And may we say congratulations to the Startup/tech ecosystem on the recent Presidential assent of the Nigerian Startup Bill.
The Nigerian Startup Act, 2022 (“the Act”) is aimed at harnessing the potential of the country’s digital economy by providing an enabling environment for the establishment, development, and operation of Startups in Nigeria. The passage of the bill into an act will help eradicate the legal uncertainties that have existed in the eco-system.
As a Startup founder/Tech Company, what does this mean for you?
1. Startup Label
Your company will be granted a startup label by the issuance of a certificate upon the fulfilment of some requirements. And they are;
- Registration as a limited liability company with the Corporate Affairs Commission, running for not more than 10 years.
- The objects of your business should include innovation development, production, improvement, and commercialisation of a digital technology innovative product or process.
- Your company is the holder of a product or process of digital technology or a registered software
- Your business has at least 1 Nigerian as a founder or co-founder
- If you are registered as a sole proprietorship/ business name/ partnership and you satisfy b,c,d above your business would be given a pre-label status for 6 months to enable you convert your business vehicle to a limited liability company
2. Tax and Fiscal Incentives
Your Startup may be exempt from paying tax for up to four years, from the date you get issued a Startup label. Your company may also be entitled to a Pioneer Status Incentive. The Pioneer incentive gives companies in critical industries like technology, agriculture, and others, a tax break of up to three years, and a possible two-year extension.
The Act also incentivises companies to employ entry-level talent with no more than three years of post-graduation experience by giving them income tax relief on up to 5% of the profit generated.
There is a Startup Investment Seed Fund, which will be managed by the Nigeria Sovereign Investment Authority (NSIA). The fund will provide early-stage financing for labelled Startups on the recommendation of the Fund Manager (NSIA), and provide relief to technology laboratories, accelerators, incubators, and hubs.
The secretariat created by the Act will also ensure that licensed startups have access to grants, loans and facilities from the Central Bank of Nigeria, the Bank of Industry & other bodies.
If you have a crowdfunding platform duly licensed by the Securities & Exchange Commission, you can now register your platform on the Startup portal. Startups can now also raise funds through crowdfunding platforms listed on the Startup portal.
5. Ease of registration with other regulators
The National Information Technology Development Agency which serves as the secretariat of the Council created by the Act, will ensure ease of registration with bodies such as the Trademarks, Patents and Design Registry, the National Office for Technology Acquisition and Promotion (NOTAP), National Copyright Commission by designating sections on the Startup portal for these bodies as well as assisting the labelled startups with filing and registration.
6. Accelerator & Incubator Programs & Trainings
The Secretariat shall establish accelerator and incubator programs for startups and provide information on the Portal on existing startup accelerator and incubator programs. There will also be periodic training programs for startups. You can also participate in showcases, pitch competitions, fellowships, and other related programs on the portal
7. Engagement with government agencies
You now have an opportunity to liaise with relevant government agencies such as the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC) and the Corporate Affairs Commission (CAC) with ease via the Startup Engagement and Support Portal. This portal would also serve as a platform for interaction between you (a Startup), the Federal Government, private institutions, angel investors, venture capitalists, incubators, accelerators, and other relevant institutions
This act is a progressive effort by the government to aid the ease of doing business in Nigeria.
For more information on legal & business advisory for your Startup, kindly contact our team below and subscribe to the Acuity Corner.