A proptech company is a company that offers real estate services through technology to simplify real estate services. The word proptech is derived from combining prop from the word property and tech from the word technology.
A proptech company may offer real estate services relating to buying, selling, renting or investing in real estate. In the world today we see a lot of proptech companies offering services that were hitherto not possible with the traditional method of offering real estate and property services.
In this article we would be discussing the procedure for registering a proptech company in Nigeria. We would also highlight the types of proptech companies you can register. If you are looking to register a proptech company in Nigeria then you would find this article to be relevant.
Laws Regulating Proptech Companies in Nigeria
There is no specific law that defines or regulates proptech companies. Hence proptech company regulation can be found in start up laws, real estate laws and business laws.
Some of the laws relating to proptech laws are as follows:
The Companies and Allied Matters Act: This is a start up law in Nigeria that regulates the registration and operation of companies. A Proptech company can be registered under this law as a private or public limited company. The company once registered would be required to file its annual returns and comply with the provisions of this law.
Investment And Securities Act: This law regulates companies that offers investments to the general public or deals with securities. Hence, a proptech company that is looking into Asset managment, public investments or deals with other forms of security is required to register with the Securities and Exchange Commission. Examples of such companies are Proptech Companies that act as Real Estate Investment Trusts (REITs) Asset management Companies and any proptech company that wishes to be publicly listed.
The Bank and Other Financial Institution Act: This law was primarily made for Banks and Financial institutions. However it applies to some extents to companies that are looking to offer property loans such as mortgages, rent loans or housing loans. Proptech companies designed to offer any form of financial services are required to register with the CBN and obtain a license.
Finance Act: The finance Act relates to taxes that are applicable to all companies in Nigeria including Proptech companies. A proptech company like other companies are subject to taxes such as VAT, Witholding Tax and Companies Income Tax.
Money Laundering (Prohibition) Act: This law is an AML mechanism put in place to prevent the laundering of money through real estate. Every real estate agent and developer must register with the Special Control Unit Against Money Laundry (SCUML) in order to carry on its business. SCUML is the agent that monitors real estate transactions against money laundering in compliance with the AML laws in Nigeria.
Types of Proptech Companies
Proptech companies are of different categories. Technologies, such as the internet, blockchain and artificial intelligence have changed the way we transact in real estate. As a matter of fact, fractional ownership of real estate is also now possible through blockchain NFT. Some of the common areas in which technology has affected real estate are as stated below:
- Agency and Brokerage
- Listing Services
- Renting and Property Management
- Asset Management
- Investing
- Due diligence
- Mortgages
- Loans
- Probate
- Leasing and rent management
- Construction
- Virtual inspection
- Real Estate Investment Advisory and Consultancy
Procedure for registering A Proptech Company
In order for us to help you register your proptech company we would require the following details and information from the promoters:
- Two Name options of the proposed proptech company
- Full Name, address, email, phone number and valid means of Identification of proposed Directors, Secretary and shareholders
- Shareholding structure if more than one shareholder
- Share capital
- Address of the company
Steps to registration of Proptech
Legal Consultation :
Legal consultation is very important in order to understand the legal requirements for registering your company. In order to avoid being penalized by regulators, it is also important to understand which category your company falls into and if it overlaps into other categories of licensable business. For instance a proptech company might actually be a fintech company providing financial services to its customers. Such a company may require a fintech license. Similarly, a proptech company that offers investment opportunities to members of the public may need to obtain a license from the Securities and Exchange Commission.
Name Search:
Before going ahead to create a business brand, business logos and other business materials, it is crucial to conduct a name search in order to be sure that the proposed company name is available.
Registration of the Company:
After the successful search and reservation of the proposed name, the appointed solicitor would then take all necessary steps required to register the company.
Application for licenses, permits and approvals:
Upon registration of the company, the next step would be to apply for all licenses, approvals and permits required for the proptech company to commence operations.
Conclusion
A Proptech company operating in Nigeria is required to be registered in Nigeria. At Classic Attorneys we provide legal advice and registration services for both proptech and real tech companies.
