By 31st of December 2023, all existing loan companies’ licences in Nigeria will expire and all loan companies doing business in the country must reapply to to their respective licensing authorities for renewal of their operational licences, amongst other regulatory compliance obligations that they must fulfill if they must remain in operation next year 2024. The procedure for renewal of a money lender licence is similar to that of fresh application for the licence. There are, however, slight differences in the requirements for a licence renewal application which must be observed carefully to avoid undue delays or potential refusal of the application.
In Lagos State, for example, every loan company is required to submit an application to the Magistrate’s Court for a new money lender certificate and thereafter make a separate application to the Ministry of Home Affairs and Tourism (“Ministry”) for the renewal of the moneylender licence. Whilst the application to the Magistrate’s Court may be pretty straightforward, the application to the Ministry may sometimes be problematic if not well handled. This is because the Ministry will conduct an inspection of the loan company’s office to check its books and interview its directors and management staff as well as verifying all submitted tax clearance certificates (“TCC”) before renewing the company’s licence.
READ ALSO HOW TO SET UP A LOAN COMPANY IN LAGOS IN THE LINK BELOW:
What are the Likely Reasons for Refusal to Renew a Money Lender’s Licence in Nigeria?
Different factors may account for the reason for a government authority’s refusal to renew the licence of a loan company in Nigeria. Some of the reasons may relate to the unfair lending practices and breach of consumer data protection law as well as failure to submit all or genuine requirements during licence renewal stage.
In Lagos State, for example, upon receipt of an application for renewal of money lender’s licence, the Ministry will review and verify the authenticity of the following documents which every loan company must submit in support of its application for licence renewal, namely:
- Money Lender Certificate from the Magistrate’s Court,
- Three (3) years’ tax clearance certificate (including the current year) of the directors and the company,
- Proof of the company’s signage which must be well displayed within the loan company’s premises,
- photocopy of the company’s previous money lender’s licence,
- Evidence of remittance of the employee tax of the loan company’s workers to the Lagos Inland Revenue Service (“LIRS”), and
- Payment of Renewal Fee (note: the Ministry is currently reviewing the Renewal Fee which will be officially communicated to the public in January 2023).
- Immigration permits such as business permit (for a foreign owned loan company), Combined Expatriate Resident Permit and Alien Card (“CERPAC”), Quotas Returns and Expatriate Tax Assessment.
Troubles may arise during the review of the above requirements if they are not genuine or satisfactory to the Ministry. The Ministry will contact the responsible agencies for the confirmation of the above requirements and satisfy itself that the documents submitted by a loan company are genuine and compliant. Where there is any deficiency, the application for renewal of money lender’s licence may be refused or delayed till when the loan company complies with any outstanding or rectifies the deficiency in the requirements submitted to the Ministry.
What other Information Should a Loan Company be Aware of When Processing Renewal of Money Lender’s Licence in Nigeria?
A loan company may change its office address but physical address or office location of a company renewing its licence must not be less than a year from the date of the first physical address at the at the time of the application for renewal.
Also, a notification of change of directors or inclusion of new director (if any) must be given to the Ministry with proof of certified documents from the Corporate Affairs Commission (“CAC”) evidencing such filings for change or inclusion of a new director.
Please note that a director of a loan company cannot serve on the board of another loan company simultaneously. Where a director serves or attempts to serve on the boards of two companies simultaneously, the Ministry may revoke the licence of both defaulting companies or the latter company, as it deems fit.
Lastly, the Federal Consumer Competition Protection Commission (“FCCPC”) now requires all digital lenders in Nigeria to register with it and the Nigerian Data Protection Bureau (“NDPB”) as part of digital lenders’ mandatory obligations before they can operate in the country. Failure to register with FCCPC and NDPB may result in a loan company’s inability to get support from digital payment companies and other third party service providers in Nigeria who will definitely insist that the loan company presents evidence of FCCPC approval before integrating their digital payment platform to the loan company’s online App.
Please note that the FCCPC has extended the deadline for the mandatory registration of digital lenders to 31st January 2023.
YOU CAN ALSO READ MORE ON FCCPC REGISTRATION BELOW:
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About KORIAT & CO.
We are a commercial law firm in Nigeria with network of lawyers and consultants in Ghana, Kenya and Rwanda. The above article is not legal advice and does not automatically make our readers our clients unless they specifically instruct us to act or represent them in any way.
We assist local and foreign clients to process company registration and business licences in Nigeria, Ghana, Kenya and Rwanda.
Please contact Koriat & Co. through admin@koriatlaw.com or 09067842241 if you require additional information about or assistance in processing company incorporation or application for a money lender’s licence.
