Nigeria: Innovations In The CAMA Bill 2018

Last Updated: 13 June 2018
Article by T & A Legal

On Tuesday, 15th May, 2018, the Nigerian Senate passed the Company and Allied Matters (Repeal and Re-enactment) Bill, 2018 ("The Bill") which is targeted at improving the ease of investing in Nigeria and bringing it in line with global best practices.

The Bill if and/or when enacted, will greatly reform the business landscape in Nigeria given the sweeping innovations it brings some of which include:

  1. Single Member Companies
    The Bill makes provisions for the formation of a company by just one individual unlike under the current operative law whereby the association of two or more persons are required to form a company. This innovation it should be noted extends only to the incorporation of private companies. 1
  2. Promotion of Technology
    The Bill promotes the use of technology in the registration of businesses in Nigeria in a bid to improve efficiency and cut costs which has already been pioneered by the Corporate Affairs Commission.2
  3. Authorised Minimum Share Capital
    The Bill introduces a new authorised share capital threshold for companies seeking registration in Nigeria with the authorised share capital for Private companies not being less than 100,000 and Public Companies not being less than 2,000,000.3
  4. Annual General Meeting for Small Companies
    The Corporate and Allied Matters Act, 2004 ("CAMA") requires every company to hold their Annual General Meetings on a yearly basis with not more than 15 months must lapse between the date of one AGM and the next. However, by virtue of the provisions of the Bill, it is no longer mandatory for small companies to convene and hold Annual General Meetings. A small company is regarded as one that:

    1. is a private company;
    2. the amount of its turnover is not more than 2 million Naira;
    3. its net assets are not more than 1 million Naira;
    4. none of its members is an alien or a government agency; and
    5. the directors between themselves hold not less than 51% of the equity share capital of the company.4
  5. Company Secretary
    Whilst the appointment of Company Secretaries is still mandatory for public companies, the appointment of same by Small or Single member companies is optional.5
  6. Paid Up Capital
    There is currently no provision under CAMA for a timeline within which the shareholders of a company should pay for shares allotted to them. However, the Bill stipulates that 25% of the issued share capital of a company must be paid up at all times.6
  7. Use of Common Seal
    The Bill has abolished the mandatory requirement for each company to have a common seal. Each company may opt to obtain a common seal and regulate its use and design through its articles of association.7
  8. Beneficial Ownership
    The Bill further seeks to promote transparency and remove ambiguity in the ownership and control of companies in Nigeria by mandating every member of a company disclose the capacity in which they hold their shares, and if on behalf of another person i.e. the beneficial owner, disclose the identity of such owner. With sanctions prescribed for non-compliance.8
  9. Auditing by Small Companies
    The Bill exempts small companies from appointing auditors. Specifically, the Bill provides that a company is exempted from appointing auditors if:

    1. it has not carried on business since its incorporation; or in a particular financial year; or
    2. the company's turnover is not more than N10m and its balance sheet total is not more than N5m9
  10. Business Rescue Proceedings
    The Bill makes provisions for Business Rescue Proceedings which is targeted at rehabilitating financially distressed companies. These provisions seek to create an effective insolvency regime in Nigeria and has a dual aim: to save viable businesses, and to ensure that non-viable businesses can quickly exit the market, allowing deployment of assets to more productive firms.10

Conclusion

It is expected that the new Bill when enacted will ease the rigours of doing business in Nigeria thereby making investing in the country an attractive prospect to investors. This will have the effect of improving and strengthening the nation's economy as the projected influx of new businesses will help it thrive and grow in bounds.

Footnotes

1. S 18 (2) Company and Allied Matters Bill 2018 (The Bill)

2. S. 31 (1), 34 (2)  The Bill

3. S. 27 (2) a, The Bill

4. Ijeoma Uju, Oghomwen Akpaibor and Dise Otrofanowei "The Repeal and Re-Enactment of The Companies and Allied Matters Act- A Bold Step Towards Business Reform"

5. Ibid N4

6. Ibid N4

7. Ibi4 N4

8. S 92 The Bill

9. S 356 The Bill

10. S. 402 The Bill

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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