The new Companies and Allied Matters (CAMA) Act, 2020 (“the Act”) has canceled and substituted the extant Companies and Allied Matters Act of 1990.
The CAMA Act has presented new provisions that encourage the ease of doing business, reduced regulatory hurdles and supports businesses to adopt the technological realities of the 21st century.
According to business experts, this is expected to ultimately promote investments, create more jobs, and promote a friendly business climate in Nigeria.
So, here are some of the provisions of the new CAMA and how it will impact your businesses.
PROVISION OF SINGLE-MEMBER/SHAREHOLDER COMPANIES
Section 18 sub-section (2) of the bill now makes it possible to establish a private company with only one (1) member or shareholder. For startups and growing entrepreneurs, this is a great news because it has totally fixed business registration challenges. Prior to this new CAMA, if you want to legally own a business in Nigeria you need have at least two or more people as co-owners of the business.
INTRODUCTION OF STATEMENT OF COMPLIANCE
In Section 40 sub-section (1); there is the introduction of Statement of Compliance (SOC) signed by an Applicant (or agent), without the need for a Lawyer or Notary Public to attest to Declaration of Compliance (DOC). SOC is a requirement of the law that indicates that you, the applicant has complied with the registration and requirements.
REPLACEMENT OF AUTHORIZED SHARE CAPITAL WITH MINIMUM SHARE CAPITAL
Section 27 of the Act has replaced ‘Authorized Share Capital’ with ‘Minimum Share Capital’. This means that the promoter(s) of a business is not required to pay for or allocate shares that are not needed at the specific time of incorporation.
PROCUREMENT OF A COMMON SEAL IS NO LONGER A MANDATORY REQUIREMENT
According to section 98, the procurement of a Common Seal is no longer a mandatory requirement. This implies that companies can now authenticate documents by other means other than a common seal. This means you don’t need to stamp seals on documents anymore. The world is evolving digitally so the seals are not necessary as before.
PROVISION FOR ELECTRONIC FILING, ELECTRONIC SHARE TRANSFER AND E-MEETINGS FOR PRIVATE COMPANIES
The new CAMA makes provision for electronic filing, electronic share transfer and e-meetings for private companies. You can now register your business from anywhere in the country via the e-registration portal. It also provides remote or virtual general meetings, provided that such meetings are conducted in accordance with the Articles of Association of the company. This will enable participation at such meetings from any location within and outside the country at a reduced cost.
EXEMPTION FROM APPOINTING AUDITORS
Section 402 of the Act allow for an exemption in relation to the audit of accounts in respect of a financial year. Also, small companies or any company having a single shareholder are no longer mandated to appoint auditors at the annual general meeting (AGM) to audit the financial records of the company.
EXEMPTION FROM THE APPOINTMENT OF COMPANY SECRETARY
Under Section 330 sub-section (1) the appointment of a Company secretary is only compulsory for public companies. This means that it is now optional for private companies to appoint a Company Secretary
CREATION OF LIMITED LIABILITY PARTNERSHIPS (LLPs) AND LIMITED PARTNERSHIPS (LPs)
The Act introduces Limited Liability Partnerships and Limited Partnerships, which combines flexibility and tax status of a partnership with the status of limited liability for members of a company. This indicates that startups are not stuck with the option of setting up a Company, but also enjoy the benefits of partnership which a partnership agreement (including vesting agreement, and founders agreements) beyond the regular Articles and Memorandum of Association, while still protecting their personal assets from being sold in claims for debts, liability, or creditors.
REDUCTION OF FILING FEES FOR REGISTRATION OF CHARGES
In Section 223 sub-section (12), filing fees for Registration of Charges payable to the CAC (Corporate Affairs Commission) 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 Act also extends mergers option to Incorporated Trustees. Section 849 indicates that two or more NGOs, social entrepreneurs with different registered organizations, with similar goals can merge to form one (1) single organization.
DISCLOSURE OF PERSONS WITH SIGNIFICANT CONTROL IN COMPANIES
Section 119 stresses transparency in terms of control in a company. It requires that person (s) with significant control in a company disclose its shareholding to other shareholders for clarity sake.
RESTRICTION ON MULTIPLE DIRECTORSHIP IN PUBLIC COMPANIES
Section 307 sub-section (1) prohibits a person from being a Director in more than five (5) public companies at a time.
BUSINESS RESCUE PROVISIONS FOR INSOLVENT COMPANIES
The Act offers a framework for rescuing a company in distress and to keep it alive as against allowing such entity to become insolvent. Provisions were made with respect to Company Voluntary Arrangements (S.434 to S.442), Administration (S.443 to S.549) and Netting (S.718 to S.721).
ENHANCEMENT OF MINORITY SHAREHOLDER PROTECTION AND ENGAGEMENT
Section 265 sub-section (6) restricts firms from appointing a Director to hold the office of the Chairman and Chief Executive Officer of a private company.
