By Daniel Fayemi
Nigerians have flooded the social media space in adulation of President Muhammadu Buhari over the weekend, for his assenting to the CAMA Bill 2020, which was passed by the National Assembly.
Professionals of different backgrounds; from Law, Engineering, Medicine and even politicians of both divides, all seem to be on the same page for once, with the consensus being that the newly passed law is the most significant for the Nigerian business community in three decades.
In its reaction to the President’s assent, the Senate commended the President, noting that the law guarantees corporate accountability and the ease of doing business in Nigeria. The House of Representatives in its own reaction described it as a ‘key milestone’ and a testament to the ‘harmonious working relationship between the Legislature and the Executive.”
NPO Reports highlights some of the new provisions in the new Companies and Allied Matters Act that make it much easier to do business in Nigeria and reduce significantly, inhibiting regulatory hurdles.
According to the provisions of the new CAMA, it is now possible to establish a private company with only one (1) member or shareholder. The minimum was two persons previously.
Also, the updated CAMA provides for remote or virtual general meetings, provided that such meetings are conducted in accordance with the Articles of Association of the company. This means that participants can join from any location within and outside the country. This is a particularly crucial piece of amendment considering the current COVID 19 enforced disruptions to movement and association all over the world.
It is no longer mandatory for a company to have a common seal like it was in the previous Act, the use of which is to be regulated by the Articles of Association.
The new CAMA provides for electronic filing, electronic share transfer and e-meetings for private companies. According to Section 861 of the new CAMA, certified true copies of electronically filed documents are admissible in evidence, with equal validity with the original documents. Also, Section 176 (1) provides that instruments of transfer of shares shall include electronic instruments of transfer.
Private companies with only one shareholder are now exempted from appointing auditors at the annual general meeting to audit the financial records of the company. Private companies, under this new law also are exempted from the appointment of a company secretary as it is now optional. According to Section 330 (1) of the new CAMA, the appointment of a company secretary is only mandatory for public companies.
The new Act has also reduced filing fees for Registration of Charges. Under Section 223 (12), the total fees payable to the CAC for filing has been reduced to 0.35% of the value of the charge. This is expected to bring about up to 65% reduction in the associated payable cost.
Authorized Share Capital has been replaced with Minimum Share Capital in the new Act in Section 27. With the new concept, promoter(s) of a business need not pay for shares that are not needed at a specific time.
It is now possible to combine the organisational flexibility and tax status of a partnership with the limited liability of members of a company with the creation of Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs) under the new CAMA.
Instead of a Declaration of Compliance, which must be signed by a lawyer or attested to before a notary public, Section 40 (1) of the new CAMA Act introduces the Statement of Compliance which can be signed by an applicant or his agent, confirming therein that the requirements of the law as to registration have been complied with. It does not require a lawyer to sign this document.
Section 849 of the new Act provides for merger between two or more associations with similar aims and objectives under such terms and conditions as may be prescribed by the CAC.
Another new provision in the new Act is the disclosure of persons with significant control in companies. Section 119 makes it an obligation for entities to disclose capacity in which shares are held, either as a beneficial owner or as a nominee of an interested person to enhance transparency.
There is a new framework for rescuing a company in distress and to keep it alive as against allowing such entity to become insolvent in the new Act with respect to either Company Voluntary Arrangements (Section 434 - 442), Administration (Section 443 - 549) or Netting (Section 718 - 721).
Section 307(1) of the Act prohibits a person from being a director in more than five (5) public companies at a time.
In essence, the CAMA Act is truly a right step in the right direction in efforts to resuscitate the nation’s economy and enhance the ease of doing business in Nigeria.