Effect of government regulations on business management; impact on your business.
Introduction
Private individuals, groups as well as the three levels of government are free to establish business enterprises. The government through various laws and agencies ensures the supervision and regulation of businesses in Nigeria. It is to ensure the ease of doing business for investors, entrepreneurs, business-oriented persons as well as safeguarding the interests of the customers of these businesses.
According to section 16 (3) of the Constitution; a body shall be set up by an act of the National Assembly which shall have power to review from time to time the ownership and control of business enterprises operating in Nigeria and to administer any law for the regulation of the ownership and control of such enterprises. Therefore, it is clear that the role of government is to protect and represent the interest of the society and the citizens in which business operates. It can be further said that through regulations they protect consumers from abuse that's where (FCCPC) comes in because it protects consumers, they ensure efficiency in the use of resources and promote equitable distribution of income.
In the previous session I spoke about Some government regulations for business owners or entrepreneurs. For more insight, Read more on: REGULATORY FRAMEWORK EVERY ENTREPRENEUR MUST KNOW IN 2023.
This session will focus on the effect of those regulations and the impact they have on your business as a business owner. Some of the things required of a business owner are;
✅ Registration of business/company after 28 days of commencement of business activity. According to CAMA every business in Nigeria must be registered with the Corporate Affairs Commission (CAC) within 28 days of commencement of business activity. Most business owners or entrepreneurs start their business without registering it with the appropriate body. The first reason why companies incorporate is because of corporate personality. Under the Nigerian law there's a fiction where a company is deemed to be a separate entity from the individuals who created it. The legal implication is that if the company owes the bank 10million naira, it is the company that owes the bank and not the directors of the company and the bank cannot sue them in their personal capacities.
✅ Taxes
There are certain taxes that will be levied on you or your business or company as a business owner. Some taxes are levied by the federal government while some are levied by the state government.
Tax revenue helps provide benefits, such as schools and roads; healthcare for the poor and elderly; police and fire protection; and to finance the defense forces. Taxes keep the nation running and provide for its people. It also helps the government to plan and manage its resources. Taxation of business or enterprise creates additional benefits for the government and propels growth and development for SMEs and promotes good governance.
✅Statutory Licenses/Permits
The government requires businesses in certain sectors of the economy to obtain permits, licenses or certifications to enable them to provide goods and services in such sectors. This is to ensure the supervision of the business, the safety of the customers, and expertise of those involved depending on the license sought for. Some of these licenses/permits include:
The National Agency for Food and Drug Administration and Control (NAFDAC) Approval which permits an individual or entity to manufacture certain foods or drugs for sale otherwise they will be deemed illegal. The failure to obtain a NAFDAC approval or registration before distributing any drugs or processed food or food materials may lead to a complete seizure of such products by the government. Having a NAFDAC number is also important for the business owner because it gives your product credibility.
Money Lending License governed by the Money Lenders Act and the Money Lenders Laws of various states granted to persons intending to go into the business of lending money. One of the benefits of being a licensed moneylender is that a moneylender can exercise its right in instituting an action in court to recover the principal loan and accrued interest from a defaulting borrower. Failure to acquire this is fatal as a person or entity may not be able to recover the money borrowed to a defaulting borrower through a judicial process.
Licenses by Central Bank of Nigeria (CBN): the CBN issues various licenses, which licenses to all companies designated as the financial institutions according to the Banks and Other Financial Institutions Act 2020 (BOFIA). By the BOFIA, no company shall carry out any FINTECH services in Nigeria without the approval or licenses from the CBN. The Central Bank of Nigeria serves as the primary body responsible for regulating financial services and financial institutions in Nigeria. It makes regulations from time to time regulating the activities of financial institutions such as minimum share capital, the requirement for obtaining licenses, issuing legal tender etc. It also requires a foreign business intending to import capital to obtain a Certificate of Capital Importation from an authorized dealer i.e. a bank.