Nigeria remains one of Africa’s most attractive business destinations, with many foreign companies choosing to gradually enter the market by establishing either a branch office or a representative office before making a long-term commitment. Both structures allow an international business to maintain a presence in the country without immediately setting up a full Nigerian subsidiary, though they serve different purposes. Understanding how each functions and how to set them up properly is crucial for navigating Nigeria’s regulatory environment and ensuring compliance.

A branch office is essentially an extension of the foreign parent company. It conducts the same business activities as the parent organization and is authorized to generate income in Nigeria, enter into contracts, and engage in commercial operations. In contrast, a representative office is much more limited. It cannot conduct business, earn revenue, or execute contracts in Nigeria. Its functions are restricted to promotional activities, market research, customer liaison, and acting as a communication channel. Many foreign companies use a representative office as a preliminary step to understand the Nigerian market before establishing a trading entity.

Setting up either structure begins with understanding Nigeria’s regulatory requirements for foreign company registration. Under Nigerian law, foreign entities carrying on business in the country must register with the Corporate Affairs Commission (CAC). However, the CAC recognises that some companies wish to operate in a limited capacity for liaison or research purposes. As a result, it permits the registration of branch offices and representative offices, provided the parent company remains the legal entity responsible for activities carried out in Nigeria.

The application process typically starts with preparing the necessary corporate documents. These include the parent company’s certificate of incorporation, constitutional documents, details of directors, a registered address and a board resolution authorising the establishment of the Nigerian office. The CAC also requires the appointment of a local representative who will act as the authorised contact person within Nigeria.

At this stage, it is important to be clear about the intended scope of activities, because choosing between a branch office and a representative office has both legal and tax implications. A company intending to conduct actual business operations in Nigeria, whether trading, supplying goods, or providing services, must register a branch office and comply with the regulatory requirements applicable to foreign companies. A representative office, by design, is not allowed to engage in profit-making activities. Using the wrong structure can easily create compliance and tax challenges.

Once CAC registration is complete, the company must fulfill additional obligations applicable to any legal presence in Nigeria. This includes obtaining a Tax Identification Number from the Federal Inland Revenue Service (FIRS). Even though a representative office does not earn income, it still requires a tax registration for administrative purposes. A branch office, on the other hand, is subject to Nigerian tax laws, including corporate income tax, withholding tax, and value-added tax, depending on its operations.

Companies should also review whether sector-specific approvals are required. Industries such as banking, insurance, petroleum, pharmaceuticals, shipping, manufacturing, and telecommunications are heavily regulated. Entities operating in these sectors may require approvals from regulators such as the Central Bank of Nigeria (CBN), the Nigerian Communications Commission (NCC), NUPRC, NAFDAC, or the Standards Organisation of Nigeria (SON). Ensuring these licences are in place is a key part of establishing a compliant foreign presence.

Practical considerations also matter when setting up a branch office or representative office in Nigeria. Securing a physical office, opening a Nigerian bank account and engaging local or expatriate staff are all part of the process. Foreign employees will require appropriate immigration permits, and companies intending to employ expatriates must apply for Expatriate Quota approval from the Ministry of Interior. This is a critical step that new entrants often overlook.

Foreign companies should also be mindful of how liability flows from operations in Nigeria. A branch office is treated as an extension of the foreign company and may expose the parent organisation to legal or financial obligations arising from activities in the country. A representative office provides more insulation from liability but offers fewer commercial opportunities. Many investors begin with a representative office and later transition to a Nigerian subsidiary once they gain clarity and traction in the market.

Conclusion

Setting up a branch office or representative office in Nigeria is relatively straightforward once the regulatory requirements and operational realities are well understood. The real success lies in choosing the structure that aligns with the company’s objectives while meeting all legal, tax, and sector-specific obligations. With Nigeria’s expanding consumer base, strategic location, and strong economic potential, establishing the right kind of presence can create a valuable pathway into one of Africa’s most dynamic markets.

For further enquiries, kindly reach out to Olawunmi Ojo via ooo@cms.trustedadvisorslaw.com, +2348038954988

Written by Olawunmi Ojo for The Trusted Advisors

Email us: info@cms.trustedadvisorslaw.com

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