HOW TO SET UP A PRIVATE MONEY LENDING COMPANY IN NIGERIA
A company involved in consumer and business money lending operations in Nigeria is referred to as a private lending company.
HOW TO SET UP A PRIVATE MONEY LENDING COMPANY IN NIGERIA
A company involved in consumer and business money lending operations in Nigeria is referred to as a private lending company.This refers to a business that lends money to consumers with the understanding that the money would be repaid with interest at a later period. Private lending companies are subject to the regulation of the Money Lending Law of the various states of the Federation.
Section 2 of the Money Lending Law states that. “Money Lending includes every person whose business is that of money lending or who carries out or advertises or announces himself or holds himself to anyway as carrying on business, whether or not he also possesses or owns property or money derived from sources other than the lending of money and whether or not he carries on businesses as a principal or agent but shall not include”.
Without the necessary government licence, it is illegal to operate a money lending business in Nigeria. Anyone caught engaged in money lending activities, whether or not they have the proper licence, would be considered to be a money lender and subject to legal consequences.
APPLICATION PROCESS FOR MONEY LENDING LICENSE
But it's vital to note that in Lagos State, a corporate applicant often receives a money lender certificate and licence if they match the standards established by the Ministry of Home Affairs (as discussed below).
A State Government department authorised to do so in the State where the money lender company is doing business or intends to do business, or the FCT, Abuja, issues the money lender's certificate and licence.
For instance, any Abuja Magistrate Court may provide a money lender with both a licence and a certificate.
In Lagos, a Magistrate Court issues certificates while the Ministry of Home Affairs issues licences. The process is more onerous in Lagos than any other State.
The following documents must be submitted with the application for a money lending licence in Lagos State:
A cover letter with the company’s seal attached.
The office address of the individual or corporate applicant.
Certificate of Incorporation of the Company.
Certified True Copy of the CAC application Forms.
Memorandum and Articles of Association of the proposed lending company.
The object clause of the company must include money lending business or financial service.
Tax Clearance of the proposed private lending company.
Where the proposed private lending company is newly registered, there must be evidence that the company is a registered taxpayer.
Police clearance from the Commissioner of Police for two (2) directors of the proposed private lending company.
Evidence of maintaining an office by the proposed private lending company.
Evidence of maintenance of a current account with a recognized licensed bank.
The proposed private lending company will receive a Form B and C after submitting an application to the Chief Magistrate. The prospective private lending firm is required to submit a formal application to the Ministry of Home Affairs and Tourism after collecting the necessary Forms.
The following additional document must be submitted with the application to the Ministry of Home Affairs:
A formal application letter to the Ministry of Home Affairs and Tourism.
Certificate of Incorporation of the Company.
Evidence of payment of application fee into the Lagos State Government Account.
Money Lending Ordinance (Form B) 19W8, issued from the Magistrate Court.
A duly completed Magistrate Form C.
A police report from the Commissioner of Police showing fingerprints of the Directors of the Company.
3 years Income Tax Clearance for the Directors of the proposed Company.
The visitation and physical inspection of the prospective office by the government representatives is the last step in the process of becoming eligible to open a private lending business. If the business is already engaged in lending operations, the books will also be examined during the visit.
NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com
WRITTEN BY CHAMAN LAW FIRM TEAM
EMAIL: chamanlawfirm@gmail.com
TEL: 08065553671, 08024230080