Startups are young companies founded to develop a unique product or service, bring it to the market and make it irresistible and irreplaceable for customers[i]. A startup is a company typically in the early stages of its development. These entrepreneurial ventures are typically started by a few founders who focus on capitalizing upon a perceived market demand by developing a viable service or platform[ii]
It is a known fact that companies knowingly default in their regulatory compliance, which has occasioned or resulted in regulatory authorities coming up with new measures to ensure compliance.
it is, therefore, safe to say that effective compliance is key to the overall performance of an organization. Therefore, companies need to start taking regulatory compliance more seriously, as non-compliance will put a dent in their operations and, by extension, cause serious reputational damage.
In this article, we will be highlighting some of the basic regulatory compliance that Startups in Nigeria need to comply with. We will also consider a few industry-specific compliances.
- Corporate Affairs Commission (CAC): The CAC is the regulatory body in charge of company registrations in Nigeria. The Companies and Allied Matters Act[iii] provides that all companies in Nigeria must incorporate their business with the CAC before commencing operations. They are also required to file annual returns within 18 months of incorporating their company in Nigeria and on a yearly basis thereafter.
- Tax Remittance: All startups are required to file their company income tax within 18 months of incorporating their company and subsequently before the 30th day of June each year. They are also to remit the Value Added Tax (VAT) monthly to the Federal Inland Revenue Service.
- Pension Contribution: Startups with a minimum of 3 employees are by law required to deduct and remit a monthly contribution of 8% for the employees and 10% for the employers. This remittance should be made into an approved pension fund account.
- Employee Compensation Scheme: The Employee Compensation Act 2010 was established to guarantee and impose obligations to employers in both private and public companies to remit a minimum monthly contribution of 1.0 percent of the total payroll into the Employees Compensation Fund[iv]
- Special Control Unit Against Money Laundering Registration (SCUML): Some designated non-financial institutions are also required to register with Special Control Unit against money laundering.
[i] https://www.forbes.com/advisor/business/what-is-a-startup
[ii] https://www.startups.com/library/expert-advice/what-is-a-startup-company
[iii] Cap I24, LFN, 2004
[iv] Section 33(1), Cap M8, LFN 2004
Written by Olawunmi Ojo for The Trusted Advisors
Email us: info@cms.trustedadvisorslaw.com
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