After 30years of the existence of the Companies and Allies Matters Act 1990, President Mohammed Buhari on Friday 7TH August 2020 signed the new Companies and Allieds Matters Act (repeal and re-enactment) Bill 2020 into law. The new Companies and Allies Matters Act brings forward several new provisions geared to improve the ease of doing business index in Nigeria and also reduce regulatory hurdles.
CAMA AMENDMENT BILL 2020
Some of the provisions espoused by the CAMA amendment bill
- Single member Shareholding
Against the previous requirement of the old act. CAMA amendment bill 2020 provides that a company can now be incorporated with a minimum of 1 (one) shareholder
- Statement of Compliance
The previous act required that a legal practitioner or notary public attest to the fact that all necessary steps have been taken in the incorporation of a company also to the fact that information provided is true and credible. This requirement has been relaxed under the new CAMA and, a simple statement or declaration by any person to that effect will suffice.
- Restriction on Multiple Directorship in Public Companies
The CAMA amendment bill 2020 prohibits a person from being a director in more than five (5) public companies at the same time.
- Enhancement of Minority Shareholder protection and engagement
The recently passed bill restricts firms from appointing a director to head the office of chairman and Chief Executive Officer of a private company. These positions have to be occupied by different individuals.
- Limited Liability Partnership and Limited Partnership
The new CAMA creates two different types of partnership called the limited liability partnership and limited partnership. This confers limited liability on partners. A status that was previously restricted to shareholders in an incorporated company.
- Appointment of Secretary
Companies and Allieds Matters Act (repeal and re-enactment) Bill 2020 dispenses with the need to appoint a company secretary by a private company. According to the new CAMA, appointment of secretary is only mandatory for public companies.
- Appointment of Auditors 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 new CAMA provides for the exemption in relation to the audit of accounts in respect of a financial year.
- Virtual Annual General Meeting
The new Companies and Allieds Matters Act provides for remote or virtual general meetings provided that such meetings are conducted with the Articles of Association of the company. This will facilitate compliance with the AGM requirement at a reduced cost. This is especially relevant considering the current global health pandemic.
- Electronic filing, Electronic share transfer and E- meetings for private companies
Certified copies of electronically filed documents are now admissible in evidence with equal validity as paper documents. The CAMA amendment bill 2020 also provides that instrument of transfer of shares shall also include electronic transfer.
- Common Seal
The procurement of a common seal regulated by the Articles of Association of the company is no longer a mandatory requirement for companies or business entities under the new act.
- Authorized Share Capital Now Minimum Share Capital
The concept of Authorized share capital has now been replaced by minimum share capital. With the new minimum share capital, promoters need not pay for shares not needed at a specific time. This reduces the cost of incorporation i.e. filing fees and stamp duties charges.
- Reduction of Filing Fees for Registration of Charges
Under the new CAMA Act, 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 lead to up to 65% reduction in the associated cost payable under the regime.
- Merger of Incorporated Trustees
The new Act provides for merger between two or more associations with similar aims and objects under such terms and conditions as may be prescribed by the CAC.
- Disclosure of persons with significant control in companies
The act introduces new transparency provision with 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.
The new act no doubt has certain laudable provisions that facilitate compliance and also make it more affordable in some regard to do business in Nigeria. However, from our perspectives, a lot needs to be done in terms of timeline and policies should be put in place to ensure that transactions are adequately processed by the governing body.