On Tuesday, 10 March 2020, the Senate passed the Companies and Allied Matters Act (Repeal and Re-enactment) Bill. The 2020 CAMA Bill seeks to establish an efficient means of regulating businesses, minimize the compliance burden of small and medium enterprises, enhance transparency and shareholder engagement, and promote a friendly business climate in Nigeria.
THE CAMA BILL 2020: A SUMMARY
Here is a summary of the new Companies and Allied Matters Act (CAMA) signed into law by President Muhammadu Buhari on August 7, 2020.
The passage of this legislation has been three decades in the making. However, its coming herald better times for small and medium businesses in Nigeria. It has been considered as Nigeria’s most significant business legislation in three decades.
Below are some aspects that are of interest and much importance:
- It is now possible to establish a private company with only one (1) member or shareholder.
- Statement of Compliance need not be signed by a lawyer. It can now be signed by an applicant or his agent, confirming therein that the requirements of the law as to registration have been complied with.
- The concept of “authorized share capital” has now been replaced in the Act with the concept of “minimum share capital”. This means that promoter(s) of a business does not need to pay for shares that are not needed at a specific time.
- The procurement of a Common Seal is no longer a mandatory requirement.
- The new CAMA makes provision for electronic filing, electronic share transfer, and e-meetings for private companies. So certified true copies of electronically filed documents are admissible in evidence, with equal validity with the original documents.
- Reduction of Filing Fees for Registration of Charges; the total fees payable to the CAC for filing has been reduced to 0.35% of the value of the charge.
- A merger of Incorporated Trustees. The new Act provides for a merger between two or more associations with similar aims and objects. CAC will approve the terms and conditions of such a merger.
- Disclosure of persons with significant control in companies. This bolster transparency in company operations. Companies are under obligation to disclose capacity in which shares are held, either as a beneficial owner or as a nominee of an interested person.
- Restriction on Multiple Directorship in Public Companies. The Act prohibits a person from being a director in more than five (5) public companies at a time.
- Business Rescue provisions for Insolvent Companies. This provides a framework for rescuing a company in distress and keeping it alive as against allowing such an entity to become insolvent.
- Enhancement of Minority Shareholder Protection and Engagement by restricting firms from appointing a director to hold the office of the Chairman and Chief Executive Officer of a private company.
- Exemption from appointing Auditors – Small companies or any company having a single shareholder are no longer mandated to appoint auditors at the annual general meeting to audit the financial records of the company.
- The appointment of a Company Secretary is now optional for private companies.
- Creation of Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs) – The new CAMA introduces the concept of Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs). This combines the organizational flexibility and tax status of a partnership with the limited liability of members of a company
Please note that items in italics are points from the new bill which I think might be of interest to us in the distant or not so distant future.