1. METHODS OF CONDUCTING BUSINESS

All business enterprises must be registered with the Registrar- General of the Corporate Affairs Commission ("Registrar of Companies"). A foreign investor wishing to set up business operation in Nigeria should take all steps necessary to obtain local incorporation of the Nigerian branch or subsidiary. Business activities may be undertaken in Nigeria as a:

(i) Private or Public limited liability company;
(ii) Unlimited liability company;
(iii) Company limited by guarantee;
(iv) Foreign Company (branch or subsidiary of foreign company);
(v) Partnership/Firm;
(vi) Sole Proprietorship;
(vii) Incorporated trustees;
(viii) Representative office.

2. THE COMPANIES AND ALLIED MATTERS ACT AND INCORPORATION PROCEDURES

The Companies and Allied Matters Act, 1990 ("the Companies Act") is the principal law regulating the incorporation of businesses. The administration of the Companies Act is undertaken by the CORPORATE AFFAIRS COMMISSION ("CAC") and its functions include:

(i) the regulation and supervision of the formation, incorporation, registration, management and winding up of companies.
(ii) the maintenance of a Companies Registry;
(iii) the conduct of investigation into the affairs of any company in the interest of shareholders and the public.

2.1. Minimum Share Capital and Disclosures in Memorandum of

The minimum authorised share capital is N10,000 in the case of private companies or N500,000 in the case of public companies. The Memorandum of Association must state interalia that the subscribers "shall take amongst them a total number of shares of a value not less than 25 per cent of the authorised capital and that each subscriber shall write opposite his name the number of shares he takes"

The locally incorporated branch or subsidiary company must then apply to the Nigerian Investment Promotion Commission ("NIPC") for Business Permit and other requisite permits and licences. The law permits and acknowledges the roles of attorneys, etc. in facilitating business transactions provided of course, that the "agency arrangement is disclosed".

2.2. Membership of the Company - Prohibition of Trusts

The Companies Act prohibits "notice of any trust, express, implied or constructive" and such shall not be entered on the register of members or be receivable by the CAC.

2.3. Shares

All Categories of Company Shares to Carry One Vote. Shares with "weighted" voting right are prohibited. All shares (i.e. whether ordinary or preferential) issued by a company must carry one vote in respect of each share.

Consequently, preference shareholders are entitled to receive notices and attend all general meetings of the company and may speak and vote on any resolution before the meeting.

2.4. Disclosures To Be Published in Company Correspondence and Business Premise

Every company is obliged to disclose on its letterhead papers used in correspondence, the following particulars:


(i) Name of the company/enterprises;
(ii) Address;
(iii) Registration/Incorporation Number;
(iv) Names of Directors and Alternate Directors (if any)

In addition, the law requires companies/enterprises to ensure that the Certificate of Registration be displayed in conspicuous positions at their principal and branch offices.

A non-Nigerian may invest and participate in the operation of any enterprise in Nigeria. However, a foreign company wishing to set up business operations in Nigeria should take all steps necessary to obtain local incorporation of the Nigerian branch or subsidiary as a separate entity in Nigeria for that purpose. Until so incorporated, the foreign company may not carry on business in Nigeria or exercise any of the powers of a registered company.

The foreign investor may incorporate a Nigerian branch or subsidiary by giving a Power of Attorney to a qualified solicitor in Nigeria for this purpose. The incorproation documents in this instance would disclose that the solicitor is merely acting as an "agent" of a "principal" whose name(s) should also appear in the document. The Power of Attorney should be designed to lapse and the appointed solicitor ceases to function upon the conclusion of all registration formalities.

3.1. Exemption to the General Rule

Where exemption from local incorporation is desired, a foreign company may apply in accordance with Section 56 of the Companies Act, to the National Council of Ministries for exemption from incorporating a local subsidiary if such foreign company belongs to one of the following categories:


(a) "foreign companies invited to Nigeria by or with the approval of the Federal Government of Nigeria to execute any specified individual project;
(b) foreign companies which are in Nigeria for the execution of specific individual loan project on behalf of a donor country or international organisation;
(c) foreign government-owned companies engaged solely in export promotion activities; and
(d) engineering consultants and technical experts engaged on any individuals specialist project under contract with any of the governments in the Federation or any of their agencies or with any other body or person, where such contract has been approved by the Federal Government."

The application for exemption from disclosing certain details about the applicant is to be made to the Secretary of the Government of the Federation (SGF). If successful, the request of the applicant is granted upon such terms and conditions as the National Council of Ministers may think fit.

Foreign companies may set up representative offices in Nigeria. A representative office however, cannot engage in business or conclude contracts or open or negotiate any letters of credit. It can only serve as a promotional and liaison office, and its local operational expenses have to be inflowed from the foreign company. A representative office has to be registered with the CAC.

Advance Fee Fraud, otherwise known as 419 in Nigeria simply means the demand for and pay ment of an advance fee in form of tax brokerage, bribe, etc under the pretence that such is needed to consummate a business deal whether the business in itself is genuine or not. the term 419 derives from section 419 of the Nigeria Criminal Code which dealt with this offence before the promulgation of the Advance Fee Fraud Decree No 13 in 1995.

Advance Fee Fraud is Introduced to Intended victims through scam letters containing faise in- formation on:-

• Millions of Dollars from over invoiced contracts in Nigeria.
• A Millions of Dollars from funds left by deceased persons.
• Contracts for the purchase of vehicles, computers and accessories, medical equip- ment etc all running into millions of Dollars.
• The sale of crude oil.

Requests are Initially simply and easily accom- plished by unsuspecting minds, and are a natural extension of scam letters which contain the sort of information mentioned above. These letters are tempting as they tend to show the ease with which money can accrue to the addressees. Thus when items such as particulars of bankers, Company letter head sta+ionaries and blank Com- pany proforma invoices are asked for, they are usually received.

Writers of fraudulent (scam) letters often purport to be persons of social distinction giving them- selves bogus prefixes such as Alhaji, Doctor, Prince, Engineer, Chief, HRH (His Royal Highness) etc. They also lay claim to positions of high status as in being Chief Executive Officers, Chairmen, Execu- tive Directors etc. These positions are claimed to be held in Government offices such as the Fed- eral Ministry of Finance (FMF), Central Bank of Nigeria (CBN), Nigeria National Petroleum Cor- poration (NNPC)/ Nigeria Security Printing 8c Mint-, ing Company (NSPMC), Nigeria Telecommunica- tions (NITEL), Nigeria Postal Services (NIPOST), Ministry of Defence (MOD), otc.

The purported advantages of such proposals lies in the making of huge monetary gains minima! effort or input. In the case of transfer of funds. there is the inducement of a commission of be- tween thirty to forty percent of the total amount invoived to the benefit of the adressee.

Advance Fee Fraud demands surface soon af- ter a link with a would be victim has been made, and normal course of communication established. Series of demands for money are made under serveral guises, one demand metamorphosing to the other until the victim is unwilling to make further payments in the apparent realisation of deceit in the whole transaction.

Such guises includ request for;-

• Remittance fee
• Legal charges
• Job completion Certificate charges
• National Economic Recovery Fund Tax
• Inheritance tax (in the case of funds supposedly emanating from Wills), and
• Vaiue Added Tax (VA T) Reven ue Tax among est others.

* Note that these demands do not exist in nor- mal and actual Government contracts. They are a part of the usual ploy to extort money from unsuspecting victims.

The victims targeted by Advance Fee Fraudsters are in the main foreign national who are invited to the country by fraudulent letters, and investors who having arrived the country for genuine business are schemed into fraudulent and frivo- lous transactions ostensibly to defraud them. in- formation about such foreigners are easily and usually obtained from catalogues of foreign companies.

WHAT TO DO

Upon the receipt of any letter suggesting the inference that it could be fraudulent going by the above analysis, take any of the following actions as applicable:-

• Report immediately to the Local Police Au- thorities nearest you.
• Report to the Nigerian Mission in your coun- tty.
• If you must respond, reply negatively and terminate communication.
• Send back the scam letter to any of the fol- lowing adresses in Nigeria

(a) The Assist. Inspr-GeneraS of Police,
"D" Department,
The Nigeria Police,
Alagbon Close,
Ikoyi - Lagos.

(b) The Commissioner of Police,
Special Fraud Unit,
D Department,
13 Milverton Road,
Ikoyi - Lagos.

Tel Nos. 234 01 2692728
234 01 2691675
Fax No. 2o4 01 2691095

(c) National Intelligence Agency,
P.M.B. 213,
Gorki - Abula.

Where you find yourself in Nigeria and probably unware of the fraudulent nature of the transac- tion you are pursuing, promptly report your pres- ence giving details of flight, hotel accommoda- tion and other relevant information to any of the officer listed above, or the nearest Police Station or your Embassy for security reasons.

WHAT NOT TO DO

• Do not respond to the scam letter either by mail, fax or telephone.
• Do not agree to any proposed meeting-wh ether it is to take place in your country, another country or Nigeria.
• Do not part with your money under any cir- cumstances.
• Do not reveal or give out your bank account number you could be duped.
• Do not be convinced by documents carry- ing the insignia/logo of Federal Government of Nigeria, Central Bank of Nigeria, Nigerian National Petroleum Corporation, or any other Nigeria GovernmetAgency. Such documents are faked or foged.
• Do not accept proposals for remittance of money into your bank account. There is no money to be remitted.
• Ensure security of your vital documents relat- ing to Bank accounts. International Passports, identity cards, fax/telephone numbers. Insur- ance certificates, company letter head pa- pers, contractual agreements etc.
• Do not prolong communication as this may convince and lure you into an avoidable mess.
• Do not give out documents or other informa- tion about yourself or business especially bank passport particulars as this may serve as the basis for fraud.

LATEST GOVERNMENT MEASURES AGAINST ADVANCE FEE FRAUD

• Closure by Nigeria Telecommunication (NITEL) of all telephone business centres all over Nigeria. This was necessitated by the fact that an over-whelming percentage of communication between fraudsters and their victims were through these centres.
• Withdrawal of the International Direct Dialling (IDD) facilities from the public.
• Enlightenment programmes through adverts by the Central Bank of Nigeria (CBN) and other Government agenda.
• Collation of telephone numbers subscribed to by fraudsters (as in the attached (1st), and subsequent investigation of their activities by the Police.
• Commencement of trials of fraudsters In the Miscellaneous Offences Tribunal, as opposed to the regular Courts.
• The approval of the use of Police as pros- ecutors in the above mentioned Tribunal.