Legal requirements for business partnerships in Nigeria

Legal requirements for your business partnership in Nigeria

To expand your business in Nigeria you might have to work in partnership with other businesses to reach your goals. It is important to set up clear legal requirements for your partnerships.

Whether you are working with a distributor, agency, or simply hiring a contractor/freelancer, you want to make sure you have the legal fraemwork in place to make sure the partnership stays on track to meet a collective goal.

Learning about the basic legal requirements for business partnerships would limit your liability and risk as you develop your business in Nigeria.

Here are a few legal requirements you should keep in mind when establishing a business partnership in Nigeria

Verify CAC incorporation

Before getting into a commercial partnership, you want to make sure the company that you’re going to be working with is a legally registered business in Nigeria.

Every business has legal requirements to be incorporated with the Corporate Affairs Commission (CAC) in Nigeria.

To verify that a company is a legally registered business, you can either perform a CAC public search or use the company’s Tax Identification Number (TIN) to search on the Federal Internal Revenue Service (FIRS) website.

Follow these incorporation verification instructions to verify that the business you are about to work with is legally registered. This guarantees that you are dealing with a legal business entity.

Tip: We found that the TIN search method was more reliable.

NDA to protect proprietary information

I’m personally not a big fan of non-disclosure agreements (NDA), mainly because of how much it slows down the process of vetting and getting through the initial conversations of whether a commercial relationship is worth exploring.

However, a lot of businesses in Nigeria still require non-disclosure agreements before they start discussing or negotiating a prospective business partnership with another company.

The reason for this is to establish trust and to confirm that any information (particularly proprietary information) that they share would not be used to the disadvantage of the company sharing the information.

Such organizations want to build trust and this can take some time.

It is good to note that some companies will require a non-disclosure agreement as part of their legal requirements before continuing a conversation after initial introductions.

Do your own “in-house” due diligence

You want to make sure you do your own due diligence on a company that you’re going to be working with.

Take a look at all their readily available assets – websites, online reviews, case studies, company profiles.

Be sure you have phone interviews with the people that you’re going to be working with.

Preferably try to have in-person meetings, and make sure you also get some references from people in the business community about the business you are exploring a partnership with.

Make a request for case studies and success stories of people that they have worked with. This will help you as you narrow down on the vendors that you plan on partnering with before you sign a service agreement.

Have a clear service or partnership agreement

Of all the legal requirements, this is the binding agreement that you would eventually sign with your prospective partner.

Within the partnership agreement, there are different terms that have to be ironed out between both sides. This is done to make sure that both parties are very clear about the mutual relationship that they are about to get into.

Details on the scope of work, timeline of the partnership, the deliverables and milestones, any confidentiality requirements, terms of the relationship – including payments and responsibilities of tasks that should be shared between parties – should be properly read, reviewed, and revised (if necessary) before it is signed by both parties to formally establish the partnership.

Confirm the “governing law”

Within your services agreement, it is good to be very clear and establish the country or state that would provide the governing law in which the agreement is executed in accordance to. 

This is very important when an international company partners with local Nigerian business, you want to make sure that you are very clear on whether it’s the Nigerian legal system or a foreign country’s law that’s going to be governing the binding contract in case of any arbitration between the two companies.

Make sure you and your partner both find a mutually agreeable governing land of law that works for both parties to move forward.

Have clear legal requirements to forge strong long-term partnerships

The hope is that once you get into a partnership, it will be long-lasting one that would not require any legal ramifications, especially if you do a good amount of due diligence upfront.

Once you have confirmed that the entity you’re working with is an incorporated business, and has the adequate expertise to fulfill their tasks within the clearly-reviewed business partnership agreement, you have covered your base for the legal requirements to work with the company.

These are some steps that you should keep in mind when you’re about to get into a legal partnership with any business partner in Nigeria.

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