Process And Requirement For Obtaining A Money Lender Licence In Nigeria

Introduction

As an alternative solution to bridging the financial inclusion gap in Nigeria, Money lending activities and businesses are emerging rapidly in the micro lending or Buy Now Pay Later (“BNPL”) sector.

In this article, we have highlighted the requirements and procedure for registration of a money lending company at the Corporate Affairs Commission (“CAC”) and obtaining the money lender certificate and licence in Nigeria.

Who is a Money Lender?

Money lender’s certificate and licence are granted by a State Government agency (The Ministry of Home Affairs) within the State where the money lending company is doing or seeking to do business.

Section 2 of The Lagos State Money Lenders Laws, defines a Money Lender to include:

Every person whose business is that of money lending or who carries on or advertises or announces himself or holds himself out in any way as carrying on that business whether or not that person also possesses or earns property or money derived from sources other than the lending of money and whether or not that person carries on the business as a principal or as an agent; but shall not include:

1. Any society registered under a Cooperative Society Law;
2. Any statutory corporation empowered by law to lend money;
3. Banks or insurance companies or other licensed business which lends money in the course its operations; and
4. Licensed pawnbroker.

It is, therefore, an offence to engage in a money lending business without the required licence in Nigeria.

Process and Requirement of obtaining a Money Lender Licence

An applicant must be registered as a company with the CAC as a private limited liability company with a share capital of not less than N20 Million and at least two (2) adult directors.

The process and requirement of obtaining a money lender are as follows:

A). Letter of Intent

This is addressed to the Chief Magistrate and Commissioner of Police of the jurisdiction where the business is to be carried out.

B). Police Clearance of the applying individual

This must be obtained by each Director of the Company who desires to apply for the Moneylender’s Licence. Also, the Directors must be physically present in order for the forensic officer to scan and analyse their fingerprints.

Documents required includes:

1. Valid means of identification of the Directors of the company;
2. Ii. 2 (Two) passport-size photographs of the Directors; and
3. Iii. Proof of payment of application fees.

C). Application to the Magistrate Court in the jurisdiction.

In applying for the Magistrate’s Certificate, the following documents must be provided:

An application letter on the company’s letterhead with the company’s seal affixed, addressed to the Chief Magistrate. The list of documents that will be attached are:

• Company’s registration Status Report
• Memorandum and Articles of Association of the company;
• Certificate of Incorporation of the company;
• Tax Clearance of the company’s Directors to prove that they are registered taxpayers;
• Police Clearance of the Directors of the company; and
• Evidence of maintenance of a current account under a licensed Bank;

Upon the due filing of the above documents, 3 (Three) documents shall be issued:

1. A letter from the Chief Magistrate’s Court Registry to the Permanent Secretary of the Ministry of Home Affairs and Tourism confirming due compliance and recommending the issuance of the Moneylender’s License to the applying corporate body in question;
2. Form B of The Money Lenders Ordinance, 1938; and,
3. Moneylenders Regulations Form of Moneylenders’ License (Form C) which needs to be completed by the Applicant.

D). Application to the Ministry of Home Affairs and Tourism

Upon obtaining the above documents, applicants shall proceed to the Ministry of Home Affairs and Tourism with payment of the prescribed fees which include:

1. Purchase of the application form required for the regularization of Money Lenders Certificate, with attesting receipt to evidence payment; and;
2. Money Lender License Fee, which will be paid into the Ministry of Home Affairs and Tourism’s designated Account:

Thereafter applicants shall:

1. Complete the application form and pay the fees into the bank account provided by the Ministry or provided by the revenue collection department;
2. Submit the Application for Regularization form, together with the following list of documents:

• A cover letter to the Ministry of Home Affairs and Tourism;
• Money Lender Ordinance (Form B) 1938 – from the Magistrate Court;
• Duly completed Form C – from the Magistrate Court;
• Police Report from the Commissioner of Police showing the fingerprints of the company’s Directors;
• 3-year Income Tax Clearance Certificate (including the current year)/Development Levy for each Director of the company;
• Pay As You Earn (PAYE) Certificate, Tax Clearance of at least 2 (Two) of the company’s Directors;
• Certificate of Incorporation of the company from the Corporate Affairs Commission;
• Evidence of payment of the application fees to the Lagos State Account; and,
• Evidence of maintenance of a bank account with a reputable bank in Nigeria.

E). Visitation

Upon submission of the relevant documents and payment of the prescribed fees, the Ministry shall conduct a visit to the office of the Applicant. It is important that the company mounts a visible office sign at the exterior of the registered address before visitation by officials of the Ministry.

Upon due compliance of the above requirements, the following shall be done by the Ministry of Home Affairs:

• A file shall be opened for the applying Money Lending Company in which all the required documents shall be inserted therein.
• Inspection officers from the Ministry shall be sent on an agreed date for visitation for the inspection of the registered office address of the applying Company. Upon visitation, as the company is yet to commence business, inspection of the office premises and officers of the company shall suffice. If business has commenced, the books will be inspected.

Lastly, after inspection and confirmation of due compliance, the corporate body shall be issued with the Moneylender’s License. Within a month of being issued a Moneylender’s License, the licensee must register the license at the Moneylender’s License Registry.

We hope you have found this information helpful. Please note that this information is provided for general informational purposes only and is not intended to be legal advice. No lawyer-client relationship is formed nor should any such relationship be implied. This answer is not intended to substitute for a legal advice. If you require legal advice, please contact us at advisory@circlellp.com

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