Corporate Affairs Commission (CAC) to administer incorporated trustees under the above-mentioned sections of the CAMA infringed on the applicant’s right to freedom of thought, conscience and religion and the right to peaceful assembly.
• On 3 May 2023, the CBN issued the Guidelines for the Regulation of Representative Offices of Foreign Banks in Nigeria. The guidelines provide for the permissible and non-permissible activities of approved representative Offices of Foreign Banks in Nigeria and the licensing requirements.
• On 10 May 2023, the Federal High Court sitting in Abuja decided in the Incorporated Trustees of Media Rights Agenda v. National Broadcasting Commission (NBC), that the NBC lacked the power to impose fines on broadcast stations. The court also set aside the fines imposed on 45 broadcast stations on 1 March 2019.
• On 16 May 2023, the Federal Government launched the National Agricultural Seed Policy 2022. The policy revised the 2015 policy and it is aimed at ensuring that farmers have access to improved quality seeds among other important objectives.
• On 28 May 2023, the Federal Government announced the introduction of the Brown Card which is the legal instrument to confer permanent residency on non-Nigerians and also enabling them to live and work in Nigeria.
• On 29 May 2023, Nigeria sworn in a new president, Bola Tinubu, who on 8 June 2023 signed the Constitution of the Federal Republic of Nigeria, 1999 (Fifth Alteration) (No. 37) Bill, 2023 raising the retirement age for High Court judges from 65 years to 70 years.
• On 9 June 2023, President Bola Tinubu signed the Electricity Act 2023 into law which repealed the Electric Sector Reform Act, 2005. The Act now recognizes the power of federating states to regulate their electricity markets by issuing licenses to private investors to operate mini-grids and power plants within the states.
• On 12 June 2023, the president, Bola Tinubu signed the Student Loan Act 2023 which sets the conditions to provide financial support to indigent students in the form of interest-free loans.
• On 12 June 2023, the president, Bola Tinubu signed the Data Protection Act 2023. The Act established the Nigerian Data Protection Bureau, the regulatory authority responsible for enforcing the provisions of the Act. It also provides the legal basis for the processing of data, cross-border transfer of data, general obligations of data controllers and processors, rights of data subjects and penalties for violations among other salient provisions.
• On 14 June 2023, the CBN announced the operational changes to the foreign exchange market in Nigeria. The CBN by the announcement abolished segmentation, collapsed all segments into the Investors and Exporters (I&E) window, re-introduced the “willing buyer, willing seller” model at the I&E window. The RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme were also stopped with effect from 30 June 2023.
• On 27 June 2023, the CBN issued the Guidelines on Contactless Payments in Nigeria. The guidelines provide the minimum standards and requirements for the operation of contactless payments in Nigeria and also specify the roles and responsibilities of stakeholders such as issuers, payment and card schemes, merchants, etc.

3^rd Quarter (July – September 2023)

This quarter saw a lot of policy and regulatory activities by the regulators in Nigeria. The Federal Inland Revenue Service (FIRS) directed all international shipping lines to settle their tax liabilities no later than 31 December 2023 or risk legal actions. The Nigerian Civil Aviation Authority also directed compliance with the regulations requiring mandatory valid insurance covers for airlines and allied service providers. The President, Bola Tinubu, also signed executive orders some of which changed the commencement date for some tax laws. Below are some of the highlights of the 3^rd quarter:

• The President, Bola Tinubu signed four Executive Orders. Some of the Executive Orders include the Finance Act (Effective Date Variation) Order 2023 which deferred the commencement date of the changes contained in the Finance Act 2023 from May 2023 to 1 September 2023 in line with the National Tax Policy; and the Customs, Excise Tariff (Variation) Amendment Order, 2023 which deferred the commencement date from 27 March 2023 to 1 August 2023.
• On 12 July 2023, the Federal Government disclosed its intention to amend the Cybercrime Act 2015 to address the threats posed by Artificial Intelligence and other emerging technologies.
• The Court of Appeal delivered judgement in Federal Road Safety Commission (FRSC) v. Darlington Ugo Ehikim to dismiss the appeal filed the FRSC. The Court of Appeal upheld the judgement of the Federal High Court that ruled that the FRSC can only operate on federal roads and do not have the right to operate on state and local government roads.
• On 25 July 2023, CAC announced that it shall discontinue manual submissions for winding up and dissolution, receivership, company voluntary arrangements, administration and netting with effect from 7 August 2023.
• On 31 July 2023, CAC disclosed its plan to strike off the names of 100,000 companies from its register for failure to file annual returns for a period of 10 years. Further to this disclosure, on the same day, CAC published the names of the 94,581 companies to be struck off its register.
• On 2 August 2023, the Court of Appeal in the case of Minister of Interior & Ors v. Eti-Osa Local Government & Ors, set aside the judgement of the Federal High Court which stopped the Federal Government from further registering marriages within some Local Government Councils. The Court of Appeal held that both the Federal Government and Local Government Councils have the legal authority to celebrate, contract and register marriages.
• On 11 August 2023, the Nigerian Civil Aviation Authority (NCAA) directed all airlines and allied service providers in the aviation industry to comply with the Nigerian Civil Aviation Regulations (Nig. CARs) 2022 which became effective from 10 July 2023. The regulations require airlines and allied service provides not to operate unless they have adequate and valid insurance cover.
• On 21 August 2023, the Federal Inland Revenue Service (FIRS) directed international shipping companies operating within Nigeria’s territorial waters to settle any pending tax liabilities by 31 December 2023 failing which the FIRS may commence legal actions against non-complying international shipping companies.
• On 20 September 2023, the Central Bank of Nigeria (CBN) announced that manual applications for Microfinance Bank licence would end by 31 December 2023. The CBN also unveiled a new platform for the submission of Microfinance Bank licence applications known as the CBN Licensing, Approval and Other Requests Portal (CBN LARP).

4^th Quarter (October – December 2023)

This quarter was remarkable especially as Nigeria won the case against Process and Industrial Development Limited (P&ID) at the Business and Property Court in London effectively putting an end to a long running legal case which had the potential of enforcing an $11 billion arbitration award against Nigeria. There were also important decisions handed down by the local courts. One such case is the decision of the Federal High Court which declared portions of the tax appeal rules as unconstitutional for constraining the right of appeal of a taxable person. The regulators also issued guidelines and regulations that apply to various sectors. Below are some of the highlights of the 4^th quarter:

• On 4 October 2023, the Nigerian Minister of Interior, disclosed that the Federal Government has started taking steps to review Nigerian visa on arrival and passport policies.
• On 7 October 2023, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) issued and presented the first Wholesale Gas Supply Licence pursuant to section 142 of the Petroleum Industry Act 2021 to Ohuru Trading Limited.
• The Nigerian Communications Commission (NCC) issued the Conditions for Offering Closed user group (CUG) Services in the Nigerian Telecom Industry to regulate the provision of CUG services in Nigeria. The conditions were scheduled to come into operation on 1 November 2023 and would remain valid until reviewed by NCC.
• On 10 October 2023, the National Health Insurance Authority (NHIA) launched the National Health Insurance Act Operational Guidelines 2023 which clarifies the roles, responsibilities and obligations of various stakeholders and facilitates the implementation of health insurance in Nigeria.
• On 23 October 2023, Nigeria won the long running dispute in the Business and Property Court in London in the suit against Process & Industrial Developments Limited (P&ID) in a judgement delivered by Justice Robert Knowles. The court also stopped the enforcement of the $11 billion arbitration award by P&ID on the ground that the process that led to the award of the contract to P&ID was manifestly fraudulent.
• On 1 November 2023, Enugu state government stated that courier operators in the state must obtain the requisite licence to operate no later than 1 December 2023. The directive would see courier operators keep and maintain pickups and delivery records and see their riders abide with strict regulations.
• On 2 November 2023, CAC issued the Public Notice on the Full Application of Penalties for Failure to File Annual Returns by Companies and Recovery of Penalties Against Company Directors and Officers. By the public notice, CAC advised companies to file their annual returns as CAC shall commence the enforcement of the strict penalties prescribed by the Company Regulations 2021 by 1 January 2024.
• On 9 November 2023, in the case of Joseph Bodunrin Daudu SAN v. Minister of Finance, Budget and National Planning & 2 Ors, the Federal High Court nullified certain sections of the Tax Appeal Tribunal (Procedure) Rules 2021, the Federal High Court of Nigeria (Federal Inland Revenue Service) Practice Directions 2021, and the Federal High Court of Nigeria (Tax Appeals) Rules 2022 which require the payment of fifty percent of disputed assessed tax before appeal as unconstitutional by constraining the constitutional guaranteed right of appeal.
• On 14 November 2023, in the case of Maritime Workers Union of Nigeria v. Incorporated Trustees of Freight Forwarders Transport Association & Ors, the National Industrial Court of Nigeria sitting in Port Harcourt, Rivers State declared that the Corporate Affairs Commission does not have the power to register trade unions.
• On 5 December 2023, CAC announced that it shall begin the implementation of the N100,000 million minimum paid-up capital for the incorporation of companies with foreign participation in Nigeria. It also directed existing companies with foreign participation with less than N100,000 million minimum paid-up capital to increase it to meet the threshold within 6 months beginning from 5 December 2023 failing which they shall be met with compulsory winding up proceedings at the instance of CAC. The CAC subsequently noted that reference should have been to “issued capital” and not “paid-up capital” and stated that it shall issue an amended notice to reflect minimum issued capital.

Conclusion

2023 has been an interesting year in the Nigerian legal and regulatory landscape. The regulators were actively issuing important rules and regulations to address and provide guidance on financial, corporate, tax, insurance matters, etc. New laws such as the Electricity Act, Data Protection Act and Copyright Act were also enacted. The courts handed down important decisions which put a finality to some of the assumed powers of certain government agencies such as the FIRS and CAC. Importantly, Nigeria won the case against Process and Industrial Developments Limited (P&ID) for the enforcement of the $11 billion arbitration award in London in what was described as a manifestly corrupt contract.

We use this opportunity to wish all our clients a very Merry Christmas and best wishes for the New Year 2024. Thank you all for your support.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post Goldsmiths Solicitors – Legal Recap for the Year 2023 first appeared on Goldsmiths Solicitors.

Like in all common law jurisdictions, relationships between employers and employees in Nigeria are primarily governed by their contracts of employment and any applicable employment laws for the time being in force. Contracts of employment would typically deal with issues such as nature of work, hours of work, emoluments, holidays, sickness, termination, notice period, disciplinary procedures, etc. Despite the provisions of the contracts, disputes still arise between the parties. Some of the issues that lead to disputes in employment include termination without notice, failure to follow laid down procedure/policies, non-payment of termination benefits, failure to give notice of termination, withholding or deduction of salaries, etc. When this happens, the aggrieved party mostly the employee would usually issue proceedings against the employer at the National Industrial Court after making demands of the employee. The court with exclusive jurisdiction to deal with employment disputes in Nigeria is the National Industrial Court.

Legal Considerations for Employers

Prior to any termination of employment, it is very expedient that employers carry out some house-keeping with respect to important issues that may arise in the course of termination. Importantly, some of the legal issues which employers are expected to consider in the termination of any employment contact can be categorized into pre-termination, during termination and post-termination.

Pre-termination

The legal issues which employers should avert their minds to and effectively consider before the termination of the employment of an employee includes:

1. Review of Employment Contract: Prior to terminating any employment, it is important for the employer to thoroughly review the terms and conditions of the employee’s engagement and familiarize themselves with the provisions of the contract. Particular attention should be paid to issues like notice period, payment in lieu of notice, outstanding benefits including bonuses, return of company assets, etc.
2. Review of the Employment Laws: In addition to the review of the contract, employers should ensure they review the relevant laws governing their relationship and specific industry. Some local laws protect certain industries and it is important that any termination complies with the provisions of industry specific laws, like local content laws.
3. Compliance with Company’s Policies: Most organizations would have company policies usually contained in the staff handbook. The handbook would typically deal with issues such as disciplinary procedure, warnings, suspensions, definition of (gross) misconduct, payment in lieu of notice and the like. It is very important that prior to any termination an employer familiarizes itself with these policies and ensure that due process is followed and that the letter and spirit of the policies are complied with.
4. Disciplinary Hearing: Some terminations would be as a result of breach of company policy such as conflict of interest, insubordination, habitual lateness to work, misuse of employer’s resources, absence without authorization, etc. In such situations, employers are also expected to conduct disciplinary hearings for any employee that breaches any of the employer’s policies. The essence of the disciplinary hearing is to ensure that the employee is given the opportunity to explain themselves and for the employer to consider the next step of action which is either to accept the employee’s explanation, warn, suspend, or dismiss the employee. Whatever is the case, employers must ensure that they comply with their own laid down disciplinary procedure. Contemporaneous notes must be kept of the proceedings and any decision made during the disciplinary process must be in writing. Any person subjected to any such proceedings must be given a fair hearing. The courts are likely to find that the employee was not given a fair hearing if the laid down procedure was not followed.

During Termination

Having followed some or all of the steps outlined above and satisfied that the employment should be terminated, it is important that the employer considers the issues discussed below during the termination process.

1. Termination Letter: In the course of terminating employment employers are required to issue termination letter to the employee. The termination letter would inform the employee of the reason for the termination of the employment. If the termination was due to a breach of policy resulting in a disciplinary hearing, it is important to set out the allegations against the employee and the findings made as part of the termination process. The letter will also inform the employee whether or not the termination is immediate and without notice, the effective date of termination, any payments in lieu of notice, any accrued benefits, return of company assets, including ID cards, etc.
2. Payments to the Employee: Further to the termination letter issued to the employee, the employer is required to pay any outstanding benefits including the salary of the employee for the period already worked. Except in cases of gross misconduct, in the event that, the termination is immediate, the employer is required to pay the employee’s the required salary in lieu of notice as set out in the contract. Other earned entitlements such as bonuses and allowances are also to be paid to the employee within reasonable time upon termination.
3. International Best Practices: Employers have an obligation to ensure that every action taken with respect to the termination or dismissal of employees complies with international labour best practices. Over the years, the National Industrial Court of Nigeria has departed from mere compliance with local laws and provisions of contract and decided that the processes leading to the termination or dismissal of employees must comply with international labour best practices. For example, it used to be the practice in Nigeria to simply state in a termination letter that an employee’s services ‘were no longer required’. The NIC has held over several cases that an employer cannot now terminate the employment of an employee without stating the reason for such termination. It is therefore very important that employees look beyond the mere provisions of the contract of employment and local laws when considering terminations.

Post-Termination

Despite following the above steps, an employee who is terminated could still be aggrieved by the termination and take steps to claim compensation after the termination. If this occurs, some of the steps to be taken by the employer are highlighted below.

1. Letter Before Action: It is usual for an employee who is dissatisfied by the termination of his employment to issue letter before action to his employer. This is usually done through the employee’s lawyers but it is not unusual for the employer to receive one directly from the employee. A letter before action would typically contain the purported ways in which the former employees say they are dissatisfied, proposed claims and demands of the employee and an ultimatum that the employer meets the demands of the employee within a particular time. It would usually end with a threat that if the demands are not met within the time stated, legal action shall commence.

2. Seek Legal Advice: An employer that has received a letter before action is expected to seek legal advice immediately with respect to the proposed claims and demands of the employee in order to determine how best to respond to the notice before legal action. It is best to proceed on the basis that legal action shall be commenced if there is no response by the employer within the time stated in the letter before action.

3. Respond to Notice before Legal Action: Having assessed the demands made in the letter before action and the all the processes leading up to the termination of the employment, the employer is expected to respond appropriately to the letter before action. There are several ways to respond to a letter before action. First, the employer could effectively respond by rejecting the claims and demands of the employee where employer is of the view that the termination has fully complied with the employee’s contract, the company policies and the law. The employer could also respond by paying the demands made in the letter before action in full or they could respond by making an offer or calculating what they say is the former employee’s entitlement following their termination. Whatever the case, the general advice is never to ignore a letter before action when received.

4. Legal Action: It could be the case that an employee commences legal action against his employer despite the employer’s response to the employee’s letter before legal action. The legal action by the employee will set out the case of the employee and his demands before the court. The employer is required to promptly seek legal assistance in defending the legal action commenced by the employee.

Conclusion

The relationship between employers and employees in Nigeria are mostly governed by their contracts of employment and the applicable employment laws. Employers are expected to have regard to some legal considerations before, during and post-termination of employments. Before the termination, employers are required to have adequately reviewed the contract of the employee, company’s policies and the law. It is also important that disciplinary hearing is conducted before termination where applicable.

During termination, the employer is required to issue termination letter which details the allegations and reasons for the termination. The employer is also required to make appropriate payments such as earned bonuses, salaries, payment in lieu of notice etc., to the employee. Employers are expected to go beyond the provisions of the contract and local laws and comply with international labour best practices. After termination, an aggrieved employee may issue letter before legal action to the employer. The employer is required respond to the letter before legal action. Finally, an aggrieved former employee may commence legal action at the National Industrial Court against the employer in which case the employer is required to seek legal assistance to defend the legal action.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post Termination of Employment in Nigeria: Legal Considerations for Employers. first appeared on Goldsmiths Solicitors.

The most recent attempt prior to this Act, was the Fifth Alteration (No. 33) Bill 2022 (The Electricity Constitutional Amendment), which was signed in the last days of the previous administration and altered the Constitution of the Federal Republic of Nigeria to empower states to enact laws with respect to the generation, transmission, and distribution of electricity in areas covered by the national grid system within their state.

Overview

The Electricity Act 2023 repeals the Electric Sector Reform Act, 2005. The primary objective of the Act is  to provide a comprehensive legal and institutional framework to guide the operation of a privatized, contract and rule-based competitive electricity market in Nigeria, and to attract private sector investments in the entire power value chain of the Nigerian Electricity Supply Industry (NESI).

Applicability of the Act: The Act applies throughout the country with respect to all aspects and segments of the power sector value chain in Nigeria, but nothing in the Act invalidates any law passed by the House of Assembly of any state with respect to all aspects of generation, transmission, system operation, distribution, supply, and retail of electricity within the state. What this means is that states still have the liberty to enact laws through their state Houses of Assembly to regulate state electricity market, create power stations for generation of electricity for supply, transmission and distribution to rural unserved and underserved areas.

Creation of Integrated National Electricity Policy and Strategic Implementation Plan: To further guide the overall development of the electric power sector in Nigeria for optimal utilization of resources like coal, natural gas, nuclear substance, and materials, as well as renewable energy sources for the generation, transmission and distribution of electricity, the Act mandates the Federal Government to create an Integrated National Electricity Policy and Strategic Implementation Plan. This new strategic policy implementation plan is to be initiated through the ministry in charge of power, within one year of the commencement of the Act upon approval of the Federal Executive Council (FEC) and may be reviewed periodically but not later than every five years.

Validity of the pre-privatization and post-privatization of the Nigerian Electricity Supply Industry (NESI): The Act recognizes the validity of the pre-privatization and post-privatization of the Nigerian Electricity Supply Industry (NESI) which resulted in the unbundling of the defunct National Electric Power Authority (NEPA), into 18 distinct Power generation, transmission, and distribution companies, which emerged from the Power Holding Company of Nigeria (PHCN) which was the initial holding company. The Act also provides for the regulation and supervision of competition in the substantially privatized electricity market, by ensuring that the federal minister in charge of power exercise supervisory powers and functions.

Creation of the Nigerian Electricity Regulatory Commission (NERC): The Act creates the Nigerian Electricity Regulatory Commission (NERC) as the apex regulator of the NESI. It empowers NERC to among other things, license and regulate persons engaged in the generation, transmission, system operation, distribution, supply and trading of electricity, create market rules and grid codes, safety, security, reliability and quality standards, establish consumer rights and obligations regarding the provision of electricity services, monitor the general operation of the electricity markets, and place sanctions as necessary in deserving circumstances. Any grievance with the decisions or actions of the NERC by any person with respect to the cancellation of a licence, refusal to issue or renew a licence, etc.  is subject to a review first by NERC upon an application made to it and it may give a final decision rescinding or varying its earlier decision. Any further grievance with the final decision given by NERC pursuant to its review is subject to an appeal at the Federal High Court. The Act further states that a person shall not institute and maintain a suit against NERC without first initiating and exhausting the internal dispute resolution with NERC.

Compulsory installation of meters for distribution of electricity to consumers. The Act makes it mandatory for electricity distribution licensees to install meters for distribution of electricity to consumers. There is also a corresponding mandatory obligation on all consumers of electricity to allow the installation of meters in their premises and pay bills chargeable to the electricity distribution licensees. The Act provides that where a consumer fails to pay bills, the electricity distribution licensee may cut off the consumer’s connection to power after giving notice in the manner prescribed by the NERC.

Establishment of the Power Consumer Assistance Fund: The Act establishes a Power Consumer Assistance Fund (PCAF), which shall be used to subsidize electricity supply to underprivileged power consumers. This category of underprivilege power consumers shall be determined by the Minister in charge of power in consultation with the NERC.

Creation of the Rural Electrification Agency: The Act creates the Rural Electrification Agency with the objectives of coordinating corporate bodies, private investors using renewable energy sources for rural electrification in the rural, unserved, underserved areas, thereby promoting universal access to affordable and sustainable electricity, and improving the quality of life and economic opportunities of rural, unserved, and underserved communities in Nigeria.

Key Highlights

• The Electricity Act, 2023 repeals the Electric Power Sector Reform Act, 2005, the Nigerian Electricity Management Services Agency Act, 2015, the Hydroelectric Power Producing Areas Development Commission (Establishment Act, Etc.) and its various amendment Acts
• Under the Act, the Federal Government shall support the development and utilization of renewable energy sources for the generation, transmission, system operation and distribution of electricity.
• The Transmission Company of Nigeria (TCN) is obliged to incorporate a company to be known as Independent System Operator (ISO) upon a written directive of NERC which is to be licensed by NERC to carry out the market and system operation functions such as generation scheduling, commitment and dispatch, transmission congestion management, administration of wholesale electricity market, etc. which were hitherto being exercised by TCN.
• A licence is required for electricity generation (excluding captive generation), transmission, distribution, supply trading and system operation.
• The construction, ownership and operation of an undertaking for generating electricity not exceeding 1 megawatt (MW) or an undertaking for distribution for electricity with a capacity not exceeding 100 kilowatts (KW) does not require a licence.
• The Act encourages private sector investments in the generation, transmission, distribution, and supply of electricity from renewable sources such as solar, wind or water.
• The Act provides for the introduction of tax incentives as are necessary to incentivize, promote and facilitate the generation and consumption of electric power from renewable energy sources.
• The Act recognizes the power of federating states to regulate their electricity markets by issuing licenses to private investors to operate mini-grids and power plants within the state. Interstate and international electricity delivery from such mini grids is however prohibited to state as it is within the remit of the Federal Government.
• The NERC maintains its status as the apex regulator of electricity sector in Nigeria, and until the federating states pass their own electricity laws, the NERC shall continue to regulate electricity business and markets within the federating states.
• The Act creates a Power Consumer Assistance Fund (PCAF), which shall be used to subsidize electricity supply to underprivileged power consumers.
• The Act creates the Rural Electrification Agency with the objectives of coordinating the use of renewable energy sources for rural electrification and promoting universal access to affordable and sustainable electricity, which improve the quality of life and economic opportunities.
• The Act creates offences and imposes penalties. Offences such as theft of electricity, theft of electric lines and materials, receiving stolen electricity, interference with meters or works of licensees, negligently breaking or damaging, intentionally disrupting power supply, damage to public street lightings, obstruction and impersonation, general contravention of orders and regulations and their penalties are specifically provided for under the Act.

Conclusion

The deficiency in power transmission in Nigeria has been attributed to inadequate power transmission infrastructure. The decentralization of power generation and distribution under the Electricity Act 2023, which gives states the power to develop legislations to create local markets for generation and transmission of power to all areas within their boundaries is anticipated to enhance affordable and sustainable electric power to all areas. Indeed, with the introduction of a parallel electricity market in the states, customers within the states can decide to remain connected to the national grid or opt for a mini-grid operator licensed by the state within which they reside in. The shift from fossil-based systems of energy production and consumption to renewable energy sources will create a market for renewable energy and stimulate private sector investments.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post What the Electricity Act 2023 Means for the Electricity Market and Stakeholders in Nigeria. first appeared on Goldsmiths Solicitors.

A Payment Solution Service Providers (PSSP) licence is a financial licence within the payments system which is issued by the Central Bank of Nigeria (CBN). A PSSP licence authorizes the licensee to provide and operate payment processing gateway and portals, solution/application development, and merchant service aggregation and collections services. A  PSSP license does not provide the authorization to hold customers’ funds or create and issue wallets. PSSPs are predominantly Financial Technology (FinTech) companies that enable  and facilitate  online and offline payments solutions which include collections, check-out, biller aggregation and payout services.

The CBN is the regulatory authority that issues PSSP licenses in Nigeria. The CBN also provides constant regulatory oversight over the activities of PSSP licensees in Nigeria.

Who can Apply for a PSSP Licence in Nigeria

Only a company that is duly registered with the Corporate Affairs Commission (CAC) in Nigeria and also meets the minimum share capital requirements and other regulatory requirements of the CBN can apply for a PSSP licence in Nigeria.

The Process of Obtaining a PSSP Licence from the CBN in Nigeria

A PSSP licence is processed in two stages viz:

• Approval-in-Principle (AIP): This is the preliminary stage of obtaining a PSSP license. During this stage, an application is to be made to the CBN for the grant of the license and they are expected to give an Approval-in-Principle or reject the application. Where an AIP is given, it is only valid for a period of six months. The AIP does not authorize the applicant to commence operation but only allows the applicant to take steps towards obtaining the final licence.
• Final Licence: The applicant is required to consolidate the AIP stage by taking steps to ensure its readiness for commencement of operation, notifying the CBN of its readiness to commence operation, by paying and applying for final licence. Upon the grant of the final licence, the applicant can commence its operations.

The process of obtaining a PSSP licence from the AIP stage to the final licence stage involves the following:

1. Write an application letter for a PSSP license which is addressed to the Director, Payments Systems Management Department of the CBN.
2. The application letter is accompanied with the required documents which include:

• Certificate of incorporation of the company with the Corporate Affairs Commission (CAC), with a share capital of N100,000,000 (One Hundred Million Naira)
• Memorandum and Articles of Association of the company
• Form CAC 2A (Return of Allotment of shares)
• Form CAC 7A (Particulars of Directors)
• Tax Clearance Certificate (TCC) and Tax Identification Number (TIN) of the Company
• Company’s profile
• Details of ownership
• Board structure
• Business plan
• Information Technology policy
• Dispute resolution framework
• Necessary certifications such as Payment Card Industry Data Security Standard (PCIDSS), Payment Terminal Service Aggregator (PTSA), etc.
• Evidence of payment of the non-refundable application fee of N100,000 (One Hundred Thousand Naira).
• Evidence of the deposit of the refundable minimum capital of N100,000,000 (One Hundred Million Naira). This is required to be made in full (one lump sum) and in the name of the applicant.

3. The CBN assesses the application for the PSSP licence and the accompanying documents and if it is satisfied with the application, it proceeds to grant an Approval-in-Principle.

4. Upon obtaining AIP from the CBN, the applicant then makes payment of the licence fee of N1,000,000 (One Million Naira) to the CBN designated account and proceeds to apply for a final licence within six months of obtaining AIP.

5. The CBN inspects the registered place of business of the applicant company and its readiness to commence operation and proceeds to issue the final licence if it is satisfied with the outcome of its inspection.

Validity and Renewal of PSSP Licence

PSSP licence validity period is as determined by the CBN and renewable if the operations of the PSSP licensee is satisfactory to the CBN. Recently, CBN renewed Cellulant’s PSSP licence and this shows the satisfaction of the CBN with the services of the company in providing payment solutions in Nigeria. Thus, the renewal of a PSSP licence by the CBN is a vote of confidence on the operation of a PSSP licensee.

Conclusion

A Payment Solution Service Providers (PSSP) licence is an important licence within the Nigerian payment systems which enables the provision of financial services such as the operation of payment processing gateway and portals which is utilized by merchants to accept debit or credit card purchases from customers. A PSSP licensee provides both online and offline payment solutions. A PSSP licence is obtainable from the CBN by submitting an application to the CBN and paying the required application and license fees within the stipulated timelines.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

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The protection of IP in Nigeria is mostly governed by the Trademark Act, and the Patents and Designs Act and the agency responsible is the Trademarks, Patents and Designs Registry of the Federal Ministry of Trade & Investment.

Nature of Intellectual Property

According to World Intellectual Property Organisation (WIPO), Intellectual Property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.[i]

A person’s Intellectual Property may be protected as a patent, copyright or a trademark. Patent protects your inventions such as when you invent something innovative i.e. a new software e.g.  ChatGPT. Trademark protects the name, logo and symbols pertaining to your products or brand. Copyright protects your original works such as literary, musical, dramatic and artistic works, sound recordings, broadcasts including songs, movies, published articles, computer programmes, novels, etc. Patent and trademark must be registered before they can be protected from infringement or unauthorised use in Nigeria. Even though copyright can be registered in Nigeria, registration is not mandatory as original works are automatically protected when they are reduced into a definite form of expression from which it can be perceived, reproduced or communicated directly or with the aid of any machine or device.[ii]

The Benefits of Protecting your Intellectual Property

Intellectual property are assets and as a result they can be stolen, copied, adapted, and infringed upon in any possible way if not properly protected under the appropriate system created for their protection. The infringement would also not be redressable if the intellectual property is not protected.  A well protected intellectual property guarantees the owner the following benefits:

1. It protects your creativity as the author of the work. Protecting your intellectual property ensures that your creativity is not taken advantage of without your authorization, thus leading to loss of patronage from customer and loss of revenue.
2. IP protections gives you a right to the exclusive use of your intellectual property. Any unauthorised use by any other person is an infringement that gives you the right to proceed against them to stop the unauthorised use and claim damages.
3. Protecting your intellectual property protects your brand against reputational damage. Your intellectual property such as your brand name and logo distinguish your business and set it apart from your competitors. If your intellectual property is not protected, counterfeit goods could be sold or poor services delivered with your brand name and logo which would affect the reputation and overall goodwill of your business.
4. It is a source of revenue or income. IP helps you to make money when you license, sell, or commercialize your creations or inventions.
5. IP can be used as a security for example whilst raising funds for your business. For instance, patents of an invention can be used as a collateral for securing loan.

How to Protect your IP in Nigeria

It is very important that you take adequate measures to ensure you do not disclose your IP to anyone before they are fully registered . Your IP can be protected by registering it with the Trademarks, Patents and Designs Registry, and Nigerian Copyright Commission (NCC). For start-ups seeking investors, this should be done even before pitching your idea to any investor. Disclosure of your IP before registration could prejudice or affect your right over the IP if someone registers it before you. Most IP for example trademark and patent operates on the basis of “first to file” principle. Also ensure that your works that are eligible for copyright protection should be fixed in a definite form of expression before passing it to any other person.

Remedies for Breach of IP

The owner of an IP can seek available remedies in the court having jurisdiction where his IP has been infringed. The remedies available include:

1. Damages or account of profits. Damages could be awarded to compensate for the loss suffered as a result of the infringement. Alternatively, an account of profit could be ordered to enable the IP owner to recover all the profits made by the infringer from the unauthorised use of the IP.
2. This remedy operates to stop the infringer from continuing the unauthorised exploitation of the IP.
3. Delivery up for destruction. The court could make an order mandating the infringer to deliver up the infringing products and the devices used in making them for destruction.

Conclusion

Intellectual Property is an important asset, and its value can only be fully realized and enjoyed only when fully protected. Nigeria has proven to be a major global hub for innovations in tech, music, movies, etc. It is very important that you take adequate measures to ensure you do not disclose your IP to anyone before they are fully registered. Start-ups have to be particularly careful with the IP before pitching for investors. In the event that a protected IP is infringed, there are remedies available to the IP to the owner in the form of damages, injunction and destruction of the infringing products.

[i] https://www.wipo.int/about-ip/en/ accessed on 17/11/2021

[ii] Section 1 (2) (b) of the Nigerian Copyright Act LFN 2004

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post The Benefits of Protecting your Intellectual Property in Nigeria first appeared on Goldsmiths Solicitors.

2022 has been an incredibly busy and exciting year in the Nigerian legal and regulatory environment. There were major and far-reaching changes ushered in by the regulatory authorities particularly the Central Bank of Nigeria (CBN). There were also major developments relating to Banking and Finance, Competition and Consumer Protection, Startups, Capital Markets, Insolvency, etc. In this article, we have highlighted some of the major legal, regulatory, and judicial changes that occurred in 2022. This article is divided into four parts representing four quarters of the year. In each quarter, we deal with all the major legal changes that occurred therein.

1^st Quarter (January – March 2022)

A remarkable feature of the first quarter was the issuance of regulations/guidelines by the CBN. Within this period, the Electoral Act 2022 was also signed into law by the President. The new Electoral Act introduced important changes to the conduct of elections Nigeria. Below are some of the highlights of the 1^st quarter:

• The Central Bank of Nigeria (CBN) Guidelines on the Introduction of E-evaluator, e-invoicing for Import and Export in Nigeria. Although the Guidelines were issued in January, it became operative on 1 February 2022 and requires the submission of an electronic invoice authenticated by the Authorised Dealer Bank for all import and export operations. The electronic invoice replaces the usual hardcopy final invoice.
• On 11 January 2022, President Muhammadu Buhari approved the establishment of the Nigerian Diaspora Investment Trust Fund, a private sector investment window for Nigerians in the diaspora to support direct investments in the country.
• On 18 January 2022, the Lagos State Government introduced the Consolidated Informal Transport Sector Levy to harmonize the taxes paid by transporters to the state government.
• On 26 January 2022, the Federal High Court in the case of Attorney General of Rivers State v. Attorney General of Federation and 3 Others, invalidated deductions by the Federal Government from the Federation Account for funding the Nigeria Police Trust Fund.
• The Central Bank of Nigeria Operating Guidelines for RT200 Non-Oil Export Proceeds Repatriation Rebate Scheme. This is a programme designed and introduced by the CBN to incentivize exporters in the non-oil export sector with the goal of raising $200 billion in FX over the course of the next three years.
• The Central Bank of Nigeria Guidelines for Regulation and Supervision of Credit Guarantee Companies in Nigeria. The Guidelines seeks to ensure a conducive environment for Micro, Small and Medium Enterprises (MSMEs) to be able to access credit at low interest rates from banks and financial institutions. The requirements for obtaining a license and also the activities which are permitted and not permitted by the license are contained in the Guidelines.
• On 7 February 2022, the Lagos State Governor signed the Lagos State Real Estate Regulatory Authority Bill into Law. The law introduced significant changes to the real estate landscape in Lagos State by mandating the registration of real estate practitioners.
• Electoral Act (Amendment) Act 2022 (the Electoral Act). The new Electoral Act was signed into law on 25 February 2022 by President Muhammadu Buhari. The Electoral Act empowers the Independent National Electoral Commission (INEC) to transmit election results electronically. Section 84 (12) of the Act, prohibits appointees of government, government officials from holding office while vying or contesting at party primaries.
• On 4 March 2022, the CAC stated in a circular that schools and other institutions would no longer be registrable as business names. This means they can now only be registered as a company pursuant to the Companies and Allied Markets Act 2020.
• On 23 March 2022, the Nigerian Communications Commission (NCC) issued the License Framework for the Establishment of Mobile Virtual Network Operators in Nigeria.

2^nd Quarter (April – June 2022)

This quarter witnessed a high level of enactment of laws and the issuance of regulations by the regulatory authorities. Importantly, three laws were passed to deal with the issues of corruption and terrorism in Nigeria. One of these laws (Money Laundering [Prevention and Prohibition] Act 2022) prompted the issuance of a guidelines by the CBN to bring its AML/CFT regulations in compliance with the requirements of the new law. The Securities and Exchange Commission (SEC) also issued a guideline to regulate digital and virtual assets. Below are some of the highlights of the 2^nd quarter:

• On 6 April 2022, the President signed Executive Order 11 which mandates government to institutionalize maintenance of public buildings. The National Biotechnology Development Agency Act, 2022 was also signed on the same day. The law provides the legal framework for the established agency to carry out research and create public awareness in biotechnology to encourage private sector participation.
• On 24 April 2022, the Corporate Affairs Commission announced the approval of the Insolvency Regulations 2022 by the Minister of Industry, Trade and Development. The regulations govern insolvency proceedings under the Companies and Allied Matters Act 2020.
• On 12 May 2022, the President signed the Money Laundering (Prevention and Prohibition) Act, 2022, the Proceeds of Crime (Recovery and Management) Act, 2022, and the Terrorism (Prevention and Prohibition) Act, 2022.
• The Central Bank of Nigeria Exposure Draft Guidelines for Open Banking in Nigeria. These Guidelines are aimed at enhancing competition and innovation in the banking system. It established the principles for data sharing across the banking and the payments system and broadened the range of financial products and services available to bank customers.
• The Central Bank of Nigeria Guidelines for the Registration and Operation of Bank Neutral Cash Hubs (BNCH) in Nigeria. The Guidelines are aimed at  reducing the risks and cost borne in the course of cash management and to also enhance cash management efficiency. The registration of a BNCH is to be undertaken in two stages of obtaining CBN Approval-in-Principle and final approval. The BNCH are to be licensed to take deposit and disburse high volume cash on behalf of financial institutions but cannot carry out lending activities, receive or disburse foreign currency or sub-contract their operation.
• Revised Guidelines for the Operation of Non-Interest Financial Institutions’ Instruments by the Central Bank of Nigeria. These Guidelines replaced the 2012 Guidelines and were issued to regulate the issuance of non-interest instruments by Non-Interest Financial Institutions (NIFIs) while also stipulating the requirements and terms of operation for NIFIs.
• The Central Bank of Nigeria (Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions) Regulations, 2022. The CBN issued the Regulations to bring its regulations on anti-money laundering and combatting the financing of terrorism to be in compliance with the Money Laundering (Prevention and Prohibition) Act, 2022 and safeguard the financial institutions from being used for financial crimes.
• The Securities and Exchange Commission issued the Rules on the Issuance, Offering Platforms and Custody of Digital Assets. The Rules were issued by SEC on 13 May 2022 and provide for the issuance of digital assets, registration requirements for Digital Assets Offering Platforms (DAOPS) and Digital Assets Custodians (DAC) among others.
• On 25 May 2022, the Federal High Court in the case of Femi Davies v. National Broadcasting Commission, nullified the National Broadcasting Code (6^th Edition) through which the National Broadcasting Commission (NBC) sought to regulate the practice of advertising in Nigeria. The court held that it was beyond the power of the NBC to regulate advertisement.

3^rd Quarter (July – September 2022)

The regulatory authorities in the banking and finance sector, particularly the CBN, were very active in issuing one form of guidelines or the other. The Federal Competition and Consumer Protection Commission (FCCPC) issued a guideline to regulate the activities of digital money lenders after a series of predatory practices by many digital money lenders. There was also a judgement of the Court of Appeal which re-affirmed the power of the Federal Inland Revenue Service to collect VAT from hoteliers. Below are some of the highlights of the 3^rd quarter:

• The Central Bank of Nigeria Review of the Industry Quick Response (QR) Code Presentment Options. The review was done by the CBN to enhance the flexibility offered by the use of QR codes in payments. The review provides that the implementation of the QR code for payments shall be based on either merchant-presented or consumer-presented modes.
• The Central Bank of Nigeria Exposure Draft on the Digital Financial Services Awareness Guidelines. This was developed to address gaps in consumer knowledge and practices with Digital Financial Services (DFS). The Guidelines provides for a set of principles and expectations for financial service providers to integrate in the provision of DFS to ensure consumer understanding, good treatment and positive outcomes.
• On 1 July 2022, the Court of Appeal set aside the judgement of the Federal High Court in the case of The Registered Trustees of Hotel Owners and Managers Association of Lagos v. Attorney General of Lagos State which invalidated the powers of the Federal Inland Revenue Service (FIRS) to collect Value Added Tax (VAT) from hoteliers and held that the collection of the tax is in the purview of the state government. The Court of Appeal has now held that it is the FIRS that has the authority to collect VAT. See Federal Inland Revenue Service v. The Registered Trustees of Hotel Owners and Managers Association of Lagos.
• Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending 2022. The regulations were issued by the FCCPC on 18 August 2022 to provide the FCCPC’s approach to regulating the digital lending space and makes provisions for the requirements for approval/registration to carry out the business of digital lending in Nigeria. Thus, by this Framework and Guidelines, institutions engaged in digital lending activities are to be registered with the FCCPC.
• The Revised Handbook on Expatriate Quota Administration 2022 (the Revised Handbook). On 31 August 2022, the Federal Ministry of Interior announced the issuance of the Revised Handbook. The Handbook increased the minimum share capital requirement of a company wishing to apply for business permit from N10,000,000 to N100,000,000. It also reduced the lifespan of Expatriate Quotas (EQs) from ten to seven years. However, the provisions of the Handbook are yet to be operational.
• The Advertising Regulatory Council of Nigeria (ARCON) banned the use of foreign voice-over artists and models on any advertisement which targets the Nigerian advertising space. The ban took effect on 1 October 2022.

4^th Quarter (October – December 2022)

The Nigeria Startup Act was enacted during this quarter, and it represents a remarkable achievement towards incentivizing startups in Nigeria through the incentives and programmes dedicated to spur the growth of startups in Nigeria. A sport policy was also developed and approved with the motive to position the sport sector to generate revenue while standardizing it. The CBN was also active with the issuance of several guidelines and regulations to regulate players in the Nigerian financial services sector. Below are some of the highlights of the 4^th quarter:

• Exposure Draft Guidelines for the Regulation of Representative Offices of Foreign Banks in Nigeria. The Guidelines stipulate how a representative office of foreign banks can be licensed in Nigeria. It enumerates the activities they can validly engage in in Nigeria such as marketing the products and services of their foreign parent or affiliate and states that they cannot engage directly in any financial transaction.
• Exposure Draft Guidelines on Contactless Payments in Nigeria. The Guidelines provide the minimum standards and requirements for the operation of contactless payments and specified the roles of stakeholders such as acquirers, issues, payment schemes, merchants, etc.
• Nigeria Startup Act 2022. On 19 October 2022, the Nigeria Startup Act, 2022 was signed into law. The law aims to provide an enabling environment for the establishment, development, and operation of startups in Nigeria and to position Nigeria’s startup ecosystem as the leading digital technology centre in Africa.
• National Sports Industry Policy (NSIP) 2022 – 2026. On 2 November 2022, the Federal Executive Council (FEC) approved the National Sports Industry Policy (NSIP) 2022 – 2026. The policy contains provisions on governance regulations, infrastructure development plans, incentives for private investors, etc. aimed at standardizing the Nigerian sport sector and thereby generating revenue.
• CBN Naira Redesign Policy – Revised Cash Withdrawal Limits. Citing the need to combat fraud, corruption, terrorism and to ensure that most of the money in circulation are within the banking vault, the CBN issued the policy document on 6 December 2022 to reduce the daily and weekly cash withdrawal limit and also to introduce certain requirements for withdrawing across the counter beyond the set limit at the rate of 5% fee for individuals and 10% for corporate organizations. The revision of the cash withdrawal limits was done by the CBN pursuant to the recent redesign of the Nigerian currency i.e. N200, N500 and N1,000 notes. Coming less than three months before the next general elections in Nigeria, this policy has received a lot of resistance from the political class.

Conclusion

2022 has been a remarkable year in the Nigerian legal and regulatory space and saw the enactment of the Start Up Act, the redesign of the Naira and the introduction of far-reaching regulations especially by CBN aimed and tackling corruption, fraud and financial crimes.

We use this opportunity to wish all our clients a very Merry Christmas and best wishes for the New Year 2023. Thank you all for your support.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post Goldsmiths Solicitors – Legal Recap for the Year 2022 first appeared on Goldsmiths Solicitors.

This article provides an insight into the provisions of the Guidelines.

What is Contactless Payment?

According to the Guidelines, contactless payment is a payment system that involves the use of contactless technology that enables an alternative payments method whereby payment instruments such as pre-paid, debit and credit cards, stickers, fobs, wearable devices, tokens and mobile electronic devices are used without physical contact with devices.

Aims of the Guidelines

The guidelines aim to provide the minimum standards and requirements for the operations of contactless  payments in Nigeria, and also specify the roles and responsibilities of the stakeholders involved in contactless payments in Nigeria.

Who are the Participating Stakeholders?

The participating stakeholders in contactless payments in Nigeria are:

1. Acquirers
2. Issuers
3. Payment Schemes
4. Card Schemes
5. Switching Companies
6. Payments Terminal Service Providers (PTSPs)
7. Payments Terminal Service Aggregator (PTSA)
8. Merchants
9. Terminal Owners
10. Customers
11. Any other stakeholder/participant(s) as may be designated by the CBN.

The stakeholders are required to obtain CBN’s approval for contactless payments products and for innovative use cases and value-added services.

Minimum Standards for Contactless Payments in Nigeria

The participating stakeholders that process and/or store customers’ information are obliged to ensure that their terminals, applications and processing systems comply with the below standards at the minimum:

1. PA DSS – Payment Application Data Security Standard
2. PCI PED – Payment Card Industry Pin Entry Device
3. PCI DSS – Payment Card Industry Data Security Standard
4. Triple DES – Data Encryption Standards shall be the benchmark for all data transmitted and authenticated between each party. The Triple DES algorithm is the minimum standard.
5. AES – Advanced Encryption Standards
6. EMV – the deployed infrastructure must comply with the minimum EMV requirements for Contactless acceptance
7. ISO27001 – Information Security Management System
8. Other standards as may be specified by CBN from time to time.

Each participating stakeholder (operator) is mandatorily required to maintain valid certification to the above standards and regularly review the status of its systems, applications, networks and devices, to ensure they remain compliant.

Roles and Responsibilities of Stakeholders

The Guidelines provide for the separate roles and responsibilities of the stakeholders as follows:

Acquirers

Some of the roles and responsibilities of acquirers with respect to contactless payments in Nigeria include:

1. Only CBN licensed institutions can serve as acquirers for contactless payments.
2. Acquirers shall ensure that their applications, instruments, tokens and devices meet current standards and specifications for contactless payments.
3. Acquirers shall execute contactless payments agreements with parties for utilizing contactless platforms for payments.
4. Acquirers shall be able to accept all cards or payments instruments used in Nigeria.

Issuers

Some of the roles and responsibilities of Issuers with respect to contactless payments in Nigeria include:

1. Only CBN licensed institutions shall serve as Issuers for contactless payments.
2. Issuers shall ensure that activation of contactless payment is at customer’s instance, and with full consent.
3. Issuers shall ensure that their applications, instruments, tokens and devices meet current standards and specifications for contactless payments.
4. Issuers shall activate only accounts and wallets with Bank Verification Number (BVN).
5. Issuers shall ensure that transaction limits are strictly adhered to.

Payment Schemes and Card Schemes

Payment Schemes and Card schemes have the same roles and responsibilities with respect to contactless payments in Nigeria. These roles and responsibilities include:

1. Ensuring that all contactless transactions are processed online or submitted via current processing specifications.
2. Implement a documented risk management process to identify and treat risks associated with contactless payments.

Switching Companies

Switching companies have the responsibility of ensuring that contactless transactions consummated by all payment instruments issued in Nigeria are successfully switched between acquirers and issuers.

Payment Terminal Service Providers (PTSPs)

Some of the roles and responsibilities of PTSPs with respect to contactless payments in Nigeria include:

1. Ensuring that all their terminals for contactless payments are functional at all times.
2. Ensure they have adequate support infrastructure that support coverage for merchants.
3. Ensure all deployed devices and terminals have support service contact information.
4. Prevent instrument clashes even when multiple contactless payments devices are present.

Payment Terminal Service Aggregator (PTSA)

The PTSA shall, on an annual basis, or more frequently, certify POS terminals for contactless payments to ensure POS terminals meet the approved standard for the industry and also put in place a risk management process.

Merchants

Some of the roles and responsibilities of merchants with respect to contactless payments in Nigeria include:

1. Ensuring that deployed devices and applications are available for contactless payments of goods and services.
2. Merchants shall be held liable for fraudulent contactless payments arising from negligence/connivance.
3. Contactless payment transaction value and associated charges shall be clearly communicated to the customer prior to consummation of the transaction.
4. Display the contactless symbol

Terminal Owners

Terminal owners are to ensure that all terminals and devices are compliant with appropriate minimum specifications and also ensure the implementation of a documented risk management process.

Customers

Customers have the option to opt-in by applying and consenting to applicable terms and conditions and can withdraw without prior notice to the issuer. Customers are also obliged to authenticate contactless payments transaction as may be required, exercise due diligence in carrying out contactless payments transactions and protect their payments instruments from unauthorized use.

Transaction Limit

The CBN is to determine the appropriate transaction and cumulative daily limits for contactless payments from time to time. However, stakeholders are permitted to set limits in line with CBN’s limits.

Contactless payment transactions below stipulated daily limits may not require customers’ authorization such as token, biometrics, pin, etc. while higher-value contactless payments shall require customer verification such as pin, mobile code, biometric, etc.

Sanctions and Penalties

Stakeholders are required to comply with the provisions of the Guidelines and other relevant regulations of the CBN. Failure to comply attract appropriate sanctions and penalties as may be determined by the CBN.

Conclusion

The Exposure Guidelines provides a regulatory framework for the activities and conduct of affairs of the stakeholders in the contactless payments system in Nigeria. When the Guidelines become operational, all stakeholders will be required to conduct their affairs and carry out their roles in accordance with the minimum set standards under the Guidelines.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

The post An Overview of the Central Bank of Nigeria Exposure Draft Guidelines on Contactless Payments in Nigeria first appeared on Goldsmiths Solicitors.

What is Representative Office of a Foreign Bank?

Representative office of a foreign bank is defined as an approved Representative Office of a Foreign Bank in Nigeria acting as liaison office of the foreign bank licensed by the Central Bank of Nigeria, whose sole object is to market the products and services of its foreign parent as well as serve as liaison between its foreign parent and local banks, other financial institutions, private companies and the general public.

Scope and Applicability of the Guidelines

The Guidelines shall apply to the following institutions:

1. A bank licensed under any foreign law, whose registered office is outside Nigeria
2. Any financial institution licensed under foreign law, whose primary business includes the receipt of deposits, granting of loans and/or provision of current and savings accounts.
3. Any foreign-owned operating bank/financial holding company that is foreign-based, that owns controlling interest in one or more banks or institutions whose primary business includes the receipt of deposits, granting of loans and provision of current and savings accounts.

Permissible Activities of Approved Representative Offices

Representative offices of foreign banks in Nigeria can carry out the following activities in Nigeria:

1. Marketing the products and services of its foreign parent or an affiliate of the foreign parent licensed and domiciled outside Nigeria.
2. Carrying out research activities on behalf of the foreign parent.
3. Serving as liaison between the foreign parent and local banks, private institutions within Nigeria and other customers of the foreign parent based in Nigeria.
4. Connect banks and other financial institutions to its foreign parent.
5. Connect exporters in Nigeria with potential customers in jurisdictions where the parent company operates and assisting Nigerian exporters with finding new markets through its international offices, etc.

Non-permissible Activities of Approved Representative Offices

Representative offices of foreign banks in Nigeria are not allowed to carry out the following activities:

1. Provision of services designated in Nigeria as banking business.
2. Provision of any commercial or trading activity that may lead to the issuance of invoices for services rendered.
3. Acceptance of orders on behalf of the foreign parent.
4. Engage directly in any financial transaction except for transactions that are related to those permitted.

Licensing

The licensing of representative offices of foreign banks in Nigeria is done in two stages which are:

1. Approval-in-Principle (AIP); and
2. Final license or approval

The Requirements for Approval-in-Principle (AIP) of a Representative Office

Foreign banks and other financial institutions seeking to establish an approved representative office in Nigeria and obtain the approval-in-principle of the CBN shall submit a formal application to the Governor of the CBN and shall meet the requirements for approval-in-principle which include:

1. The home supervisory authority of the applicant bank or other financial institution must have a valid Memorandum of Understanding with the CBN.
2. No objection letter (or approval) from the home supervisory authority.
3. Evidence of payment of non-refundable application fee of N5,000,000 to the CBN.
4. Board resolution in support of the foreign parent’s decision to invest in the equity shares of the proposed representative office.
5. Evidence of name reservation with the Corporate Affairs Commission.
6. Detailed business plan or feasibility report
7. Schedule of services to be rendered
8. Sources of funding for the representative office’s operations and five years financial projection
9. Draft copy of the representative office’s Memorandum and Articles of Association
10. Draft Shareholders Agreement unless it is 100% owned by the foreign parent bank.

The Requirements for Final License or Approval of a Representative Office

The promoters of a proposed representative office in Nigeria are expected to apply for the grant of the final license to the CBN not later than three months after obtaining the approval-in-principle of the CBN. The requirements include:

1. Evidence of payment of non-refundable licensing fee of N10,000,000
2. Certified true copy of certificate of Incorporation of the business
3. Certified True Copy of Memorandum and Articles of Association
4. Certified True Copy of Form CAC 1.1
5. Evidence of location of the Office for the take-off of the business
6. Names, addresses and curricular vitae of Management staff
7. Schedule of changes, if any, in the Board and shareholding after the grant of the AIP.
8. Copies of letters of offer and acceptance of employment in respect of the management team.

The CBN will also conduct an inspection of the premises and facilities of the proposed representative as a requirement for the grant of final license.

Reporting Requirements of a Representative Office

A representative office has the following reporting requirements or obligations:

1. Informing the CBN forthwith of any incidents of fraud, theft or robbery.
2. Submitting a written confirmation by the Chief Representative that the Representative Office has complied with all the requirements in its approval document to the CBN.
3. Submitting a quarterly report which summarizes the activities undertaken by the representative office.
4. A certificate from a recognized audit firm affirming that during the year no income was earned or accrued to the Nigeria office. Such certificate shall be submitted not later than 28 February of each year.

Operational Requirements of a Representative Office

The operational requirements which apply to a representative office include:

1. A representative office shall use the parent’s name only in conjunction with the description “representative office” in its documents and correspondences, including office signage, letterheads and business cards.
2. A representative office shall inform the CBN of its proposed hours of business
3. No representative office shall be relocated or closed without the prior written approval of CBN
4. Notify the CBN in writing immediately or within seven days if there is any variation to the shareholding structure that changes the control and/or majority ownership in its parent foreign institutions.

Disclosure and Examination of a Representative Office

A representative office is obliged to display the following information in a conspicuous place on its premises:

1. The name, contact details and logo of the foreign bank it is representing
2. Its authorization to operate a representative office as issued by the CBN
3. An authenticated copy of the consent letter from the home country supervisory authority.
4. An authenticated copy of the foreign bank’s valid license to conduct banking business
5. A list of the services offered by the representative office.

The representative office is to be examined periodically and risk-based on issues which are not limited to the following:

1. A review of the activities conducted
2. A general assessment of its management and supervision
3. A review of whether the office is complying with applicable laws and regulations.

A brief examination report shall be prepared highlighting any significant supervisory concerns.

Conclusion

The Guidelines provide a clear regulatory overview to what representative offices are, the requirements for the licensing of a representative office in Nigeria, the activities that can be undertaken by a representative office while also highlighting the obligations that are to be met by the representative office. The Guidelines, when issued, will streamline the activities of representative offices whilst giving the CBN more regulatory overview of their activities.

The post An Overview of the Central Bank of Nigeria Exposure Draft Guidelines for the Regulation of Representative Offices of Foreign Banks in Nigeria first appeared on Goldsmiths Solicitors.

On 28 March 2022, the Central Bank of Nigeria (CBN) issued the Guidelines for the Regulation and Supervision of Credit Guarantee Companies (CGCs) in Nigeria. The Guidelines are expected to create a conducive environment for Micro, Small and Medium Enterprises (MSMEs) to access credit at low interest rates from banks and financial institutions. The Guidelines also stipulate the activities that CGCs are permitted to undertake while outlining the non-permissible activities, application process for obtaining Approval-in-Principle and final licence as well as the corporate governance structure of CGCs.

The post Overview of the Central Bank of Nigeria (CBN) Guidelines for the Regulation and Supervision of Credit Guarantee Companies in Nigeria first appeared on Goldsmiths Solicitors.