INTRODUCTION:
The intersection of transportation and FinTech has the potential to create a new generation of 'super apps' that combine mobility with financial services. As a matter of Fact, When ride-hailing apps emerged over a decade ago, they revolutionized transportation with user-friendly platforms for sharing rides. As users adapted to the embedded payment model, seamless payments became the norm. This led to the rise of 'Apps' that integrate multiple services and payments. Now, ride-hailing companies face a choice: expand into fintech-infused Applications or focus on evolving transportation solutions?
The development of the fintech industry has been a bright spot in the Nigerian economy with the potential to get brighter even given the challenges posed by the ongoing COVID-19 crisis. The sector has been gaining momentum, as agile and innovative startups move to take advantage of increased technology penetration and high levels of unmet needs in the traditional banking sector to seize market share. In the past three years, fintech investments in Nigeria grew by 197 percent, with the majority of investment coming from outside the country.
In a Scenario (Assessment) given by the Reputable Law Firm, Metalex Legal, it was seen that there are certain group of entrepreneurs in Nigeria who are planning a new ride hailing technology start up in Nigeria and they have developed a mobile app in transporting passengers to this effect. The name of the App they developed is “LAST BUS STOP”. Now, They are seeking my legal advice on how they can successfully achieve their aim and register their business with the following questions being put forward to the Interns. They are;
1. What type of Business Stucture is most suitable for an e-hailing tech Startup in Nigeria:
Answer:
The Business Structure which will be given as a Legal practitioner is a LLP. A Limited Liability Partnership is a body corporate created and incorporated under this CAMA and is a legal entity distinct from the Partners according to Section 746(1) of CAMA. A Limited Liability Partnership (LLP) is essentially a hybrid business form that combines the benefits of a Partnership and a Limited Liability company. This is different from a Limited Partnership which is sufficiently distinguished by the Act under Sections 795 – 810 of the CAMA, 2020.
The formation of an LLP must be done by two or more people who are associated with and carrying on a business for profit, as seen in Sections 753 (1) (a) and (b) of CAMA, 2020. The incorporation documents must be filled out in the manner described by the Commission and upon payment of prescribed fees.
Under Section 747 of CAMA, 2020, a person who has been deemed to be of unsound mind by a Court in Nigeria or elsewhere, or who is an undischarged bankrupt is not qualified to join an LLP as a Partner.
There are several restrictions on the registration of names of a Limited Liability Partnership under the Commission during its incorporation or name change. If the Commission considers the name of an LLP to be undesirable, similar, or substantially identical to that of another partnership, business name, limited 22 Section 746 of CAMA liability partnership, body corporate, or registered trademark, the application for registration or change of name of an LLP may be denied.
Furthermore, it is important to know that incorporation is different from registration. Incorporation means forming a new business structure that becomes a recognized person or entity under the law, while registration simply means the process of registering under the government where it operates.
2. What specific Legal requirements and regulations should the startup Comply with?
These are specific Legal requirements that should be a guide for any start up to commence in Nigeria. And they are:
1. Register with the Corporate Affairs Commission (CAC)
2. Obtain a Tax Identification Number (TIN)
3. Limited Liability Partnership (LLP) is required to prepare a Statement of Account and Solvency within 6 months from its financial year end.
4, Adhere to National Information Technology Development Agency (NITDA) guidelines
5. Meet Lagos State Transport Law requirements (for Lagos-based operations)
6. Ensure data protection and privacy compliance.
7. limited liability partnership (LLP) is required to audit its accounts in accordance with rules prescribed by the Minister.
8.The LLP/LPs must also file annual returns within 60 days after the financial year.
How can the Start up protect its Intellectual Property, Such as the Mobile App and Business Model?.
To safeguard intellectual property:
- Trademark registration for the app name and logo.
- Copyright registration for the mobile app and software
- Patent registration for innovative features or business methods
- Non-Disclosure Agreements (NDAs) for employees and partners.
- Secure coding practices and data encryption.
4. What are the Potential Challenges and risks associated with Operating an e-hailing Tech startup in Nigeria?.
There are so many Challenges that might be encountered in the middle of establishing such business model in Nigeria. They are;
- Regulatory hurdles and compliance issues.
- Competition from established players.
- Security concerns and data breaches.
- Driver and passenger safety issues.
- Financial sustainability and funding challenges.
- Potential legal disputes with drivers, passengers, or competitors.
- 5. What are the Necessary Licenses and permits required to operate an E-hailing Service in Nigeria
- Here are some Necessary Licences and permits needed;
- - Certificate of Registration from CAC
- TIN
- NCC license for telecommunications services
- Lagos State Ministry of Transportation permit (for Lagos-based operations)
- Vehicle inspection and certification (for drivers)
- Driver's license and verification
- Business permit from local authorities.
CONCLUSION:
In Conclusion, One thing I definitely know is that the decision to integrate FinTech is not just about expanding services, but about creating a seamless user experience that combines mobility, payments, and financial services. As a Matter of Fact, Ride-hailing companies that succeed in this endeavor will reap the rewards.The future of ride-hailing is inextricably linked with FinTech. As companies navigate this new landscape, they must prioritize innovation, user experience, and strategic partnerships to thrive in an increasingly competitive market.