What is a Bureau de Change?
A Bureau De Change (“BDC”) is a registered business licensed by the Central Bank of Nigeria (“CBN”) to carry out or facilitate the sale, purchase or exchange of foreign currencies.
A BDC is defined by the CBN’s Revised Operational Guidelines for Bureaux De Change in Nigeria 2015 (“CBN Manual”) as a company that is licensed to carry on small scale foreign exchange business in Nigeria and whose sole object is the carrying on of such business on a stand-alone basis.
Therefore, it is a retail foreign exchange dealer carrying on the business of Personal Travel Allowance (PTA), Business Travel Allowance (BTA), medical and school fees, etc., as approved by the CBN.
It is an offence to carry on the business of a BDC in Nigeria except with the prior authorization of the CBN.
What is the process of a BDC licence application?
The application for a BDC licence is processed in two stages, namely:
Approval-In-Principle step (usually for six months); and Final Licence stage (which must be applied for not later than six months after the grant of the Approval-In-Principle).
No proposed BDC shall incorporate/register its business name with the Corporate Affairs Commission (“CAC”) until an Approval-In-Principle (“AIP”) has been obtained from the CBN, a copy of which shall be presented to the CAC. Promoters shall reserve the proposed company’s name at the CAC.
What are the Requirements for a BDC licence?
As mentioned above, the application process is in two stages (i.e. the AIP stage and the Final Licence stage). Consequently, the requirements for the two stages differ.
3.1. The requirements for a grant of AIP are as follows:
(a). A formal application to the CBN Governor to grant the promoters Approval in Principle to carry on the business of a BDC in Nigeria. The application should be addressed to the Director Financial Policy and Regulation Department (FPRD), Central Bank of Nigeria PMB 0187, Garki, Abuja.
The promoters of the BDC shall attach the following documents to their application:
(b) A non-refundable application fee of N100,000 (One Hundred Thousand Naira Only) in bank draft payable to the CBN.
(c) Evidence of payment of the prescribed minimum capital of N35 million into the designated CBN account. Please note that the CBN shall refund this amount with interest after the proposed institution has obtained its final licence.
(d) A copy of the business plan or feasibility report containing information that includes:
[i] Aims and objectives of the proposed BDC;
[ii] Need gap in services offered by the BDC;
[iii] Proposed training programme for staff and management succession plan;
[iv] A five-year financial projection for the operation of the proposed BDC, indicating expected growth and profitability;
[v] Details of the assumptions which form the basis of the financial projection;
[vi] Organizational structure of the proposed BDC indicating the functions and responsibilities of the top management team;
[vii] Composition of the Board of Directors and the curriculum vitae of each member, including other directorships held [if any];
[viii] Anti-Money Laundering/Combating Financing of Terrorism (“AML/CFT”) policy and compliance manual; and
[ix] Conclusions based on the assumptions made in the feasibility report.
(e) A copy of the draft Memorandum and Articles of Association of the proposed BDC.
(f) A letter of intent to subscribe to the shares of the proposed BDC signed by each subscriber.
(g) A copy of the list of the proposed shareholders in tabular form showing their business and residential addresses and the names and addresses of their respective bankers, as well as the details of their Bank Verification Number (BVN).
After considering the application and the above-supporting documents, the CBN may grant an Approval-In-Principle, which usually lasts for six months.
Upon the grant of the AIP, the promoters may then proceed to register the BDC company with the CAC.
3.2. The requirements for the grant of Final Licence are as follows:
Not later than six (6) months after the grant of AIP, the promoters of a proposed BDC are required to submit an application for the grant of a final licence to the Governor of CBN, Abuja, and accompany same with the following documents:
[i] Evidence of payment of a non-refundable licensing fee of N1,000,000 (One Million Naira) only;
[ii] The names, designations and signed Curricula Vitae (CV) of the proposed members of the top management of the BDC.
[iii] Evidence of incorporation of the BDC company with CAC;
[iv] Evidence of having suitable office accommodation for the operation of the proposed BDC.
[v] Any other conditions as may be specified in the CBN’s AIP letter
After that, the Governor may grant a final licence to the BDC subject to the fulfilment of specific requirements. The BDC shall comply with those conditions to the satisfaction of the CBN within such period as the CBN may specify.
What are the financial requirements for obtaining a BDC licence?
The financial requirements for the BDC applications for AIP and Final Licence are as follows:
[a] Minimum paid-up share capital – N35 million share capital (this amount is to be deposited with CBN in bank draft and will be refunded upon the grant of the final licence, with interest, if any);
[b] Non-refundable application fee – N100,000 (payable at the AIP application stage);
[c] Non-refundable licensing fee – N1,000,000 (payable at the Final Licence application stage)
[e]Non-refundable annual licensing renewal fee – N 250,000 [payable not later than 30 days after the end of each calendar year]
[f] Non-refundable change of name fee – N100,000 (payable to CBN before any change of business name at the CAC).
[g] Solicitor’s fees for CAC incorporation and processing the applications for AIP and final licence to CBN.
[f] Miscellaneous expenses for preparing feasibility reports or business plans, AML/CFT Policy and Compliance Manual, CAC registration costs, etc.
Please note that the mandatory caution deposit of N35,000,000 (which was payable in addition to the refundable N35,000,000) has now been scrapped and is no longer part of the financial requirements for a BDC licence.
What is the timeline for the completion of the application process?
The Approval-In-Principle is usually granted between 3 to 6 weeks after submission of application, all other things being equal. The final licence is given after six months of the grant of the AIP. The company’s registration takes around 3 to 6 weeks but is usually completed within the six months after the grant of the AIP before applying for the final licence.
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