Section 29 of the Investment Promotion Act 1992 sets out what a certificate says. Its brevity is deceptive: each of the four terms carries consequences.
Section 29
(1) Where the Authority grants an application under section 28, it shall issue a certificate for a foreign enterprise to carry on business.
(2) A certificate shall (a) be in the prescribed form; and (b) contain the following terms —
(i) the name of the foreign enterprise; and
(ii) the nature of the activity; and
(iii) the location where the foreign enterprise is to carry on business; and
(iv) any other prescribed terms and conditions.
| Term | Why it matters |
|---|---|
| Name | The certificate is enterprise-specific and not transferable. A related company is a different enterprise |
| Activity | Operating outside it breaches the certificate (s 41(1)(e)) and exposes contracts to s 41A |
| Location | The certificate authorises business at that location. Expanding elsewhere requires variation under s 33 |
| Other terms and conditions | Breach is an offence and a ground of cancellation or suspension under s 36(1)(a)(ii) |
The activity term
A certificate authorises the enterprise to carry on business in that activity. It does not authorise the enterprise generally.
Two provisions soften the position:
- Section 3 defines activity to include “all other antecedent and incidental business activities which are reasonably required to be conducted by an enterprise in carrying on business in that activity”. So the ordinary incidents of the certified business — leasing premises, employing staff, contracting for supplies — are covered.
- Section 33 allows an application to vary the terms.
But a genuinely new line of business is not incidental. Diversifying without varying the certificate risks:
- An offence under section 41(1)(e) — failing to comply with the terms of a certificate — carrying a fine up to K100,000 plus K10,000 for each day it continues;
- A declaration under section 41A that contracts relating to “business activities outside of the nature of the activities for which the foreign enterprise is certified” are unlawful and void; and
- Cancellation or suspension under section 36.
Note who may apply for a section 41A declaration: the other party to the contract, or the Authority. A counterparty who no longer wishes to perform has a statutory route out.
Sections 30 and 31 — the Register of Certificates
(1) The Authority shall keep a Register of Certificates, into which shall be entered particulars of (a) every certificate issued; (b) every certificate cancelled; and (c) such other particulars as are prescribed.
(2) The Register, or a document purporting to be, to be a copy of, or an extract from it, is prima facie evidence of the matter contained in it.
(3) A copy of a certificate or of an extract may be obtained on payment of the prescribed fee.
The Register of Certificates shall be open for inspection during normal business hours.
Due diligence. Anyone dealing with a foreign enterprise can check whether it holds a certificate, for what activity, and at what location. Given section 41A, that is a search worth doing before contracting.
Evidence. Section 30(2) makes an extract prima facie evidence, so a party need not call an officer of the Authority to prove the position. That works alongside section 41(4), under which a certificate signed by the Managing Director stating that an enterprise was not certified, or was not complying, is prima facie evidence of that matter.
Transparency. Cancellations are recorded as well as grants, so the Register shows enforcement history.
Before contracting with a foreign enterprise
- Search the Register. Confirm a certificate exists and has not been cancelled.
- Check the activity. The proposed contract must fall within the certified activity, or be incidental to it — otherwise section 41A is available.
- Check the location. The certificate states where the enterprise is to carry on business.
- Check for suspension. A suspension under section 36 takes effect from the date of the notice and continues until revoked, cancelled or overturned on appeal.
- Take a warranty. Prudent contracts with a foreign enterprise include a warranty that it holds a current certificate covering the contract activity, and an obligation to notify any change.
For a national enterprise selling an interest to a foreign investor, the position is governed separately by Part IVA — and section 41(1A) makes the seller liable where the buyer has no certificate.
Sources
- Investment Promotion Act 1992 — ss 3, 28–31, 33, 36, 41, 41A
- Companies Act 1997
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.