In the last few months, the Federal Government of Nigeria has taken decisive steps for the purpose of easing doing business in Nigeria. One of such major steps was the overhaul of the procedural aspects of the incorporation of companies and registration of business names at the Corporate Affairs Commission (CAC) by introducing online procedures and gradually phasing out manual procedures. These positive steps led to an improved ranking and rating Nigeria’s ease of doing business by the World Bank.
In a bid to consolidate on the gains made by Nigeria in the area of ease of doing business, the National Assembly, on 15th May 2018, passed the Companies and Allied Matters Act (Repeal and Re-enactment) Bill 2018 (The Bill), which is a Bill for an Act to repeal and re-enact the primary statute for the regulation of companies in Nigeria, the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria, 2004 (“CAMA” or “the Act”). This is the first re-enactment of the Act since it was first enacted 28 years ago.
One of the principal objectives of the Bill is to reduce unnecessary bottlenecks and bureaucracy in the registration and regulation of companies, business names and incorporated Trustees in Nigeria. One of the notable changes introduced by the Bill is that one (1) person alone will be able to incorporate a company as opposed to the present statutorily required minimum of two (2) persons as prescribed by Section 22(3) of CAMA. This change is expected to (i) ease the adoption of the limited company structure by small businesses; and (ii) reduce the cost of managing limited companies for small businesses.
Also, small companies and companies with one shareholder, will no longer be mandatorily required to appoint a Company Secretary or hold Annual General Meetings, this requirement is now only for Public companies. Furthermore, the minimum share capital for companies will be varied. For instance, the minimum share capital of public companies will be increased from N500,000.00 (Five Hundred Thousand Naira) to N2,000,000.00 (Two Million Naira), in order to ensure that only companies that are stable going concerns carry on business as public companies.
The Bill also removes the requirement for small companies to hold Annual General Meetings (AGMs). Previously CAMA required companies to hold AGMs on a yearly basis. Thus once a company qualifies as a small company, that is, a private company; a company with a turnover of not more than N2,000,000.00; a company with its net assets not more than N1,000,000.00, the mandatory requirement to convene and hold an AGM will not apply.
In addition, Part B of the Bill, pursuant to Section 567, provides for the establishment of Business Names Registry in each State of the Federation. This will be a registered office of business names where there shall be kept a register in the prescribed form. This would ostensibly allow for easy and speedy registration of business names and reduce the onerous strain on the CAC.
The introduction of the BiIl is most welcome, having regard to the fact that, with the passage of time, the CAMA has become outdated in several respects, some of which have been positively addressed by the Bill. However, questions remain as to whether, in view of the fundamental importance that the CAMA plays in the regulation of companies and allied matters, the Bill goes far enough in reforming Nigerian corporate law in line with present day realities. The outstanding questions notwithstanding, the fact that the Bill represents progress in Nigerian company law jurisprudence is apparent and until the Bill is passed into law, there remains room for the inclusion of further improvements.