Nigeria’s President Muhammadu Buhari was commended over the weekend for signing into law what many described as the most significant piece of business legislation in Nigeria over the last 30 years – the Companies Allied Matters Act (CAMA 2020).
For years, there have been calls to repeal and re-enact the bill which had become a clog in the wheel of progress for new businesses in this technology age.
Former Head of State, Ibrahim Babangida replaced the piece of legislation, which used to be known as Companies Act of 1968, to Companies and Allied Matters Decree №1 of 1990.
This decree dictated how business was done in Nigeria since then until 2004 when it was slightly adjusted to become the Companies and Allied Matters Act (CAMA).
Acting on the intense calls to review the ACT, the Bukola Saraki-led eight Senate passed the bill, but Buhari declined assent, requesting that some provisions contained in the bill must be amended.
Here are some of the benefits of the new law:
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1. Filing fee reductions and other reforms to make it easier and cheaper for small and medium-sized enterprises to register and reform their businesses in Nigeria.
2. It allows corporate promoters of companies to establish private companies with a single member or shareholder and creating limited liability partnerships and limited partnerships to give investors and business people alternative forms of carrying out their business efficiently and flexibly.
3. It introduces Limited Liability Partnerships. This aligns with the realities of MSMEs who are owned by one person and restricted them from registering or forced them to use proxy cofounders/directors.
4. It introduces Statements of Compliance, replacing “authorised share capital” with minimum share capital to reduce costs of incorporating companies and providing for electronic filing, electronic share transfers, e-meetings as well as remote general meetings for private companies in response to the disruptions physical meetings due to the Covid-19 pandemic.
5. It enhances the minority shareholder protection and engagement, introducing enhanced business rescue reforms for insolvent companies and permitting the merger of Incorporated Trustees for associations that share similar aims and objectives.
6. It recognizes electronic signature.
7. It scrapped the need for Consent of the Attorney General for companies limited by Guarantee.
8. It empowers the Corporate Affairs Commission (CAC) to cancel name conflicts or fraud, instead of seeking redress in court.
9. The common Seal of Companies is now optional.
10. The Statutory audit of accounts is now optional for Incorporated companies that are yet to commence operations or with turnover of less than N10 million and balance sheet size of not more than N5 million for a financial year. This exempts banks and insurance companies or as prescribed by CAC.
11. AGMs are now optional for companies with one shareholder.
12. Companies can now buy back their shares.
Stakeholders, however, urge the Federal Government to ensure the implementation of the law as this, according to them, may rubbish the whole process of putting the bill together, passing it into law and the President’s eventual assent.