Below are some introductory snippets with respect to the celebrated Nigeria Startup Act 2022.

1. The Nigeria Startup Act 2022 (NSA) is the relevant law in place. It emanated from what you know previously as Nigeria Startup Bill. Bills are merely proposed laws. Until passed into law, a bill has no legal effect no matter how famous.

2. The commencement date of the NSA is 19 October 2022. This date is the official date the Act took legal effect.

3. The main objective of the Act is to “provide for the creation and development of an enabling environment for technology-enabled startups in Nigeria.” So, this Act is not really looking at your startup if it isn’t a tech startup.

4. The startups need to be companies incorporated under the Companies and Allied Matters Act 2020. Registering your startup as a Business Name is not the way. Don’t do that.

5. For your startup to come under the Act, it needs what the Act described as a “startup label”. Below are the requirements to obtain the startup label:

a) Your startup must be a registered company as mentioned above, which has been in existence for not more than 10 years.

b) The objects or business of the startup must be “innovation, development, production, improvement, and commercialisation of a digital technology innovative product or process”.

c) The startup needs to be “a holder or repository of a product or process of digital technology, or the owner or author of a registered software”.

d) At least one-third of the shares of the startup must be held by one or more Nigerians as founder or co-founder of the startup.

Note: A sole proprietorship or partnership may be granted what is known as “a pre-label status” for a period of six months to enable it step up as a company and comply with other labelling requirements of the Act. A sole proprietorship or partnership which fails to step up within the 6 months will lose the pre-label status granted to it.

A startup desirous of being granted a label under the Act shall submit an application on the Startup Support and Engagement Portal (Startup Portal) to be established and submit necessary documents.

It is important to seek legal support from law firms with experience in the technology space for necessary guide to ensure that your application is smooth and in order.

At the end of a successful application process, your startup will be issued with a labelling certificate. Your startup label shall be valid for a period of 10 years from the date of issuance. You cannot be a startup forever.

Upon obtaining your startup label, you need to:

1. comply with all the extant laws governing businesses in Nigeria.

2. provide information annually on the number of human resources, total assets and the annual turnover achieved from the period the startup label was granted.

3. maintain proper book of accounts in accordance with reporting obligations provided under extant laws and regulations.

4. provide an annual report on incentives received and advancement made by virtue of the incentives.

5. notify the authorities of any change in structure, composition or objects of your startup within a period of one month from the date of such change, and

6. comply with the obligations set out by the authorities after issuance of the startup label.

Note: You need qualified solicitors to help you with regulatory compliances while you focus on your business. The business of an entrepreneur is not so much on rules & regulations but in innovating, changing lives and making money!

The Act established a body known as the National Council for Digital Innovation and Entrepreneurship. This body will generally oversee the implementation of the objectives of the Act.

Among other incentives, the Act provides for certain tax reliefs for startups under the Act and repatriation of investment by foreign investors. This is to pave way for more foreign direct investment in the country.

Conclusion

The Nigeria Startup Act is a big win for tech entrepreneurs in Nigeria. Through the legal and institutional framework provided, the Act promises a rewarding future for technology-driven startups in the country.