All digital loan companies’ licences in Lagos State must renew their licence as same is deemed to have expired by 31st of December 2024. Effective from 1st January 2025, digital lenders must reapply to to their respective licensing authorities for the renewal of their operational licences, amongst other regulatory compliance obligations that they must fulfill if they must remain in operation in the year 2025.
A digital lender may be a licensed Finance Company, Microfinance Banks (both are licensed by the Central Bank of Nigeria) or a Money Lender which is otherwise licensed by a Magistrate’s Court and the Lagos State Ministry of Home Affairs and Tourism.
All CBN-supervised institutions are expected to apply in writing for the renewal of their licences by paying the renewal fee upon which the CBN grants a renewal subject of course to satisfactory audit checks by the Inspection Team of the Other Financial Institutions Supervision Department (OFISD) of the CBN.
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. Every money lender 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 for the renewal of the moneylender licence.
The CBN’s OFISD and the Lagos State’s Ministry of Home Affairs and Tourism 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 their respective licences.
Different factors may account for the reason for a government authority’s refusal to renew the licence of a digital loan company. Some of the reasons may relate to violation of the conditions of licence, 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 of Home Affairs and Tourism 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.
The Ministry usually undertakes due diligence on the company and all submitted documents by contacting 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.
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 CBN or 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. A prior approval of the CBN is required to appoint a director on the board of any CBN-licensed institution in Nigeria.
***************************************************************************************
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.
