Following the emergence of online betting, the Nigerian gambling industry has experienced extraordinary growth in the past few years. This also followed the legalization of some forms of gambling in the Nigerian Criminal Code Act, 1990. The industry has therefore continued to attract both local and international investors due to its huge potentials.

Gambling activities in Nigeria broadly include sports betting, lottery, gaming, casinos, lotto, etc. In order to legitimately operate any type of gambling activity in Nigeria, an operator must first obtain the appropriate licenses from the regulatory authorities. Using Lagos State as a case study, this article explains the regulatory requirements and processes involved in obtaining sports betting license in Lagos State.

Regulatory Framework

Previously, a sports betting company wishing to operate within Nigeria required both a federal license issued by the National Lottery Regulatory Commission (NLRC) and a state licence from the state in which it wishes to operate from. At the federal level, the NLRC, established under the National Lottery Act, 2005, served as the primary body overseeing gaming activities across the country. Concurrently, state governments regulated sports betting within their jurisdictions through their respective regulatory authorities. However, a recent landmark judgment in Lagos State Government & Ors v. Attorney General of Federation and Anor with suit number SC/1/2008 delivered by the Supreme Court of Nigeria in November 2024, has changed this position by nullifying the National Lottery Act, 2005 and declaring that the National Assembly lacks the jurisdiction to legislate on matters related to lotteries and games of chance, as such powers reside exclusively with state Houses of Assembly to legislate on lottery and gaming within their respective states. Thus, the import of the Supreme Court judgement is that the National Lottery Act, 2005 now applies only within the Federal Capital Territory (FCT) where the National Assembly has the legislative power to enact laws on lottery and gaming matters. Therefore, lottery and sports betting companies are now only required to obtain licenses solely from the state(s) in which they intend to operate.

In Lagos State, the regulatory body responsible for controlling and regulating sports betting activities is the Lagos State Lotteries and Gaming Authority (LSLGA). Sports betting companies must obtain the requisite license from LSLGA before commencing operations in the state.

With a large internet penetration and the rise of online betting, in practice, a sports betting company can obtain a license in one state and be accessible online in another state thereby avoiding the need to apply for licences in multiple states.

Requirements for Obtaining a Sports Betting License/Permit from Lagos State Lotteries and Gaming Authority (LSLGA):

As stated above, the regulatory body responsible for issuing sports betting license/permit in Lagos State is the Lagos State Lotteries and Gaming Authority (LSLGA). The requirements for obtaining a sports betting permit from the LSLGA include:

1. Company Incorporation: The first step towards obtaining a sports betting license from the LSLGA is the incorporation of a local company in Nigeria with the Corporate Affairs Commission (CAC) as mandated under the Companies and Allied Matters Act, 2020 (CAMA). This is a compulsory regulatory requirement for any company wishing to do any business in Nigeria.
2. Share Capital: The company must meet the minimum share capital requirement of N20,000,000.00 (Twenty Million Naira) as prescribed by the LSLGA. Please note however that the CAC now requires that any company with foreign participation must have a minimum share capital of N100,000,000 (One Hundred Million Naira). If the company being set up has foreign participation either by shareholding or directorship, the minimum share capital from a CAC point of view must therefore be N100,000,000. Also note that this amount is merely the minimum value of the company shares at the time of registration and the shares do not have to be fully paid up.
3. Financial and Technical Ability: The company must demonstrate the financial and technical ability to operate a sports betting business. The applicants must demonstrate financial stability and viability by submitting audited financial statements, proof of sufficient capital, and a detailed business plan. Regarding the technical ability, operators must invest in a robust technical infrastructure for their sports betting platform, including secure servers, data protection, and reliable payment processing systems. Compliance with international online security standards is also very essential.
4. Applicant companies cannot be wholly-owned by foreigners as Nigerians are required to hold at least fifteen percent (15%) of the shares in foreign-owned companies to fulfil local content requirement and promote local participation.
5. Payment of application and license/permit fees.

Procedures for Obtaining a Sports Betting License/Permit from LSLGA:

The procedure for obtaining a sports betting license from the LSLGA is divided into three stages as follows: the application stage, the approval in principle stage and the final or grant of license stage.

Application Stage:

At this stage, an application for a sports betting license/permit is to be submitted to LSLGA together with the following documents:

1. A letter of intent.
2. Evidence of payment of non-refundable application fee
3. Company incorporation documents issued by CAC (Certificate of Incorporation, status report showing details of directors, minimum share capital and registered address and MEMART).
4. Detailed business plan/proposal on the sports betting scheme which should provide information and documentation on the following:
   1. Business structure information such as address of the registered office, branches, outlets and planned locations, particulars, profile and relevant qualification(s) of directors and key personnel, Tax Clearance Certificate (“TCC”) of Director(s) in the last three (3) years, description of operations and management structure, a sports betting industry analysis that clearly demonstrates an understanding of the sports betting industry, marketing and distribution plans, address of planned location, branches and outlet(s). Please note that these must be lock-up shops – kiosks and mobile vendors are not allowed.
   2. Proposed sports betting operations including details of planned games, relevant sports activities, approximate odds to be used, Operator’s game rules and participants’ Code of Practice, Number and frequency of sports/games and prizes and price structure.
   3. Financial projections including management account, company’s bank statement of the preceding year to support financing plans, five years projected profit and loss account, balance sheet, cash flow analysis which should provide for the annual licence fee and monthly gaming tax, capital investments, etc.
   4. Hardware and software information including servers, routers, firewalls, operating systems and database application specification.
   5. General information on the architectural diagram clearly illustrating the technical operational flow, the proposed platform (whether self-host or cloud based) and the contact information of the hosting company if cloud based.
   6. Detailed information about the applicant’s bookmaker, betting sites and technical consultants, proposed technical topography including a schematic diagram clearly illustrating the technical operational flow.

Due diligence will be conducted on every application to determine the suitability of the applicant for the license within a period of 10 to 15 working days. The applicant will also be required to make a presentation before the LSLGA to justify the grant of the license as part of the application process. Upon the satisfactory fulfilment of the requirements of the application stage and payment of the license fee, an Approval in Principle (AIP) will be granted.

Approval-in-Principle (AIP):

After a successful presentation and upon a satisfactory fulfilment of the pre-approval requirements, the applicant must pay a license fee currently N50,000,000.00 (Fifty Million Naira). Once this payment is made, the applicant is issued an Approval in Principle (AIP). An AIP serves as a temporary licence allowing the company to operate for a period not exceeding three (3) months (90 days) during which the company will be excused from paying tax.  The AIP is typically granted with specific conditions that must be met before the issuance of a final or substantive license.

Grant of License:

Upon the expiration of the AIP and the applicant’s fulfilment of all stipulated conditions set on the AIP, a final license is issued to the applicant. This license is valid for one (1) year from the date of issuance and is renewable annually for a fee currently N10,000,000.00 (Ten Million Naira).

Post-Licensing Obligations

Following the issuance of the license and commencement of operations, licensed operators are required to fulfill certain post-license obligations, including the remittance of a monthly gaming tax of 2.5% of their sales revenue to the regulatory body. Additionally, licenses must be renewed annually upon expiration to maintain operational compliance. There are also other tax obligations for e.g. income tax, Value Added Tax (VAT), company income tax, etc. that are payable by the company either to the state revenue authority or the Federal Inland Revenue Services. The licensed operators are also required to make the filings of their annual returns with the CAC to ensure their regulatory compliance.

Conclusion

With the rise of online betting, the Nigerian gaming industry has experienced extraordinary growth in recent years. Previously, sports betting was regulated at both the federal and state levels in Nigeria. However, a recent landmark Supreme Court judgment in November 2024 clarified that sports betting companies are now only required to obtain licenses exclusively from the states where they intend to operate as the licensing and regulatory powers and oversight of the NLRC is now limited only to the Federal Capital Territory. Upon obtaining the license, operators must comply with all post-license obligations, including remittance of fees to the regulatory body, renewal of license, payment of taxes, filing of annual returns with the CAC, etc.

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 Practical Tips on How to Obtain Sports Betting License in Lagos State, Nigeria first appeared on Goldsmiths Solicitors.

With Nigeria being a leading Fintech hub in Africa, we have in last few years witnessed a surge in online money lending service. The operation of money lending business in Nigeria is regulated by the Money Lenders Laws of the various states in Nigeria, the Federal Capital Territory (FCT) and the Federal Competition and Consumer Protection Commission (FCCPC). There are 36 states and a Federal Capital Territory (FCT) in Nigeria and an operator must obtain the money lenders license from the regulatory authority in the relevant state(s) in which they wish to operate or the FCT before commencing operations. It is important to note that where the money lending business is to be carried on in more than one state, a money lenders license must be obtained in each state in which the money lending business is to be carried on. It is a criminal offence to engage in the business of money lending without a money lenders license.

In Lagos State, the money lender’s license is granted by the Lagos State Ministry of Home Affairs. Using Lagos State as a case study, this article explains how to obtain the money lenders license in Lagos State and the digital money lenders registration with the FCCPC. The processes and procedures are similar in other states.

Requirements for Money Lenders License in Lagos State

The Lagos State Money Lenders Law is the principal law which regulates money lending in the state and the regulatory authority responsible for issuing licenses is the Lagos State Ministry of Home Affairs. Money lenders license can only be issued to corporate entities in Lagos state. Thus, any potential investor interested in money lending business is required to first incorporate a company in Nigeria.

The requirements for processing and obtaining a money lenders license in Lagos state are as follows:

1. Incorporation documents including company certificate of incorporation, Memorandum and Articles of Association, etc. of the applicant company issued by the Corporate Affairs Commission (CAC).
2. The minimum share capital of the applicant company is N20,000,000 (Twenty Million Naira). However, where the company has foreign participation, the minimum share capital requirement is N100,000,000 (One Hundred Million Naira).
3. Police Clearance Certificate of two directors of the applicant company.
4. Three (3) years Tax Clearance Certificate (TCC) for the company and for at least two (2) directors.
5. Reference letter from the applicant’s bankers in Nigeria.
6. Proof of payment of the application and processing fees.

The Procedure for Obtaining Money Lender’s License in Lagos State

The procedure for obtaining the money lenders license in Lagos State is initiated with an application to the Chief Magistrate of the Magistrates Court within the magisterial district where the lending company is located and ends with the issuance of a money lenders license to the applicant. The procedure for obtaining the license is highlighted below:

1. An application in the prescribed form is made to the Chief Magistrate of the Magisterial District where the applicant company is located.
2. The Chief Magistrate issues a Money Lenders Certificate (Form B) and a letter addressed to the Permanent Secretary of the Lagos State Ministry of Home Affairs to the applicant company confirming due diligence of the applicant company and recommending the issuance of a money lenders license.
3. An application is made to the Nigerian Police for the issuance of Police Clearance Certificates for two directors of the applicant company.
4. A formal application is made to the Lagos State Ministry of Home Affairs for money lender’s license accompanied with the following documents:
5. Form B and the Letter of Recommendation issued by the Chief Magistrate.
6. Incorporation documents of the applicant company.
7. Three years Tax Clearance Certificate (TCC) of the applicant company and of at least two directors.
8. Police Clearance Certificates for two directors of the applicant company.
9. A reference letter from a commercial bank being the bankers of the applicant company in Nigeria.
10. Proof of payment of the application and processing fees.
11. A physical inspection of the applicant company’s place of business will be carried out by the Lagos State Ministry of Home Affairs upon submission of the application.
12. A Money Lenders License is issued to the applicant company by the Lagos State Ministry of Home Affairs where it is satisfied that all the statutory requirements have been met and the applicant company is considered fit and proper to act as a money lender.

Validity and Renewal of Money Lender’s License in Lagos State

Money lenders license is valid in Lagos State for a period of one year and therefore subject to renewal every subsequent year. To process the renewal of the license, the licensed operator is required to obtain a new Money Lenders Certificate (Form B) from the Chief Magistrate accompanied with the expired license, updated tax clearance certificate and evidence of payment of the renewal fee. Upon being satisfied that the requirements continue to be met, a renewed license is issued.

Registration with the Federal Competition and Consumer Protection Commission (FCCPC)

In 2022, the Federal Competition and Consumer Protection Commission (FCCPC) issued the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022 (“the Guidelines”). The Guidelines require digital money lenders to register with the FCCPC before the commencement of business operations. The process of registering with the FCCPC is summarized as follows:

1. The digital money lender is to obtain an Audit Trust Mark from the Nigerian Data Protection Commission.
2. Obtain a compliance Audit Report and Privacy Impact Assessment Report from a duly registered Data Protection Compliance Organisation (DPCO).
3. Obtain and complete the requisite digital money lender’s registration form from the FCCPC. The completed form is to be accompanied with some documents which include:
4. Incorporation documents of the applicant.
5. The company’s terms of use and privacy policy
6. The company’s code of conduct
7. Brief description of the business and details of its groups, subsidiaries and affiliates.
8. Evidence of feedback and complaint resolution mechanism
9. Evidence of payment of the registration fee
10. Obtain and complete the requisite declaration form from FCCPC.

The application is to be submitted to the FCCPC together with the required documents. In practice, the FCCPC allows some flexibility in the registration process by allowing applicants to begin the digital money lender’s registration process while waiting for the Audit Trust Mark and the Compliance Report and Privacy Impact Assessment Report.

Failure to register with the FCCPC may lead to the permanent blacklisting of the digital money lender’s business and the removal of its digital apps from online platforms such as Google Play Store and Apple Store, etc. which will make the money lender unable to transact its business in Nigeria.

Conclusion

With the growth of FinTechs in Nigeria, there has been tremendous growth in the Nigerian online money lending space in the last few years. The business of money lending is regulated in Nigeria by the state governments, the FCT and the FCCPC. An operator is required to obtain a money lenders license in any of the 36 states of Nigeria in which it wishes to carry on business. Individual licenses must be obtained in every state in which an operator seeks to do business. Any company desirous of providing money lending services through any digital platform is required to register with the FCCPC before commencing business in Nigeria failing which its business and digital apps could be permanently blacklisted.

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 How to Obtain Money Lenders License in Lagos State, Nigeria 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.

This article provides an overview of the new law, it considers the objectives, application, principles guiding the processing of personal data, cross-border transfer of personal data and other key provisions.

Application of the Nigeria Data Protection Act

The Act applies to data controllers or data processors domiciled, resident or operating in Nigeria and the processing of personal data that occurs within Nigeria. It also applies to situations where the data controllers or data processors are not domiciled, resident or operating in Nigeria but are processing the personal data of data subjects in Nigeria.

The Act does not apply to the processing of personal data which is done solely for personal or household purposes by one or two more persons. The Act also does not apply to the processing of personal data necessary for the investigation, detection or prosecution of crimes or the prevention or control of a public health emergency, etc.

Objectives of the Act

The Act seeks to achieve the following objectives:

1. Safeguard the fundamental rights, freedoms and interest of data subjects as guaranteed under the Constitution.
2. Regulate the processing of personal data and ensures that personal data is processed in a fair, lawful and accountable manner.
3. Protect data subjects’ rights and provide means of recourse and remedies in the event of breach.
4. Ensure that data controllers and data processors fulfill their obligations to data subjects.
5. Establish an impartial, independent and effective regulatory Commission to superintend over data protection and privacy issues and supervise data controllers and data processors.

Establishment and Functions of the Nigeria Data Protection Commission

The Act established the Nigeria Data Protection Commission (“the Commission”) for the purposes of achieving the objectives of the Act. Thus, the Commission has the core functions of regulating the deployment of technological and organizational measures to enhance personal data protection, accredit, licence, and register suitable persons to provide data protection compliance services, register data controllers and data processors, receiving complaints relating to violations of the Act or any subsidiary legislations.

Principles of Processing Personal Data

Data controllers and data processors process personal data on the basis of care and accountability to data subjects. Accordingly, data controllers and data processors must act in a fair, lawful and transparent manner, collect data only for specified and legitimate purpose, hold and retain the data accurately, not longer than necessary, and generally ensure appropriate security measures are taken to secure the personal data.

Consent and Lawful Basis for the Processing of Personal Data

Consent of a data subject is very important for processing personal data. A data subject is a person whose information or data is being processed or sought to be processed. A data controller or data processor must obtain the consent of a data subject before processing his/her data, and it lies on the data controller or processor to prove that the data subject has given consent. The request for consent must be in a clear simple language and format with information that the data subject reserves the right to withdraw the consent at any time.  The consent must be freely and intentionally given either in writing, orally or through electronic means. Silence or inactivity does not amount to consent. In the case of a child, or person lacking legal capacity), the consent of a parent or guardian will suffice. The need to obtain consent of parent or guardian, may however not apply where the processing of personal data is necessary to protect the vital interests, or for the purpose of the education, medical or social care of such child or person lacking legal capacity, or where it is necessary for proceedings before a court.

The consent must be given for the specific purpose(s) for which personal data is processed, or where the processing is necessary for the following purposes:

1. For the performance of a contract to which the data subject is a party
2. For compliance with a legal obligation to which the data controller or data processor is subject
3. To protect the vital interest of the data subject or another person
4. For the performance of a task carried out in the public interest or in the exercise of official authority vested in the data controller or data processor
5. For the purposes of the legitimate interest pursued by the data controller or data processor, or by a third party to whom the data is disclosed.

Obligations of a Data Controller

• Obligation to Provide Information: A data controller has the obligation to provide certain necessary information to a data subject before collecting his personal data. The information which the data controller must provide to the data subject include the following:

1. Identity, residence or place of business and means of communication with the data controller and its representative.
2. Recipients or categories of recipients of the personal data
3. Existence of the rights of the data subject
4. Retention period for the personal data, etc.

The data controller shall make this information available by means of a privacy policy which should be expressed in a clear, concise, transparent, intelligible and easily accessible format.

• Data Privacy Impact Assessment Obligation: The assessment is a process designed to identify the risks and impact of processing personal data. A data controller is required to conduct a data privacy impact assessment where the processing of personal data may result in high risk to the rights and freedom of a data subject. This is to be conducted before the processing of personal data.
• Obligation to Erase Personal Data: A data controller has the obligation to erase the personal data of a data subject without undue delay where it is no longer necessary or where the data controller has no other lawful basis to retain the personal data.

Obligations of a Data Processor

Data controllers are engaged by data processors to process personal data. These data processors are also mandated to comply with the principles for the processing of personal data, assist the data controller to fulfill its obligation, implement appropriate technical and organizational measures to ensure the security, integrity, and confidentiality of personal data. Where a data processor engaged by a data controller further engages another data processor, the data processor directly engaged by the data controller is obliged to notify the data controller of its engagement with another data processor.

Data Protection Officers

Data controllers that process significant personal data are required to designate a person as a Data Protection Officer (DPO). The DPO may be an employee of the data controller or a person engaged by a service contract and must possess expert knowledge on data protection laws and practices. A DPO advises data controller, monitors compliance with the Act and related data protection policies of the data controller. The DPO also act as the contact point for the Commission on data processing issues.

Rights of Data Subjects

A data subject has the following rights with respect to the processing of his personal data by a data controller.

1. Right to Confirmation from a Data Controller. A data subject has the right to obtain from a data controller without constraint or unreasonable delay, confirmation as to whether the data controller or a data processor operating on its behalf is storing or otherwise processing personal data relating to the data subject and if so, the purpose of the processing, the recipients or categories of recipients to whom the personal data have been disclosed or will be disclosed, etc.
2. Right to receive a copy of his personal data in a commonly used electronic format.
3. Right to correction or deletion of the data subject’s personal data where correction is not possible where the personal data is inaccurate, out of date, incomplete or misleading.
4. Erasure of personal data of the data subject without undue delay
5. Right to restrict the processing of personal data
6. Right to withdraw consent to the processing of personal data at any time.
7. Right to object to the processing of personal data relating to the data subject.
8. The right to reject being subject to a decision based solely on automated processing of personal data.
9. The right to receive personal data in a structured, commonly used and machine-readable format and be able to transmit it to another data controller without any hindrance.

Data Security

Data controllers and data processors are required to implement appropriate technical and organisational measures to ensure the security, integrity and confidentiality of personal data in the possession. They must ensure that personal data are protected against accidental or unlawful destruction, loss, misuse, alteration, unauthorized disclosure or access.

The security measures that may be implemented to ensure personal data security include encryption, periodic assessments of risks to processing systems and services, regular testing, assessing and evaluation of the effectiveness of the measures, regular updating of the measures and introducing new measures to address shortcomings, etc.

Personal Data Breaches

Personal data breach is the breach of the security of a data controller or data processor which leads to or may lead to the accidental or unlawful destruction, loss, alteration, unauthorised disclosure of, or access to personal data transmitted, stored or processed.

Data processors are required to notify data controllers or engaging data processors of personal data breaches which the data processors store or process upon becoming aware of it by describing the nature of the personal data breach and the number of data subjects and personal data records concerned and also respond to all information requests from the data controllers or the engaging data processors.

Data controllers should also notify the Commission of personal data breaches which are likely to result in a risk to the rights and freedoms of individuals within 72 hours of becoming aware of such breach. Data controllers are also to communicate the personal data breach to the data subjects in a plain and clear language including measures that could be taken by the data subjects to mitigate any possible adverse effects.

Data controllers and data processors are also required to keep a record of all personal data breaches, facts relating to the breaches, its effects and remedial actions taken.

Cross-border Transfers of Personal Data

Data controllers and data processors are not allowed to transfer or permit the transfer of personal data from Nigeria to another country unless:

1. The recipient is subject to a law, binding corporate rules, contractual clauses, code of conduct or certification mechanism that affords an adequate level of protection.
2. meets one of the lawful basis for transfer of personal data outside Nigeria.

The level of protection considered adequate must uphold the principles that are substantially similar to the conditions for processing personal data provided by the Act. An adequate level of protection is assessed by taking into account the existence of an effective data protection law, access of public authority to personal data, existence of an independent supervisory authority, etc.

Registration of Data Controllers and Data Processors

Data controllers and data processors of major importance are mandated to register with the Commission within six months after the commencement of the Act or upon becoming a data controller or data processor of major importance. Data controllers or data processors of major importance are data controllers or data processors that process personal data of particular value or significance to the economy, society or security and are resident or operating in Nigeria.

The Commission is required to maintain and publish a register of duly registered data controllers and data processors of major importance on its website. A data controller or data processor of major importance shall be removed from the register where it ceases operation.

Enforcement and Penalties

A data subject who is aggrieved by the action, inaction or decision of a data controller or processor may lodge a complaint with the Commission and it may investigate the complaint where it is not vexatious or frivolous.

The Commission may also issue a compliance order once it is satisfied that any requirement of the Act or subsidiary legislation has been violated or likely to be violated by a data controller or data processor. The order may be a warning, order to comply with the request of a data subject or a cease-and-desist order. The Commission may also issue an enforcement order or impose a sanction for violation of the Act or a subsidiary legislation.

The penalty or remedial fee for violation of the Act or subsidiary legislation is:

1. Higher maximum amount, which is the greater of N10,000,000 and 2% of its annual gross revenue in the preceding financial year, in the case of a data controller or data processor of major importance.
2. Standard maximum amount, which is the greater of N2,000,000 and 2% of its annual gross revenue in the preceding financial year, in the case of a data controller or data processor not of major importance.

Conclusion and Remarks

The Nigeria Data Protection Act, 2023 is an important piece of legislation and has been long in coming. It provides for the basic principles and the lawful bases for the processing and transfer of personal data in Nigeria and applies to both resident and non-resident data processors. It provides for the responsibilities of data controllers and data processors while also providing for the rights of data subjects. The processing of sensitive personal data and the personal data of children and persons lacking legal capacity to consent must follow the applicable principles as provided by the Act. Data security measures which are robust are expected to be put in place by data controllers and data processors to protect against the risk of personal data breaches. The Act creates the Nigerian Data Protection Commission which has the overall responsibility to ensure compliance and impose penalties where necessary. Both resident and non-resident data processors are advised to pay particular attention to this new legislation as they are now required to take specific steps to ensure compliance with the Act.

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 Better Late than Never: Nigeria Finally Passes the Data Protection Act 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:

The post How to Obtain a Payment Solution Service Providers Licence in Nigeria first appeared on Goldsmiths Solicitors.

By a Circular dated 7^th March 2023, the Central Bank of Nigeria (CBN) released the “Operational Guidelines for Open Banking in Nigeria” (‘the Guidelines’). The Guidelines set out rules for sharing the data/information of customers between participants in the open banking system. Although not defined in the Guidelines, open banking system may be defined as the exchange of the data of an entity’s customers with other entities for the purpose of providing innovative financial services. Thus, the Guidelines recognize the right of customers to privacy and data protection and set out the rules for engaging in open banking in Nigeria. It among other things, stipulates technical requirements/considerations for operating in the open banking system, identifies the risks associated with open banking to include cyber security, data privacy and integrity, product management, money laundering and regulatory compliance, and outlines the rules to manage these risks.

In this article, we highlight some salient provisions of the Guidelines such as who the participants in open banking are, the obligations of participants, regulatory oversight functions, policies/frameworks to be formulated by participants, reporting obligations, intellectual property issues and risk management.

Participants in Open Banking Operations

These are the organizations/persons who may engage in the exchange of customers’ data for the purpose of providing/receiving innovative financial services. Participants in open banking are classified based on the roles and the services they provide as follows:

1. API Providers;
2. API Customers; and
3. Customers.

API providers (APs) are those who use Application Programming Interface (API) to avail data or service to another participant. They can be licensed financial institutions, fast-moving consumer goods (FMCG) companies such as cosmetics, beverages, drugs, etc. companies, retailers, payroll service bureau, etc.

API Customers (ACs) are those that use API released by APs to access data or service. They are the recipients of API containing the data or service of other customers.

Customers as participants are the data owners who shall be required to provide consent for the release of their data for the purpose of accessing financial services. They may provide consent whilst filling out a form, etc.

Open Banking Registry

By the Guidelines the CBN is expected to maintain and provide an Open Banking Registry (‘the Registry’). The Registry is charged with regulatory oversight functions for participants in open banking. Participants in open banking are required to be registered with the Registry and their details are to be held by the Registry. The Registry is also to maintain an API interface which would serve as the primary means by which API providers manage the registration of their API customers.

Responsibilities of API Providers and API Consumers

The Guidelines set out several responsibilities which APs and ACs are expected to comply with. These responsibilities provide rules for ensuring accessibility of open banking systems and procedures, transparency, cybersecurity, privacy protection, etc.  Some of these responsibilities are:

1. Configuration management: APs and ACs are required to keep detailed inventory of open banking system configuration items in accordance with current Information Technology Infrastructure Library (ITIL) Standards. They are also to have automated configuration management (CM) processes and a configuration management policy.
2. Execution of a Service Level Agreement (SLA): They are required to execute an SLA which is to contain provisions on accounting and settlement, fee structure, reconciliation of bills, registration, and sponsorship responsibilities. The fee structure is also to be publicly disclosed on their websites and applications.
3. They are to ensure that all systems required for open banking are available, functioning optimally and meet up with the minimum standards on service monitoring, incident management, performance monitoring and event logging.
4. They are to ensure that they meet the minimum performance standards for open banking systems. The Guidelines outlines several key performance indicators (KPIs) to ascertain compliance with the minimum performance standards. One of such KPI is that where the average API total processing time is less than 3 seconds, it would be considered as ‘operational’, where it is less than or equal to 7 seconds, it would be considered as ‘suspect’, and where it is greater than 7 seconds, it would be considered as ‘critical’.
5. APs and ACs are required to maintain Business Continuity Plan (BCP) which are to among other things, indicate the architecture of the Online Transaction Processing (OLTP) and Online Analytical Processing (OLAP) infrastructure, trigger events, processes for failover and fail-back, and includes quarterly failover exercises and review of processes. The Guidelines also sets the threshold for failover and fail-back procedures as ’30 minutes of downtime’. They are also required to implement Disaster Recovery Plans (DRP) which may also be entrenched in the BCP. The plans are to be tested every 6 months. Whilst CBN is to oversee testing procedures, it is the responsibility of ACs and APs to provide the facilities for testing.
6. They are to ensure that they have problem management systems in place. The problem management system is aimed at managing incidents known to be recurring and which are not resolved under the SLAs. APs and ACs are to maintain a Problem Register which is to be made available to regulators, auditors, risk, and control teams within the organization. The problem management system is to be always electronic, or cloud based.
7. They are to ensure compliance with interface requirements. Some of these requirements are ensuring that interfaces between APs and ACs are 100% electronic, the data interchange format must be JavaScript Object Notation (JSON) and ensuring that the data standard for financial transactions are model based on ISO 20022 or any other global applicable minimum standard.
8. ACs and APs are to ensure that they maintain best competition practices. They are to comply with the provisions of section 2 of the Code of Conduct for the Nigerian Banking Industry which guards against unethical practices/unprofessional conducts by persons in the banking industry.
9. They are to ensure that the data in their possession is well protected and are to set up effective information security management systems and are to ensure compliance with technical security standards and minimum-security principles as contained in US NIST CSRC.
10. Change management obligations. They are required to collate change requirements and plan the changes for the next month. Changes to be made, whether pre-emptive or responsive are to be reported with sufficient details and in accordance with the prescribed notifications to be sent to all stakeholders that may be affected by such changes. The notifications are to be made in the following order:

• 24 hours before the intended change
• 1 hour before the intended change.
• Immediately the change has been completed and the services have been confirmed restored.
• 30 minutes after the change should have been completed but has been prolonged or failed.
• At the point of commencing a change rollback.
• When the services have been restored.

11. APs and ACs are required to have secure real-time communication platforms for first level incident responders within their organizations and respective ACs/APs for incident notification, investigation, and resolution. Emails are however not sufficient communication channels for incident management in open banking. The communication platforms are to accommodate text voice and video conferencing as effective modes of communication.

Termination of Agreement between Participants.

Any participant desirous of terminating a relationship is required to give the other party 20 business days’ notice of such termination. Where the relationship is terminated without notice due to fraud, abuse of service, etc. the AP is required to provide the AC with a report justifying the termination within 2 business days.

Policies/Frameworks to be Formulated under the Guidelines

ACs and APs are required to formulate the following policies:

1. Data Governance Policies. These policies are to govern the way APs and ACs handle the data of customers. They are to be approved by a committee of its Board of Directors or at minimum, an executive management committee.
2. Data Ethics Framework. The Data Ethics Framework is to provide the principles for collecting, collating, storing, analyzing, processing, etc. data. The Framework is also to provide consistent procedures for the documentation, verification, etc. of data to ensure compliance with extant laws and regulations.
3. Data Breach Policy. This policy is aimed at preventing, managing, assessing, reviewing, etc. data breach.
4. Configuration Management Policy. This Policy is to be approved by the AP’s or AC’s executive or board level information technology steering committee or an equivalent body not less than executive level.
5. Risk Management Framework. This Framework is to set out guiding principles for the management and mitigation of risks. Participants are to have a risk management committee which is to consist of at least three members of senior management cadre.

Rendition of Returns/Reporting Obligations

One of the ways CBN safeguards the privacy rights of customers and ensure data security under the Guidelines is by mandating ACs and APs to render periodic returns to the CBN. The returns are to state the volume and value of transactions, the number of users, success and failure rates, security and fraud incidents, downtime reports and any other information as CBN may require from time to time.

Participants are also required to introduce an incident reporting portal to enable easy, efficient, and fast reporting of cybersecurity breach incidents.

ACs and Aps are to provide monthly API Consumers Reports to each other indicating among other things, statistics of incidents/problems, SLA compliance and aggregate impact in downtime or loss of service, the number and category of Fraud and Disputes with accompanying SLA performance, and the excerpts of the problem register indicating new, existing, and resolved problems.

ACs and APs are also required to make ‘Customer Reports’ to customers who have subscribed to one or more ACs stating among other things, transcript of ACs activities on the use of customer-permissioned data shall be provided to the customers at the minimum every month or for a period less than a month as may be requested by a customer, a transcript of each AC’s activities against the customer’s account/wallet for at least the last 30 days, etc.

Data Sharing

The Data of individuals is an intangible yet sensitive asset. The Guidelines provide for rules for data sharing with other (outsourced) service providers as well as between APs and ACs. Before APs share the data of a customer with ACs, they are to obtain the consent of the customer and authenticate the consent to ensure it emanates from the customer. This is to be done by putting in place Two Factor Authentication (2FA). The AC on the other hand is also required to furnish the customer with certain information such as its legal name, CAC registration number, means of identification in the open banking registry, access type and duration, means of withdrawal of consent, etc. for the consent obtained to be valid.

Intellectual Property

The Guidelines make provisions on IP issues and stipulates that the IP rights in any data or other information would always remain with the participant/party whom such data emanated from. Thus, parties are to be mindful of this provision while drawing up Agreements to ensure that no clause runs contrary to this stipulation.

Resolution of Complaints

By the Guidelines, participants are to stipulate how customers can lodge their complaints during the customer’s onboarding. Where there is a complaint, participants are required to acknowledge receipt of the complaint within 24 hours and are to resolve the complaint within 48 hours of its receipt.

Conclusion

It is important to emphasize that the Guidelines only applies to the exchange of data for the purpose of providing innovative financial services in Nigeria. Any organization that controls the data of its customers is now allowed to exchange it with other entities for the purpose of providing innovative financial services in Nigeria. However, before the information of customers are shared, their consents must be obtained, authenticated by API provider, and validated by the API customer. The Guidelines provides minimum security measures and risk management systems to be put in place to protect the information of customers. It sets out rules that would guard against the violation of the privacy rights of customers while promoting efficiency, financial inclusion, healthy competition, and customers’ access to services available to them in the financial service industry.

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 CBN’s Operational Guidelines for Open Banking 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.