|Quick Insight For Courier Business (Companies)|
|Minimum Share Capital: N2Million|
|Regulatory Body: NIPOST ( The Minister Through The Postmaster General)|
|Cost of License: N2Million (Domestic) N10Million (International)|
|Duration of License: 1 Year|
|Cost of Renewal: N350,000 (Domestic) N1.5Million (International)|
The Courier business is one of the regulated businesses in Nigeria and the provisions relating to its regulations are contained in the Nigerian Postal Service Act, LFN 1992.
By being regulated, it means that a courier company registered in Nigeria must comply with certain requirements
and must obtain a license from the regulatory body before it begins its operation. Any company operating or which purports to operate as a courier company without first obtaining the required license will be in breach of the provisions of the law and as such may face dire consequences including prosecution.
The rationale for the regulation of courier business is to ensure that there is some sort of assurance for members of the public for the high level of trust placed on courier companies. In helping to deliver parcels, customers place much trust on the courier company as an agent, thus courier companies should be bound by some fetters no matter how minimal. Also, courier companies bypass custom checks and heavy scrutiny that exists at the borders.
A Courier is defined as one who is a person or company who transmits messages or transports messages and packages. Further, A courier is defined as a messenger, but not necessarily of verbal communications. He carries something – documents or goods – from one party to another.
The above definitions and a combined reading of the provisions of the NIPOST Act seem to cover companies that operate courier services not minding the nomenclature. Hence a company may not be called a courier company but may still carry on courier business. For instance, courier companies often use allied words such as “delivery”, “dispatch”, “Express”, “Parcel Service” and often times “Logistics”. In reality, the activities of these companies fall within the purview of the definition of a courier.
Over the past couple of years, the courier industry has witnessed an upward spiral which led to the NIPOST in 2017 generating a total of N20.62bn. In the same vein, many investors are yielding to the enticements of the courier business as there has suddenly been a rise in the number of courier companies. This is as a result of the gradual but rapid shift from traditional market structures to digitalized marketplaces. As the interest of people increases towards shopping online, so also will there be an increase in demand for dispatch and delivery services.
As interesting as it may sound, many of the existing courier business owners are oblivious of the requirement of regulation or the provision of the law. This article does not pretend to serve as sufficient legal advice but rather, a hint at the legal provisions and requirement for the initiation and operation of a courier company in Nigeria. It is intended as a quick guide for anyone who is considering opting for an investment in the courier business. Legal practitioners who have been briefed by a promoter of a courier company can also peruse in order to properly advise their clients on courier company regulation. This article will be updated frequently in order to maintain its accuracy should the be any changes to the regulatory requirements. However, the author hereby excludes liability for any loss occasioned as a result of acting solely on the content of this article. It is therefore advised that non-lawyers should first seek legal advice before incorporating a courier company.
Pre Incorporation Requirements
As a regulated business, a courier business must be registered as a company with a share capital. Section 43, (1) (a)and (b) states that no person shall operate a courier service in Nigeria, unless the person is registered as a company under or pursuant to the Companies and Allied Matters Act; and (b)is licensed as a courier service operator under the provisions of this Part of this Act. It, therefore, behoves the promoter of a courier company to choose from four options as provided for under section 24 of the Companies and Allied Matters Act, 2004. The four of such companies include:
a private company limited by shares
a public company limited by shares
a private unlimited company
a public unlimited company
Other forms of business or non-business entities are excluded due to the requirement of a share capital. Thus a business name or a company limited by guarantee cannot be formed to operate a courier business.
Post Incorporation Requirements – Application for licence
Having registered the company, the next course of action will be to obtain a courier license.
The procedure for application and grant of a license are contained in section 44 of the NIPOST Act and subsection (1) provides that An application for a license shall be in writing addressed to the Minister through the Postmaster-General.
Also, subsection (3) gives the Minister, the power to regulate the license fee.
The NIPOST Courier Regulatory Department had published the following as the licensing procedure and costs and such remained valid at the time of publishing this article:
- An applicant is to forward an application for a new license on company’s letter headed paper to General Manager (CRD) Nigerian Postal Service (NIPOST), Communications Building, Lafiaji, Lagos, Nigeria.
- The application should be forwarded with a non-refundable application fee of N20,000.00
- The payment of application fee entitles the applicant to registration form and Courier Operations Regulations.
- The filled or completed application form should be submitted to the above address with the license fee, in Bank Draft of Two (2) Million Naira for domestic (national) courier operations, or Ten (10) Million Naira for international courier operations.
Note that the non-refundable license fee should be payable to the Postmaster General.
- Payment of administration fee (facilities inspection) N200,000.00
- Thereafter, the inspection of facilities in the five (5) branches and the Head Office of the prospective courier operator will be carried out nationwide.
- The success of the facility inspection entitles the prospective operator to a new courier license.
Documents Required To Be Submitted
The following should be submitted to the above address (CRD) for processing of new licence:
- Certified True Copy of Certificate of Incorporation
- Memorandum/article of association
- Company’s tax clearance certificate for the last three years (Original to be sighted)
- Leasehold certificate or tenancy agreement in respect of the company registered office.
- Indemnity insurance policy of N500,000.00 and evidence of a capital base of N2million or a bond of the value.
- Evidence of payment of license and application fees.
- Names, qualification, addresses and telephone numbers of all directors of the company.
- The sample of waybills, labels, bags, tags, envelopes, receipt, and registered trademark (if any).
- Partnership, merger, alliance (or such other arrangements agreements (if any).
- Any other information required from time to time.
Length and Renewal of License
Section 45 (1) of the NIPOST Act provides that The Minister may, on the recommendation of the Postmaster-General, grant a licence to an applicant under this Act if he is satisfied, from all the evidence and information supplied to him, that the applicant is suitable to operate a courier service.
Section 45(2) goes further to state that a licence granted under subsection (1) of this section, shall be valid and operative for one year from the date of issue and may be renewed.
The combined provisions of subsection (1) and (2) means that any license granted by the NIPOST is subject to annual renewal.
Procedure for Renewal is Stated Below:
- Application for renewal should be submitted to the above address at least three months to the expiry date of the license for processing
- The renewal fees for courier license are N350,000.00 for domestic (national) courier operations and N1.5million for international courier operations.
Notwithstanding the application for renewal, the same section 46 bestows the power to revoke a license on the Minister at any time. The said section states that The Minister may revoke any licence granted under section 45 of this Act if he is satisfied that it is in the interest of the public so to do.
Consequences of Not being Licensed
Under the Act, a company not licensed or whose license has been revoked is shall cease to operate a courier service. The lacuna in the provision of the law stipulates that while such company may continue to carry on its other objectives if it has such, it must and should not operate as a courier company.
Similarly, section 50 of the Act makes it an offence for any person to operate a courier service without a license. A combined reading with section 51 will make render the directors, secretaries, partners or any other person who participates in running the company to be individually liable upon conviction to the payment of a fine not exceeding N50,000 (Fifty Thousand Naira.)
Those Not required to be licensed.
It is obvious that a company will not be deemed a courier company if it simply delivers its products, mails or packages to its clients. Section 3 of the NIPOST Act defines instances or activities that are not within the purview of the regulation of NIPOST. One of such is where letters concerning goods or merchandise is sent by common carriers, to be delivered with the goods which letters concern without hire or reward or other such profit or advantage for receiving or delivering letters.
Challenges of Operating A Courier Business In Nigeria
Many promoters of courier companies have decried the huge capital required to start a courier business. The argument of many is that there should be a third category of license for those who wish to start really small with a view to expanding at a future date. The third category will have a very low license fee and would give room for those with little capital to operate within the industry.