Legal Experts Explore Implications Of CAMA 2020 On Nigeria’s Ease-Of-Doing-Business Profile
The recent amendments to Nigeria’s Companies and Allied Matters Act, following the signing of the 2020 law by President Muhammad Buhari on August 7, 2020 (to replace the old law, extant since 1990) have generated as much excitement as controversy among key players in the country’s economic and business landscape. Expectedly, this development has thrown up animated discussions and debates across the length and breath of the country, with stakeholders from all walks of life pondering on the possible impact of the amendments and other new legislations included in the Act on the country’s commercial health – and especially it’s ease of doing business index (which, more than any factor, determines whether local and foreign investors feel confident enough to invest in the Nigerian market with any assurance of a healthy return on their investment.
One of the most insightful of such discussions took place on Wednesday, November 2020 as legal experts held a Zoom seminar on the provisions of CAMA 2020 and all its implications on the Nigerian economy. Convened under the auspices of the Oyo State Ministry of Justice and jointly hosted by Prof. Oyelowo Oyewo, the Attorney-General and Commissioner for Justice of the State, and Mr. Seni Adio, SAN, the immediate past Chairman of the Nigerian Bar Association’s Section on Business Law (NBA-SBL), the webinar paraded an illustrious faculty of speakers and contributors, including Alhaji Garba Abubakar, the Registrar-General of the Corporate Affairs Commission (CAC), who was the keynote speaker at the event, as well as Olayinka Esan, Esq., the Chairman of the Ibadan Branch of the Nigerian Bar Association. Mrs. Funmi Roberts, the founder and principal partner of Funmi Roberts and Co., was the moderator of the event, while other panelists were Tolu Olatunji, Esq., a member of the Council of the NBA-SBL, and Mr. Nosa Afe, the Managing Director and Chief Executive Officer of LogistiQ Xpeditors Limited.
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In their opening remarks, the Chief Host, Prof. Oyewo and Mr. Adio, SAN made it clear that the goal of the webinar was not only to illuminate the implications of the CAMA legislation, but also to x-ray the role of legal practitioners towards maximizing the innovations in the Act’s provisions, as well as making the country’s business climate more favorable and competitive for key stakeholders.
In his keynote speech, Alhaji Abukakar – the CAC boss – noted that CAMA 2020, with its 870 key provisions, divided into seven parts, was the culmination of years of painstaking work aimed at sanitizing the nation’s business environment and removing the bottlenecks that had adversely affected it’s ease of doing business profile. He went on to list some of the key areas of the Act and the contributions lawyers (as well as other professionals such as accountants and corporate secretaries) could make to ease doing business, and facilitate compliance and adherence to best practices. Some of these include:
a) Single Shareholder for Private Companies (Section 18), which says that a company can now be registered with just a single shareholder; and businesses are no longer mandated to have a minimum of 2 shareholders. This, according to the CAC Registrar-General, makes setting up a business in Nigeria much easier.
b) Pursuant to Section 26, it is now easier to register a Company Limited by Guarantee (or CGTE for short).
c) The Introduction of Limited Liability Partnerships (LLP) and Limited Partnerships (LP) as covered by Sections 746 to 810 of the Act. The CAC boss said while the LLP and LP are newly introduced business structures in CAMA 2020, these options can now be selected by those who require the benefit of a limited liability structure with the tax status and flexibility of a partnership.
d) Reduction of Filing Fees for the Registration of Charges as provided for in Section 222 (12) of the Act. Previously, fees for registration or release of Charges were between 1 to 2% of the value of the charged assets. Now, he added, the total fee payable to the CAC is not to exceed 0.35% for both private and public companies – a provision which should result in cost savings for businesses.
e) Introduction of Electronic signature, electronic transfer of shares and virtual general meetings – as stated in Sections 101, 178 (1) and 240 (2) of CAMA Act 2020. Abubakar stated that in line with today’s world, e-signatures can now be used to sign documents, while companies can now maintain an e-register for share transfers. In addition, private companies are now permitted by law to hold virtual meetings in accordance with their articles of association.
f) According to Section 402 of the Act, small companies are exempt from audit requirements. The CAC boss also explained that small companies, as well as companies yet to commence business since incorporation are exempted from audit requirements. This, he said, reduces the regulatory burden currently being borne by small businesses.
g) Alhaji Abubakar also spoke about the Appointment of Company Secretaries, which he said was optional for small companies, according to Section 330 of CAMA 2020. Small companies are no longer mandated to appoint a Company Secretary. Although this should help small businesses save costs, he added, small businesses need to weigh the advantages of outsourcing company secretarial tasks to legal professionals against cost savings.
h) Abubakar cited Section 265 (6) in respect of the Restriction on Single Person Holding Position of Chief Executive Officer and Chairman of the Board, explaining that this Section states that the offices of CEO and the Chairman of the Board are not to be held by the same person, for public companies. This measure, the CAC boss reiterated, was in accordance with good corporate governance principles.
i) Another area he touched on was the provision in Section 307 of the Act, concerning the Restriction of Multiple Directorships in Public Companies. The maximum number of director positions that can be held by a person in public companies is now 5. This, Abubakar said, should encourage good corporate governance.
j) Abubakar rounded off his presentation with an overview of Section 849, which deals with the Merger of Incorporated Trustees. Incorporated Trustees with similar aims, he said, are now permitted to merge. He hastened to add, however, that the Federal Competition and Consumer Protection Commission (FCCPC) is the apex regulator in matters of mergers and it would be useful to check the requirements of the Federal Competition and Consumer Protection Act 2018 in such cases.
In their respective summations, the Chief Host, Prof. Oyewo provided insights into the business rescue provisions in the Act as a very welcome development, and his Co-Host, Mr. Adio, SAN spoke about the opportunities to be affordable stakeholders to comment and contribute to the implementing regulations of the Act. He also discussed the collaboration with the Executive, National Assembly and Business (through the NBA-SBL and the Nigerian Economic Summit Group — NESG) culminating in the passing of the CAM Bill and signing into law by President Buhari. Mr. Esan, observed that whereas, the Act ostensibly dispensed with the need to engage legal counsel for certain tasks, the total effect of the Act is to ease access to businesses becoming well structured thus providing other forms of more lucrative work for legal practitioners.
Mr. Afe, lauded the Act in terms of what it portends particularly with respect to encouraging the informal sector of the Nigerian economy to becoming formalized in order to access capital and other business development offerings. He also observed that businesses now have legal backing for various innovative measures that they had employed particularly since the advent of the Covid-19 pandemic. While generally in consonance with the submissions of the other panelists, Mr. Tolu Olatunji, Principal Partner, Edge Hill Law Practice, emphasized the need for the CAC to promptly deploy a platform that would essentially make the process of incorporation, conducting corporate searches, and other basic functions, paperless. To which the Registrar General responded was in the offing.
The outing was very insightful and had in attendance legal luminaries, including a Justice of the Supreme Court Hon. Justice Helen Ogunwumiju, JSC, Hon. Justice M. L. Abimbola, Chief Judge of Oyo State, and Senior Advocates of Nigeria, including Chief Kunle Kalejaiye, SAN, and Chief Yomi Alliyu, SAN.