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DealHQ Partners

Season 1 Episode 2 – AFCFTA: Leveraging Technology to achieve regional competitiveness

Simply is the sponsored Podcast of DealHQ Partners, where we engage thought leaders on trending issues around law and business in the most simplistic manner.

Our Tosin Ajose joins Mrs. Nkemdilim Uwaje Begho, the CEO of Future Software Resources Limited and a Non-Executive Director in Stanbic IBTC Bank who is recognized as a  seasoned digital transformation executive and one of Forbes top 10 female tech founder in Africa in conversations around the Africa Continental Free Trade Agreement and the role of technology in achieving competitiveness in Africa’s new borderless and integrated market.

This episode examines the role of digital in fast-tracking the gains of AFCFTA, how technology and innovation will facilitate connectedness and a truly homogeneous market, big data, data share, and regional collaboration, and how Nigeria can position itself for competitive advantage in the free zone

 

Listen here:   linktr.ee/DealHQ

 

 

UNDERSTANDING NON-FUNGIBLE TOKENS(NFTs)

 

WHAT ARE NON-FUNGIBLE TOKENS?

Non-Fungible Tokens are cryptographic tokens created using blockchain technology. They represent and uniquely describe a valuable digital asset with special distinct features that allow for traceability and identification of the underlying asset which it represents (this underlying asset could be digital or a tangible real-life asset such as a vehicle, a gadget, a literal work or real estate).
The non-fungibility of these cryptographic tokens distinguishes them from other common cryptocurrencies such as bitcoin or ethereum which are created in multiples, each having the same features as all the others in circulation and each coin being of equal value. An NFT is encoded with an “indivisibility feature” i.e. the token cannot be broken into smaller elements of a whole such as you would a bitcoin (which can be broken into 100,000,000 satoshis) with each bearing a corresponding value of the fraction of a bitcoin. Each NFT is unique, exclusive and can only be transferred as a whole.

Nonfungible.com a website that tracks NFT marketplaces represents that the current NFT Market is worth over USD250 Million. For a market that was completely non-existent before 2017, it is expected that the market will balloon in geometric progression because of the boundless opportunity it opens for the trade of digital assets in a secure and efficient manner. Especially the possibility of easily converting all forms of assets into NFTs.

WHAT ARE THE KEY FEATURES OF A NON-FUNGIBLE TOKEN?

i. Uniqueness
The metadata attached to an NFT allows it to be defined by its unique features such that it can be clearly distinguished from other assets.

ii. Rarity
For NFTs it is impossible to create or reproduce the subject asset (there will always, only be a single version of the asset on the blockchain). This specifically is what influences the value of NFTs and makes them desirable to collectors.

iii. Indivisibility
An NFT cannot be split into smaller units of a whole. An NFT can only be held or transferred as a whole.

iv. Value
Only assets likely to be deemed valuable in the NFT marketplace may be converted to NFTs.

ARE ALL NFTS BACKED BY A TANGIBLE UNDERLYING ASSET?

An NFT is usually backed by an underlying asset which could be digital (such as digital art) or tangible real-life assets (such as an automobile or real estate). As previously explained the distinctive information relating to the asset is encoded into metadata on a blockchain platform. It is important for a buyer to understand the exact nature of the asset that is being acquired and to ensure that the smart contract purchased actually transfers legal and beneficial interest in the intended underlying asset and that the metadata are not a mere description of the same. It has been the case that some undiscerning buyers have acquired a mere description of an asset rather than the asset itself

WHAT NATURE OF LEGAL INTEREST DO I ACQUIRE WHEN I BUY AN NFT?

The Buyer of an NFT often expects to acquire the original, rare, and unique form of the underlying asset which the cryptotoken represents (if it is an artwork the original copy as digitally signed by the artist with a digital proof of authenticity and uniqueness in the form of metadata). The asset itself may not always be encoded into the Ethereum blockchain itself.
In simple terms, the NFT buyer acquires simply a smart contract on blockchain which contains metadata with the name of the asset, description of the asset, and a URI (Uniform Resource Identifier which provides technical details about how the asset works and in some cases link to an IPFS (InterPlanetary File System) a protocol that allows for the creation of permanent, immutable links to the blockchain where the asset is emplaced.

HOW IS THE VALUE OF AN NFT DETERMINED?

An NFT’s value is driven by demand and the value placed on it by potential buyers. There is therefore no empirical basis for determining its value, it remains very speculative. Offer prices are often driven by sentiments and its inherent features of rarity and uniqueness. A popular example is a digital collage created by the artist Beeple which after being converted to an NFT was traded for USD69Million at a public auction that started with a usd100 bid called the beginning of the Digital Collectibles craze. Or Jack Dorsey’s (Founder of Twitter) first tweet which he converted to an NFT and sold for USD2.9Million.

HOW DOES THE NFT MARKET PLACE OPERATE?

The NFT Marketplace is a virtual platform/website where NFTs can be traded, and where market participants take a sell or buy position and transact with each other via their digital wallets using cryptocurrencies as the medium of exchange. Whilst most marketplaces will trade a wide range of NFTs some operate as niche markets trading only one homogeneous category of NFTs a good example is Looking Glass Factory, a site that trades only digital holograms.

Some of the most common NFT marketplaces are:
i. Opensea, which is acclaimed as the largest NFT marketplace trading a variety of NFTs including art, virtual worlds, sports, trading cards, and other forms of collectibles. On Opensea, collectibles can be listed at a fixed price or for auction;
ii. Rarible, another popular marketplace that is community owned. It trades several categories of NFTs including art, photography, games, metaverses, music, domains, and memes amongst others;
iii. SuperRare is a marketplace for people to buy and sell unique, single-edition digital artworks. Each artwork is authentically created by an artist in the network and tokenized as a crypto-collectible digital item that you can own and trade;
iv. Atomic Market another popular platform is a shared liquidity marketplace that feeds other marketplaces. It allows its users to tokenize and create the digital asset and thereafter sell or auction the asset;                                         v. Another common platform “valuables” is a niche market solely for trading tweets.

NFT marketplaces have become mainstream in the crypto space whilst NFTs have become the most trending asset class of 2021, sparking the interest of traditional investors and several high net worth individuals.

HOW ARE NFTs CLASSIFIED?

The subject of the classification of NFTs remains quite unsettled, however as the market deepens we expect more clarity around their classification. A school of thought argues that NFTs are securities in respect of which local securities law should apply, others argue that they are simply a digital identifier of any form of asset whose legal title is transferrable. The test of whether an NFT will be classified as security will depend on:
i. The purpose for which it was created: If the NFT is being created and sold as a way for members of the public to earn investment returns with a line of recourse to the issuer it will be more likely to be considered a security. Especially if the smart contract has features of an investment contract.
ii. How it is traded: where an NFT is traded on a marketplace that operates similarly to exchanges and capital trade points shares where other securities or commodities are traded, it is likely to be classified as security especially where there exists is a secondary market feature on the trading platform.

WHAT FORMS OF INTELLECTUAL PROPERTY RIGHTS ARE ATTRIBUTABLE TO NFTs?

The storage of NFTs on a blockchain ledger provides a way for asset holders to establish proof of ownership and possession with the innate benefit of immutability and security. It is important to understand the bundle of intellectual property rights which may be applicable NFTs or transferrable to a buyer.

Patent: Where the mining of an NFT or the cryptotoken involves innovation that solves a technical problem, it may be possible to patent the innovation subject to meeting the applicable registration criteria. The patent right is likely to remain proprietary to the creator.

Copyright: In relation to copyright, the metadata related to an NFT are by themselves a creative expression over which the creator automatically acquires exclusive copyright. There is a marked distinction between ownership of the NFT and ownership of the content in the metadata. Where not expressly assigned in the ‘smart contract’ between the creator and the buyer, any incidental copyright remains with the owner. The owner of the copyright remains the only party who can reproduce, make derivative works of, perform, display or distribute copies of the content. Where an NFT relates to artistic or literary work, it is curious what nature of interest is transferred to a buyer if he is not granted the intellectual property right in the work whether in form of a full assignment or a license to use.
Trademarks: In relation to trademarks, NFT creators may protect the name or other graphic property in the work by registering the name or the visual representation.

CONCLUSION
Even though Non-Fungible Tokens are gaining popularity and momentum as a digital asset class, it is no gain saying that the market is new and evolving. Market regulations are therefore still at infancy. At best, the law and regulation applicable to the class of underlying asset will apply to all related transactions. It remains important to exercise caution and seek professional advise when dealing in NFTs especially to guarantee that a buyer of an NFT actually acquires the intended interest in the subject underlying asset.

 

HOW TO GET STARTED

Do you need to know more about NFTs? Our Technovation team is available to support you.
You may contact our team on: Email: info@dealhqpartners.com Telephone: +234 1 4536427 or +234 9087107575

Click here to download PDF

 

Simply by DealHQ Podcast – Cryptocurrencies and the Nigerian Financial Market

Simply is the sponsored Podcast of DealHQ Partners, where we engage thought leaders on trending issues around law and business in the most simplistic manner.

In this maiden episode, Our Lead Advisor, Tosin Ajose is in conversation with Mr. Michael Ugwu, the Founder and CEO of Freeme Digital Limited and pioneer General Manager for Sony Music Entertainment West Africa, a venture capital investor and cryptocurrency enthusiast discussing issues bothering on cryptocurrency adoption, market trends, trading, counterparty risks and regulations from a Nigerian perspective and from a broader Africa wide view.

The whole world acknowledges the unprecedented growth in the global cryptocurrencies MARKET with Nigeria recording over $400 million traded in 2020 alone inspite of its low internet penetration. Statistics show a high level of enthusiasm around the adoption of cryptocurrencies, especially amongst the youth. This episode examines the cryptocurrency market in Nigeria from an investor’s perspective, opportunities in Decentralised Financing (DeFI), lessons, and opportunities for new adoptors.

Listen here:   linktr.ee/DealHQ

 

CBN FRAMEWORK FOR REGULATORY SANDBOX OPERATION

In June 2020, the Central Bank of Nigeria (CBN) released the exposure draft of its Framework for Regulatory Sandbox Operations which set out the rules, processes and guidelines for participation in the CBN regulatory sandbox in a bid to get stakeholder input ahead of its adoption. Following the exposure, on the 13th of January 2021, the Apex Bank published the final version of the Framework which establishes the CBN regulatory sandbox – a controlled facility where fintech developers/innovators can test new and innovative services under the Supervision of CBN. This will enable safe and reliable deployment of innovative fintech solutions without compromising the integrity of the financial system or the experience of the consumers.

WHAT IS A SANDBOX?

In simple terms, a sandbox is an isolated, safe, testing environment where developers/innovators can test new programmes or software applications under a system that promptly identifies and quarantines malware or other zero-day vulnerabilities without compromising the host device(s). These tests are typically conducted prior to go-live.

WHAT ARE THE OBJECTIVES OF THE CBN REGULATORY SANDBOX?

The Apex Bank, has recognized that the introduction of the CBN regulatory sandbox will:

  1. Reduce time to market for innovative products by allowing developers and the CBN to simultaneously monitor the pre go-live product testing in the sandbox thereby shortening approval timeline.
  2. Ensure customer protection safeguards as prescribed by CBN are adhered to;
  3. Promote adequate regulation and an enabling environment for innovation without compromising consumer safety;
  4. Encourage innovative solutions that will advance financial inclusion; competition and ultimately lower cost to consumer;
  5. Define the roles of different stakeholders within the sandbox ecosystem and the bigger payment systems industry.
  6. Provide a communal environment for continuous engagement between fintech innovators/developers and the CBN.

WHO IS ELIGIBLE TO PARTICIPATE?

The Sandbox application process is open to both existing CBN licensees (financial institutions regulated by the CBN) and other Nigerian Companies or Enterprises not regulated by the CBN but who wish to test innovative payment products deemed acceptable by the CBN. Innovators whose proposed solution involves technologies which are not covered under existing CBN regulations may also apply to the CBN for special consideration to participate.

Apart from the Applicant’s eligibility, the underlisted are additional criteria for selection to participate:

  1. The product or service must be innovative and show potential to improve efficiency, security and quality of services in the overall financial market or enhance risk management amongst financial institutions;
  2. The proposed project must fall within prescribed value and volume for effective risk management and mitigation;
  3. The product or service must clearly demonstrate usefulness and functionality;
  4. The applicant must have all resources required for testing in the sandbox;
  5. The applicant must have a business plan showing how the product is to be deployed to market after testing is completed.

HOW DO I APPLY TO PARTICIPATE IN THE CBN REGULATORY SANDBOX?

CBN will make a call for applications once in each calendar year via its website and local newspapers. The advertisement will include minimum eligibility criteria, interested participants are to address their application to the Director, Payments System Management Department and submit same through the CBN official email address: sandbox@centralbankofnigeria.gov.ng. Successful applicants will be issued a letter of approval within 45days from close of application.  Upon the issuance of the letter of approval, the applicant is required to comply with all necessary documentary filings prescribed in the framework.  Upon entry into the Sandbox, Applicants are additionally required to comply with the operational and reporting requirement prescribed in the framework.

CAN CBN WITHDRAW OR REVIEW AN APPROVAL TO PARTICIPATE AFTER IT IS GRANTED?

At any time before the end of the prescribed testing period, CBN may review or withdraw an approval granted to any participant who:

  1. Fails to comply with prescribed safeguards;
  2. Submits misleading information conceals or fails to disclose material information;
  3. Contravenes any applicable law which impacts directly on applicants integrity or reputation;
  4. Goes into liquidation;
  5. Breaches data security or confidentiality requirement;
  6. Compromises consumer safety;
  7. Fails to address identified risks, technical flaws or vulnerabilities.

Before withdrawing its approval, CBN will give the defaulting Participant 45days prior notice and the opportunity to respond to the grounds of the withdrawal. In cases where delay is deemed detrimental to consumers or the Financial System generally, CBN may proceed to withdraw the approval without notice. Once approval is withdrawn, the affected Participant must immediately implement its planned exit from the Sandbox and desist from promoting or taking its product/service to market. It must also comply with other obligations imposed by CBN regarding disposal of confidential information and mandatory post-exit reporting.

WHAT RISK ASSESSMENT SAFEGUARDS MUST BE ADHERED TO WHILE IN THE SANDBOX?

Whilst in the Sandbox, Participants are required to promptly identify all potential risks to consumers, financial institutions or the financial systems generally and to develop appropriate safeguards to respond to/address the risks in ways that demonstrate;- sound financial practices, fair and equal treatment of all consumers, compliance with anti-money laundry regulations, preserves confidentiality of consumer information and encourages healthy competition amongst similar financial products or services.

HOW MANY APPLICANTS MAY BE ADMITTED TO THE SANDBOX AT THE SAMETIME?

The number of applicants admitted will be pre-determined by the CBN based on available resources and capacity at the given time. Each group of innovators admitted into the Sandbox at a given time will be referred to as a “Cohort”. It is expected that CBN will admit one cohort per calendar year. Selection will be based on the Sandbox’s strategic objectives and CBN’s prescribed eligibility criteria.

WHAT HAPPENS AT THE END OF THE TESTING PERIOD?

When a Participant has completed its product testing in the Sandbox, the result will be benchmarked against the product objectives and the CBN will determine whether the product or service is suitable to be deployed to the market. Deployment could be direct by the Participant to the market or by licensing the product to another firm to take to market or taken to market in partnership with other CBN regulated firms. Where CBN deems the test as failed either on account of sub-optimal output or unintended negative consequence on the public CBN will prohibit the deployment of the product. A participant may on its own elect to discontinue testing in the sandbox in such case it shall seek the consent of the CBN which may be granted subject to satisfactory performance of all prescribed regulatory obligations. For successfully tested products, participants may proceed to apply for the requisite license to deploy the Product. CBN will typically support successful participants in addressing risks and vulnerabilities detected during the testing phase.

ARE THERE CIRCUMSTANCES UNDER WHICH EXTENSION OF TIME FOR TESTING MAY BE GRANTED TO A PARTICIPANT?

Typically, applications from participants would indicate proposed testing timeline. Each cohort however will generally run for 6 months. Where a participant feels that it is expedient to extend the testing period, an application shall be made to the CBN at least 30days before the end of the initial testing timeline stating the additional time required and the reason for the application. CBN will not permit frivolous or protracted extensions. Where a general positive outcome has been recorded and extension is only required to respond adequately to risks or vulnerabilities identified during initial testing CBN will be most inclined to grant the requested extension.

HOW WILL THE CBN REGULATORY SANDBOX DRIVE PRODUCT INNOVATION AND FINANCIAL INCLUSION?

The CBN sandbox provides the needed anchored support for fintech innovators by reducing the cost and time to completion of new products, more importantly the sandbox will be a major repository for market data whilst also providing the regulator with wider coverage and more intimate interaction with innovators and their products. It is expected that the regulatory sandbox will provide a good foundation for the wider adoption of open banking systems in Nigeria.

HOW TO GET STARTED

Do you need more about the CBN Regulatory Sandbox? Our Finance and Technovation team is available to support you. You may contact our team on: Email: info@dealhqpartners.com Telephone: +234 1 4536427 or +234 9087107575

Click here to download PDF

 

CBN RELEASES FRAMEWORK FOR QUICK RESPONSE (QR) CODE PAYMENTS IN NIGERIA

The Nigerian apex bank on the 13th of January 2021 released its framework for Quick Response (QR) Code payments in Nigeria. The framework amongst other things seeks to:

  1. Prescribe standards for implementing QR Payments in Nigeria;
  2. Guarantee Interoperability of QR Payments systems with the bigger payment system infrastructure;
  3. define the Roles and Responsibilities of Participants within the QR Payments architecture;
  4. Prescribe risk management principles that assure market integrity and promote user confidence.

QR Code payment system is a simple and contactless payment model conducted by scanning quick response codes from a mobile application (usually via a smartphone) by another device and having payments transferred directly from the user’s account to the merchant, without the need for a POS terminal or any other hardware.

The Covid 19 Pandemic has given a rise to the adoption of QR Payment systems as merchants, retailers and consumers continue to seek/drive contactless service adoption to minimise the risk of infections at points of trade. It is projected that over 2.2Bn users will have embraced the QR Payment Systems by 2025. It is important to note that some countries such as India have mandated the introduction of QR Payment solutions for retailers falling within a prescribed turnover threshold.

The CBN Framework prescribes the acceptable QR Code specification for Nigeria – all QR Code payment systems are required to be based on theEMV® QR Code Specification for Payment Systems (or such other standards which may also be prescribed by the CBN which meet the security requirements in the framework). Further, the framework prescribes rules around activations, compliance with card scheme rules, transaction limits for users, transaction fees, user risk profile assessment parameters, settlement timelines, requirements around training, support and security guidelines for merchants, mandatory requirement for interoperability of QR Payment systems.

The Framework also prescribes elaborate/mandatory risk management principles which are intended to guide in achieving market integrity and promote user adoption. These principles include adoption and implementation of mandatory risk management guidelines by all participants within the value QR payment value chain, compliance with mandatory code encryption standards, certificate of compliance for all QR Code applications, updates and patches to be issued by the Payment Terminal Service Aggregator (PTSA), KYC requirement for merchants onboarding. It further prescribes for dispute resolution in line with the CBN Consumer Protection Regulation and sanctions for infractions/infringements.

 

HOW TO GET STARTED
Do you need more information on QR Code payments? Our Technovation team is available to support you. You may contact our team on: Email: info@dealhqpartners.com Telephone: +234 1 4536427 or +234 9087107575

Click here to download PDF

 

THE NIGERIAN SECURITIES AND EXCHANGE COMMISSION TO COMMENCE REGULATION OF DIGITAL ASSET AND DIGITAL ASSET OFFERINGS

In a bid to cater to innovators seeking legitimacy and relevance as well as enhance investor protection, the Securities and Exchange Commission (“SEC”) issued a statement on the 14th of September, 2020, indicating its intention to commence the regulation of Digital Assets and Initial Offering of Digital Assets which qualify as securities under the Nigerian Securities Law.

The participation of the apex regulator of the Nigerian capital market is expected to bolster market confidence, establish standards of operations and encourage ethical practices that will protect the investor community whilst entrenching fair market practices.Categories of Digital Assets falling within the SEC’s regulatory purview
The SEC has broadly defined Digital assets as any digital representation of value capable of being traded virtually and which functions as either a medium of exchange or a unit of account; or a store of value, which does not have legal tender status neither is it guaranteed or backed by the Government of any specific jurisdiction. Its operations are backed primarily by a subsisting agreement within the community of users and is clearly distinguished from Fiat Currency and E-money.

 

The implication is that the SEC has now categorized all Digital Assets as securities over which it exercises regulatory oversight by virtue of Section 15 of the Investment and Securities Act except where the Issuer or Sponsor is able to prove otherwise to the satisfaction of the commission.
The 4 categories of digital assets/instruments which have now been classified as securities by the SEC include:
1. Crypto Assets (non fiat virtual currencies): will qualify securities if issued as an investment or as commodities if traded on an exchange or capital trade point;
2. Utility Tokens or Non-Security Tokens (tied to the provision of an underlying product or service); will be treated as commodities or as securities if traded on an exchange or capital trade point. Spot trades of utility tokens are however excluded.
3. Security Tokens (which gives participation in a tangible underlying assets or its receivables in the form of distributions) will be treated as securities
4. Derivatives and Collective Investment Funds of Crypto Assets (any derivative or fund which underlying asset is a digital asset falling under the Purview of SEC Regulation) will be classified as securities under the relevant rules.
Registration of Digital Asset and Offerings to the Public:
Sponsors or creators of Digital Assets are required to apply to the SEC for an initial assessment via an initial assessment filing. Through this filing the Sponsor will provide information required to establish whether or not the asset qualifies as securities registrable with SEC. Without clearly stating the criteria for exemption the SEC has hinted that assets issued via a crowd funding portal will be exempt. It is expected also that where issuance will be by other means than an invitation to the public, such would also be exempt. Once the SEC determines that an asset is not exempt, the sponsors shall proceed with an Initial Asset Registration.
All Digital Assets Token Offering (DATOs), Initial Coin Offerings (ICOs), Security Token ICOs and other block chain based offers within Nigeria or by Nigerian issuers or sponsors or by foreign issuers targeting Nigerian investors will now fall under the SEC’s jurisdiction. Consequently, Sponsors or promoters of new issues will require registration whilst Sponsors/Issuers of already issued but qualifying Digital Assets now have 3 months to either submit the initial assessment filing or documents for actual registration.
HOW TO GET STARTED Do you require further information on the registration of Digital Assets in Nigeria? Our capital markets team is available to support to you. You may contact our team on: Email: info@dealhqpartners.com Telephone: +234 1 4536427 or +234 9087107575

Click here to download PDF

 

HOW TO SERIES: HOW TO REGISTER A PATENT (NIGERIA), JULY 2020

HOW TO REGISTER A PATENT IN NIGERIA

  1. A. What is a Patent?
    A patent is a right granted to an inventor, which allows the inventor to exploit the full rights and benefits from
    their invention/work (including the right to use, sell, produce, mass-produce) to the exclusion of all other users
    for a period of about 20 years. A registered patent gives protection against third party exploitation within the
    country where the right is obtained. B. What law guides the registration of patents and where do I apply for the
    registration of a patent? The registration of Patents in Nigeria is governed by the Patents and Design Acts Cap.
    344, Laws of the Federation of Nigeria 1990 (Act of 1970) administered by the Registrar of Trademarks, Patents
    and Designs, Trademarks Registry, Federal Ministry of Industry, Trade and Investment, FCT, Nigeria.
  2. B. What law guides the registration of patents and where do I apply for the registration of a patent?
    The registration of Patents in Nigeria is governed by the Patents and Design Acts Cap. 344, Laws
    of the Federation of Nigeria 1990 (Act of 1970) administered by the Registrar of Trademarks, Patents and
    Designs, Trademarks Registry, Federal Ministry of Industry, Trade and Investment, FCT, Nigeria.
  3. C. How do I know if my work/invention qualifies for registration of a patent?
    A patent may be granted for any work/invention that:

    1. is new (novel); the invention must be substantially different from anything else that is within public knowledge
    2. involves an inventive step; must not be obvious to a person skilled in the art of the invention and must not make reference to any matter that forms part of the prior existing invention
    3. is capable of industrial application; (useful)
    4. is not specifically excluded in the Act; (e.g. inventions which encourage immoral and offensive behavior)
    5. has an address for service in Nigeria (if the applicant’s address is outside Nigeria arrangement must be made for a verifiable delivery address in Nigeria).

    NOTE: Each application must relate only to one invention but may cover claims for multiple numbers of products or processes i.e. an invention can be a modification or novation of one or more existing inventions in the market

  4. D. What are the practical steps for registering a patent in Nigeria?Step 1: Fill Application Form together with written declaration
    There are two classes of application forms available for patent registration;

    1. Form 1A: being the application form for the registration of a conventional/local patent; and
    2. Form 1B: being application form for the registration of a non-conventional/international patent.

    I. Filling of Form 1A (Local Application)

    Form 1A is the applicable form for local applications for works created and originating in
    Nigeria. The name, address, email address and contact number of the applicant is required to
    be provided and in cases of multiple/joint inventors or inventors under the employ of a
    company, the name, address, email and contact number of a representative of the company
    or the joint inventors will be appropriate.

    A declaration by the true inventor will be required to be submitted alongside the application
    form and Form 3. The true inventor is the individual responsible for the ideation of the
    invention.

    II. Filling of Form 1B (Foreign Application)

    Form 1B is the applicable form for applicant seeking foreign priority for works or inventions
    which did not originate from Nigeria and which is already registered in another foreign
    jurisdiction. The application will be accompanied by a written declaration consisting of:

    1. The date and the number of the earlier application:
    2. The country in which such application was made; and
    3. The name of the inventor who made it.

    The applicant will also fill a Form 3 as detailed below, to accompany the Form 1B and the
    written declaration. Not more than 3 months after filing the application, the applicant will be
    required to furnish the Registrar with a copy of the earlier application certified by the
    appropriate industrial property office of the foreign convention country.

    Step 2: Fill the Specification Form (Form 3)

    All Applicants (Local or Foreign) are required to fill Form 3 – Complete Specification Form.
    Form 3 is very crucial to any Patent application; it contains a detailed description of the
    invention and its claims (a claim is any information detailing the innovation of the invention
    provided by the applicant in hopes of creating an extent/scope of protection for the said
    invention from infringement by a subsequent invention). The applicant would have to explain
    in the technical terms what makes the invention different from what already exists in the
    market in hopes to protect it from subsequent inventions.

    The contents of Form 3 would include;
    1. The title of the invention;
    2. An abstract on the functionality of the invention;
    3. Background and History of the Invention;
    4. Detailed description of the invention supported with diagrams and illustrations;
    5. Claims (starting from general claims to specific ones):
    6. Summary of what society/ mankind stands to gain from the invention

    Step 3: Submit application to the Registry and pay of application fees

    The Applicant will pay the application fee as may from time to time be advised by the Registrar
    and submit application forms together with evidence of payment of the prescribed fees.

    Step 4: Application is granted and patent is valid for 20 years

    After submission, the patent application is examined by the Registrar merely to ascertain
    formal compliance, the Registrar assumes regularity. Once the application satisfies the
    statutory requirements as to the completion of form, payment of appropriate fees amongst
    others, the Registrar is likely to grant the patent without enquiries into its novelty,
    inventiveness and industrial applicability or sufficiency of disclosures in Form 3.

    Patents are granted at the risk of the patentee and without guarantee as to their validity. Once
    granted, a patent is valid for 20 years.

  5. E. Can a foreigner register a patent in Nigeria?
    A foreigner or a foreign corporation can seek foreign priority in Nigeria if it has a subsisting
    local application which has been admitted for registration by the approving authority in its
    own home country. Upon application for foreign registration such will be admitted for
    registration by virtue of the Nigeria Patent and Designs Convention Order 1971. The Convention
    provides that if a Nigerian application is made within 12 months of the making of the earlier
    application in the foreign country, such application will be treated as having been made on
    the same date on which the foreign application was made.
  6. F. What Legal Rights do I have as Patent holder?
    As a patent holder under Nigerian Law:

    • You have a valid cause of action against anyone who infringes on your right to the
      Patent during its subsistence;
    • You have the legal and beneficial right over the patent which may be sold, assigned
      or granted for the use of others in the form of a license.

    HOW TO GET STARTED

    Are you interested in registering a patent for your invention? Our corporate services team is
    available to provide registration and start up support to you. You may contact our team on:
    Email: info@dealhqpartners.com Telephone: +234 1 4536427 or +234 9087107575

    A patent holder may consider the option of applying to have his patent registered under the
    World International Property Organization (WIPO) which currently has over 189 member
    states including Nigeria.

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HOW TO SERIES: HOW TO REGISTER a NOT FOR PROFIT ORGANIZATION (NIGERIA), JULY 2020

What is a not for profit organization?

Simply, a not for profit organization (NFP) is one that is set up to promote a charitable or other non – profit cause. It could be a social, cultural, educational, religious or other cause underlined primarily by impact.

B. What are the possible options for registration of an NFP under Nigerian Law?

Under Nigerian laws, a Not for profit organization can be registered as either of the following:

  1. Incorporated Trusteeship under Section 590 of CAMA: This involves the selection of Trustees as legal representatives of a body or community of people bound together by religion, custom, kinship or nationality or a body of people established to achieve religious, educational, scientific, social, development, cultural or charitable purpose. The Trustees are given the status of a legal corporation and granted legal personality making them custodians of the rights, duties and responsibilities of the body, community or association (which could be a church, a social club or an educational institution). The trustees have fiduciary powers and duties of trustees under common law. The name of the NFP will typically read like “Incorporated Trustees of the Daily Progressive Association”
  2. Company Limited by Guarantee: Section 26 of CAMA provides for the registration of a category of companies referred to as limited by guarantee. This category of registration is suitable for a company set up to promote science, beauty, religion culture, education, research or charity. The income and property of such company can only be used towards the promotion of its objects, it is restricted from utilizing any part of its income or property for personal use of its members or stakeholders, it is also restricted from distributing profit. Like a typical Company, the Limited by guarantee has its affairs led by its Board of Directors whilst the Company is owned by its shareholders whose liability are limited to the extent they have determined at inception (this means that the shareholders are responsible for the future debts or liabilities of the Company to the extent they pledged at the time of registration – this is usually quantified as a monetary limit )The name of the NFP will typically read like “Excel Educational Resources LTD.GTE”.

C. Should I register my not for profit as an Incorporated Trusteeship or as a Company Limited

Either of the 2 processes will suffice. However entities who intend to be involved in some form of business seem to generally have a preference for being registered as a Company Limited by Guarantee as this is a more familiar arrangement in the business world – the company will be a legal entity, with a Board of Directors and can contract, sue or be sued in its name. The Incorporated Trusteeship on the other hand has its legal personality vested in its Trustees – it can only contract, sue and be sued in the joint name of its trustees. In the case of the Company Limited by guarantee there is a requirement to procure the prior consent of the Attorney General of the Federation, this makes the registration process slow and often cumbersome. Where time is of the essence, an incorporated Trusteeship is often a preferred choice.

D. Is a Not For Profit Organization prohibited from doing business? 
It is an erroneous assumption that a not for profit must be an association or a social club that primarily does no business. An NFP can do business provided that the intent is to utilize any profit generated from its operations toward promoting its cause without distribution of such profit to members or stakeholders.

E. What matters do I need to consider before commencing registration? 

Typically, the registration of an entity is undertaken by the Promoter(s). The promoter is any one or more individuals that have conceived the idea of setting up the organization. They will have to answer a number of preliminary questions which will help determine the structure and approach to registering the entity.
  1. What are the objectives, beliefs, mission, and purpose of the organization? 
  2. How the organization will be funded?
  3. Who will run the affairs of the organization?
  4. To what extent do the promoters or the organization’s leaders desire to be liable for the actions of the organization?
  5. What will the organization be called? (it is advised that a minimum of 2 possible names be selected as approval of names is usually subject to availability the name will only be approved where it is not statutorily restricted or close enough to the name of an existing entity such that it may confuse the public) 
  6. Does the organization intend to do business or distribute profit to its stakeholders?

F. What documents are required for registering an Incorporated Trusteeship? 

  1. Two printed copies of the Constitution 
  2. Duly signed copies of the Minutes of the Meeting appointing the Trustees and authorizing the application.
  3. Production of Iron Seal.
  4. Identity Cards and Passport Photographs of each Trustee.
  5. Duly completed Form CAC/IT/1 (Application Form) (https://www.cac.gov.ng/wp-content/uploads/2019/12/cac_it_form_001-1.pdf)
  6. Duly completed CAC1.1 (Registration Form) (https://www.cac.gov.ng/wp-content/uploads/2019/12/CACform1.1.pdf)

G. What documents are required for registering a Company Limited by Guarantee? 

  1. Application Letter
  2. Memorandum and Articles of Association
  3. Letter of Consent of Attorney General of the Federation (this can be procured by submission of an application letter and approval by the AGF)
  4. Payment of Stamp Duty Fee to the Federal Board of Inland Revenue.
  5. Notice of address of the registered office.
  6. Identity Cards and Passport Photograph of the Directors.
  7. Duly Completed Form CAC 1.1 (Registration Form)

H. What is the process of registering an incorporated trusteeship? 

Step 1: Name Selection, Availability Check and Reservation: 
The promoters of the Incorporated Trustees would decide the name of the IT and conduct an availability check on the CAC website. The Commission will reserve the name for 60 days upon payment of the prescribed fees. 1 
Step 2: Collation of Application documents and information 
The Promoters would ensure the Trustees of the proposed IT fill the application documents and will collate the documents for submission to the Corporate Affairs Commission.   
Step 3: Application and Submission to the CAC.  
The prescribed application fees are paid, and the application documents are submitted to the CAC.  
Step 4:PublicationofNoticeofIntentiontoregister
Where the CAC is satisfied that the application requirements have been met, it shall cause the application to be published in two daily newspapers. The purpose of this publication is to invite for objections from the members of the public on the registration of the body.
Step 5: Transmission of File and Issuance of Certificate
The files are transmitted to the office of the Registrar General of the CAC for Consent and approval. Upon approval, CAC will issue a Certificate of Incorporation.
I. What is the process of registering a Company Limited by Guarantee?  
Step 1: Name Selection, Availability Check and Reservation:  
The Promoters of the company will conduct an availability check on the CAC website. (https://www.cac.gov.ng/)The Commission will reserve the name for 60 days upon payment of the prescribed fees. Where the name is not available, the promoters of the IT will have to select another name for the proposed company.  
Step 2: Collation of Application documents and Information 
The promoters of the company will ensure that all application documents are properly filled by the proposed Directors of the Company and Company Secretary and collate them for 
submission to the CAC.  
Step 3: Payment of Stamp Duties  
The payment of Stamp Duties is made to the Federal Board of Internal Revenue Service.   
Step 4: Approval and Issuance of Certificate 
The Corporate Affairs Commission transfers the filed documents to the office of the AGF for approval. A Certificate of incorporation is issued by the CAC upon the approval of the AGF. 
HOW TO GET STARTED 
Are you interested in setting up a not for profit organization in Nigeria? Our corporate services team is available to provide registration and start up support to you. You may contact our team on:  Email: info@dealhqpartners.com  Telephone: +234 1 4536427 or +234 9087107575 

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