Notable Provisions Of The Start-Up Bill
The notable highlights of the Bill include;
a) Nationality of the Startup: The Bill provides that the company should be incorporated in Nigeria and have its headquarters in Nigeria.
b) Objective of the Startup: The Bill provides a wide range of objects which include innovation, development, production, improvement and commercialization of innovative products.
c) Life span: To qualify as a startup in the Bill and have access to the incentives, the company should have existed for not more than ten (10) years in Nigeria.
d) Products: The Bill targets the Tech ecosystem of Nigeria. The Bill provides that the goods and services offered by a startup company, should involve new technology or at the least, be technology-enabled.
The Bill also proposes that Ministries and Agencies of Government set a 15 per cent margin of preference for startups, when the agencies procure technology-related products.
e) Shareholding of the company: The Bill aims to promote Nigeria’s economy by encouraging Nigerian based startups. As a result, the Bill provides that at least 51 per cent of the startup shares should be held by Nigerians.
This provision does not limit foreign participation. Companies in which foreign participation exceeds 49 per cent, can still qualify as a startup where the ultimate beneficial owners of its foreign corporate shareholders are Nigerian citizens.
f) The One Stop Shop Centre (OSSC): The Bill provides that the OSSC will set up to fast track and reduce regulatory constraints on startups. The OSSC will help fast track the incorporation of companies, registration of trademarks, patents and industrial designs as the relevant regulators, such as Corporate Affairs Commission, Trademarks, patent and Design Registry, NOTAP, etc. provide these support all at a discounted rate.
To support start-ups and reduce regulatory hiccups, the Bill also proposes the creation of a portal for easy access of information on all the regulatory and registration requirements associated with startups within the country.
g) Expenses of Startup company: The Bill also provides that at least 15 per cent of the expenses of a startup company, should be attributed to research and development activities.
h) Labour: Employees are not to exceed 100 excluding casual workers, consultants and outsourced staff.
i) National council: The proposed Bill also provides for the creation of a National Council, consisting of individuals from both the private and public sectors, to advise regulators. The recommended Council would comprise of representation from various ministries and government bodies. The Council also proposes representation from two Venture Capitals or Private Equity firms and two startup hubs. Regulators within the startup space are to consult with the Council before issuing policies, directives or regulations that affect startups.
j) Funding: The Bill proposes the establishment of a Startup investment seed fund. There will be an engagement portal that enables stakeholders in the Startup ecosystem to interface, a special fund for startups aiming to scale, establish talent development programmes, and free zones for startups. Additionally, there is the provision of incentives by commercial banks to provide loans to startups, and also sensitize the public and private research institutions to conduct more research on startups.
k) Tax incentives: Several tax incentives are proposed by the Bill such as tax credits for investors, tax exemptions on the profits of Startups for a specific duration and taxation of goods, and services at a reduced value-added tax rate. This is in line with international best practices, which is necessary to encourage investments in the Startup space.