Abdul Muhammed Law Practice
Abdul Muhammed Law Practice has put together the most comprehensive checklist for registration of technology transfer agreement that you can find in Nigerian legal blogsphere.
Introduction
NOTAP offers a pre-execution evaluation service called Technical Advisory Service (TAS), where companies submit their technology transfer agreements for analysis and comments.
This process aims to enhance agreement standards before finalization and execution.
The comments provided by NOTAP during TAS serve as guidance for companies in refining and executing agreements with their technical partners.
Additionally, NOTAP conducts a post-execution evaluation after agreements are executed but before they are presented for registration.
If any observations are made, the applicant company is expected to renegotiate the agreement with its technical partners to incorporate necessary amendments.
NOTAP emphasizes the importance of seeking proper guidance from them on technology transfer agreements before finalizing and executing them.
Evaluation criteria
NOTAP regulations aim to make the evaluation criteria more straightforward and organized for efficient review and compliance, and these points are discussed below.
Scope of Technology:
Is the technology to be acquired within the agreed scope? Are the services specified clearly and in detail?
Training Schedule:
Is the training program detailed, including the number of trainees, location, duration, and specifics?
Involvement of Expatriates:
Does the agreement involve expatriates, and if so, are details provided regarding their number, caliber, duration, and remuneration?
Local Value Addition (LVA):
Are percentages of local value addition specified for raw materials, packaging, equipment, and inputs?
Due Diligence:
Has sufficient publicly available information been gathered about the transferor’s capabilities and activities?
Supply Chain and Raw Materials:
Are the sources of imported materials and machinery clearly stated?
Historical Agreements:
What is the history of agreements submitted for registration, and are there similar agreements in the same sector?
Remuneration and Payment:
Do payment clauses fall within approved ranges, and is the breakdown of technology fees provided?
Employment Generation and Local Value Addition:
Does the agreement provide for employment generation and local value addition, including local fabrication and export provisions?
Spin-off Firms and Participation Percentage:
Does the agreement allow for spin-off firms, and is the percentage of local and foreign participation clearly stated?
Projected Figures and Compliance:
Are projected figures reasonable, and does the agreement comply with NOTAP regulations?
Warranty and Guarantee:
Does the agreement include warranty and guarantee clauses?
Restrictive Clauses:
Are there any restrictive clauses on export, production volume, or complementary technologies?
Duration and Taxation:
Is the agreement duration appropriate, and does it comply with Nigerian tax laws?
Arbitration and Governance:
Does the agreement comply with Nigerian laws, including arbitration and governance clauses?
Signatories and Technology Stipulations:
Are signatories clearly identified, and does the agreement contain stipulations on local raw materials, skill acquisition, and technology substitution?
Corporate Responsibilities:
Does the agreement address corporate responsibilities in science and technology-based situations?
Technological Integrity:
NOTAP will reject agreements that do not adequately consider Nigeria’s technological interests and integrity.
Verification Process
NOTAP has clearly outline the verification process and the required documents for technology transfer agreement registration or renewal, streamlining the application process for applicants.
NOTAP may verify information with relevant agencies when necessary and verification includes tax clearance certificates for the past three years, remittances, professional memberships, certificates of incorporation, trademark registrations, letters of award, authorization letters for software-related services to MDAs, performance bonds, and engineering drawings.
General Application Requirements:
Applications for registration or renewal of technology transfer agreements must be submitted on the company’s letterhead or through an authorized representative within 30 days of the agreement’s effective date.
Payment of applicable fees is made through NOTAP’s portal, generating a Remita Retrieval Reference (RRR).
Currently, application and registration forms are completed manually, but automation is in progress for online completion and download of annexes.
Required Documents:
Completed application form.
Certificate of incorporation (for new companies).
Memorandum and articles of association.
Copy of the agreement.
Completed questionnaire.
Feasibility study (for new companies).
Audited accounts for the past three years.
Evidence of tax payment for the last three years.
Taxpayer Identification Number (TIN) for new companies.
Profile of the transferor.
Details of the technical partner (website, brochure).
Comprehensive training program details (number of personnel, skills/knowledge to be acquired).
Payment of applicable fees.
Requirements for Technology Transfer Agreements with NOTAP
NOTAP guidelines provide clear and concise guidelines for technology transfer agreements with NOTAP, ensuring clarity and understanding for all parties involved, and these are discussed below.
Explicit Rights:
The agreement must explicitly grant the Nigerian entity rights for the use and exploitation of the technology.
Clear Term:
The contract duration should be clearly stated.
Process Rights:
For process rights, the grant details should be explicitly outlined in the contract. Terms like “technical information” or “technical services” are supplementary to the explicit terms.
Capacity Building:
Clear provisions for capacity building and understudying by Nigerians must be included to ensure skill domestication.
Tax Deduction:
Provisions for appropriate local tax deductions such as withholding tax are necessary.
Research Activities:
All agreements should include provisions for research activities, both in-house and in collaboration with Nigerian educational entities.
Net Sales Separation:
For entities selling both imported and locally produced products, net sales statements must be clearly separated for each category, as technology fees are based only on locally manufactured products.
Government Contracts:
Agreements for government contracts must include provisions for arbitration in Nigeria.
Assembly Exclusion:
Generally, agreements on assembly of completely knocked-down parts are excluded, except for short-term technical services with payment.
Scope of Services:
The scope of services in agreements must clearly define the services to be provided by the transfer licensor.
Technology Content:
Agreements must outline methods for technology domestication, including local raw material development and skills acquisition.
Domestication Plan:
A detailed plan for domesticating the technology, including substitution of imported raw materials and skill acquisition, must be provided.
Raw Material Localization:
Efforts to source raw materials locally must be demonstrated, especially if relying on up to 75% imported raw materials after 5 years of operation.
Intellectual Property Registration:
Evidence of registration or pending registration of intellectual property in Nigeria should be provided where available.
Exclusion of Food Items:
Agreements for food items with low technology content will not be approved. Approval will only be granted for short technical services related to installation, commissioning, and training.
Start-up Fee Approval:
Up to 1-2% of net sales may be approved for start-up companies.
Tie Fees to Profit:
Fees for packaging technology should be tied to profit before tax.
Equity Ownership:
For companies with wholly foreign-owned equity, evidence of capital importation is required for repatriating earnings.
Expatriate Details:
Details of expatriates, including visas and immigration documents, must be submitted along with evidence of skill unavailability in Nigeria.
Board Resolution:
A Board Resolution authorizing the management of the transferee company to enter into a Technology Transfer Agreement is required.
Original Annual Accounts:
Original copies of annual accounts must be submitted, not photocopies.
Telecom Sector Trademarks:
Trademark License Agreements are not allowed in the telecom sector. Trademarks can be registered at the Patent and Trademark Registry for ownership and prevention of infringement.
