1. Introduction
The licensing of a money lender company in Oyo State is one of the functions of the Ministry of Trade, Investment and Cooperatives (“Ministry”) of the Oyo State Government. The Ministry would issue a moneylender company a professional/business premises registration certificate, which serves as a licence for the company to operate moneylending activities within the Oyo State.
Before applying to the Ministry, the applicant company for moneylender’s licence must be registered as a private limited liability company with the CAC. Although the minimum share capital with which the company is to be registered is not specified by the Ministry, it is advisable that the share capital of a moneylenders is not less than N20 Million and should have at least two (2) Directors. See our earlier article for the general requirements for incorporation here.
2. Applicable Costs for Incorporating a Money Lenders Company
The costs of incorporation of a company in Nigeria are usually dependent on the amount of share capital of the company. This is because the share capital of a company attracts a stamp duty (payable to the Federal Inland Revenue Service) in addition to the incorporation or filing fee chargeable by the CAC.
The total of incorporation costs of a Money Lender company (i.e. a N20 Million share capital company) in Nigeria is about N305,000 (Three Hundred and Five Thousand Naira). The foregoing sum entails the CAC Registration Cost and Stamp Duty chargeable by Federal Inland Revenue Service (“FIRS”).
The incorporation by CAC costs about N105,161.25 (i.e. this is calculated by paying N10,000 cost for the first 1 million of the 20 million share capital and, then, paying N5,000 cost for every subsequent N1million of the remaining 19 million share capital, which will then mean N5,000 multiplied by 19, plus the initial N10,000 which ultimately equals to N105,000).
Also, as already mentioned above, stamp duty of N153,050 is payable to the Federal Inland Revenue Service on the N20 million share capital (this sum is determined by multiplying 0.75% by 20,000,000).
Both payments above are payable using the Federal Government Remita payment platform which charges about N161 per payment.
Post-incorporation costs for obtaining the certified true copy of already registered company’s documents and other miscellaneous expenses should not exceed N50,000.
3. Licensing Procedure and Costs
The procedure for application of an operational licence for moneylender are in two phases, one application is done at the Ministry and the other at the Magistrate Court.
i. Requirements for the application to the Ministry
As mentioned above, the Ministry issues a professional/business premises registration certificate which serves as operational licence for money lending companies to operate within the state.
The procedure for acquiring the licence is as follows:
(a.) An application letter in the prescribed form on the letter head paper of the company is addressed to the Honourable Commissioner of the Ministry of Trade, Investment & Cooperatives.
(b) Accompanying the application letter are copies of the Certificate of Incorporation, the Memorandum and Articles of Association (“MEMART”) of the Company and other CAC documents showing the share capital of the company, the shareholder(s), the director(s), company secretary and other particulars. Please note that the MEMART must contain an object to the effect that the Company engages in the business of money lending services;
(c) Three (3) years Tax Clearance Certificate of at least two (2) Individual directors of the Company. Please note that it is required that the company must have at least two (2) adult directors.
(d) Payment of registration fee.
ii. Requirements at the Magistrate Court
(a) The first step here is to apply to the Chief Registrar of the Magistrate’s Court for a money lender’s licence.
(b) Certified True Copies of the Certificate of Incorporation, the Memorandum and Articles of Association (“MEMART”) of the Company and other CAC documents showing the share capital of the company, the shareholder(s), the director(s), company secretary and other particulars of the company should accompany the application letter.
(c) Also accompanying the application letter are the following:
- Three (3) years Tax Clearance Certificate of two (2) Individual directors of the Company.
- Evidence of maintenance of a current account with a licensed bank in Nigeria or a Reference Letter from a licensed bank in Nigeria;
- Evidence of payment of Company Income Tax for three (3) years (for old company);
- Passport Photographs the two (2) directors;
- Means of identity of the two (2) directors;
- Evidence of application for TIN (this is applicable only when it is a newly incorporated company);
- Fully filled Forms B and C from the Magistrate’s Court.
- Police Clearance for the two (2) directors.
The Chief Registrar of the Court will then open a file for the applicant, assign it to any Magistrate within the jurisdiction to consider the applicant’s application for money lender’s licence.
If the application succeeds, the moneylender’s license is issued to the applicant by the assigned Magistrate for a period of one (1) year and shall be renewable at the expiration of the license.
4. Benefits of obtaining Money lending Certificate and License
1. Right to institute an action in court to recover the principal loan and accrued interest from a defaulting borrower. It is an offence to lend money for purpose of attracting interests unless the lender has obtained a money lender’s certificate and licence.
2. Right to own moveable and immovable property in the company’s name.
3. Certificate and licence serve a huge added advantage and brand visibility.
4. It can attract serious investors and create an opportunity for business expansion if a money lending business is registered and licensed.
5. Protects the business and promoters from criminal liability for doing money lending business without regulatory licence.
5. Estimated Costs for Obtaining Money Lender Licence in Oyo State
| Particulars | Costs (N) |
| Company Registration | 305,000 |
| Ministry Registration Costs | 100,000 |
| Magistrate’s Court Licence/Certificate | 100,000 |
| Tax Registration for New Company | 100,000 |
| Police Report for two (2) directors | 60,000 |
| Tax Clearance Certificate of directors for 3 years | To be determined on case by case basis |
| Bank Account Opening | 50,000 |
| Miscellaneous Expenses | 150,000 |
| Professional Fee | Available on request |
Please note that the regulators are at liberty to change the applicable charges without notice. The above figures can also be verified by the readers.
6. Estimated Timeline
We estimate that the entire process for company registration and money lender licence of Oyo State can be completed in not more than one (1) month.
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About KORIAT & CO.
We are a growing commercial law firm in Lagos and Abuja. 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.
Please contact Koriat & Co. through admin@koriatlaw.com or 09067842241 if you require additional information about or assistance in making the application for a money lender’s licence.
