On the 7th of August 2020, president Muhammadu Buhari signed the companies and allied matters bill which was recently passed by the National assembly into law.
The new companies and allied matters act [CAMA 2020] introduces new provisions to reflect modern corporate realities as well as improve the ease of doing business in the Nigeria business environment.
Below are 50 notable key points in the new companies and allied matters act [CAMA2020]
- PRE-ACTION NOTICE TO THE CORPORATE AFFAIRS COMMISION S.17
It is no longer compulsory to issue a 30days pre-action notice to cac before instituting an action against the CAC. - SOLE SHAREHOLDERS S.18
One [1] person may incorporate a company so long as you comply with the provisions of CAMA. - RESTRICTIONS ON TRANSFER OF SHARES OR ASSESTS OF THE COMPANY S.22[2]
A private company may restrict the transfer of the shares of the company. i.e. a member is barred from transferring his shares to a third party without first offering same to existing members [right of first members] note; that for the sale of assets amounting to 50% of the total value of the company’s assets the consent of its members is highly required. - CONSENT OF THE AGF FOR COMPANY LIMITED BY GUARANTEE S.26[7]
The consent of the AGF may be dispensed with in registering the memart where he fails to grant such consent within 30days, provided that that there are no cogent reasons for the refusal, note that there are additional requirement that an applicant must fulfill before CAC can assent to the application and thereafter register the company. - COMPANY LIMITED BY GUARANTEE S.26[12]
There has been an increase from N10,000.00 to N100,000.00 as the total liability of members to be contributed to the company’s assets in the event of winding up. - MINIMUM ISSUED SHARE CAPITAL S.27[2][a]
Minimum issued share capital has replaced authorized share capital for companies. Private company is N100,000.00 and public company is N2,000,000.00 - STATEMENT OF COMPLIANCE S.40[1]
It provides that the statement of compliance be signed by the applicant or his agent confirming therein the requirements of the law that the requirement have been complied with. This serves as an alternative to the requirement to submit a declaration of compliance signed by a lawyer or attested to before a notary public. - RE-REGISTRATION OF COMPANIES
A public company limited by shares can be re-registered as an unlimited company with a share capital this is in addition to the re-registration processes and procedures of the repealed law - POWER TO EXEMPT FOREIGN COMPANIES S.80
An application for exemption of a foreign company from the requirements of incorporation a separate entity in Nigeria for carrying on business in Nigeria is to be made to the minister and not the council of ministers - COMMON SEAL S.98
It is no longer mandatory to have a common seal - ELECTRONIC SIGNATURE S.101
Documents requiring authentication by a company may be signed electronically. - COMMON SEAL S.102[2]
A company may execute a deed without affixing a common seal. - DISCLOSURE OF PERSONS WITH SIGNIFICANT CONTROL S.119 & S.791
Companies and limited liability partnerships are mandated to disclose to CAC, persons with significant control over the entities - INCREASE OF ISSUED SHARE CAPITAL ON ALLOTMENT OF NEW SHARES S.128
Where there is an increase in the issued share capital of a company as a result of the allotment of new shares, the increase will only take effect if at least 25% of the share capital including the increase has been paid up. - ISSUANCE OF SHARES AT A DISCOUNT IS UNLAWFUL S.146
It is now unlawful for companies to issue shares at a discount. - ELECTRONIC TRANSFER OF SHARES S. 175
Shares may be transferred electronically, as electronic instrument has been included as an instrument of transfer. - FINANCIAL ASSISTANCE S.183
There has been an expansion of the rule against financial assistance. it includes a. where the financial assistance is done pursuant to a court order under a scheme of arrangement, merger, acquisition b. where the principal purpose of the financial assistance is not to reduce or discharge any liability incurred by a person for the purpose of acquisition of shares in the company or its holding company or discharge of such liability. - ACQUISITION BY A COMPANY OF ITS OWN SHARES S.184-186
CAMA 2020 permits companies to buy back their shares as long as the condition precedents are complied with. It lists out procedures of acquisition and person whom the company may acquire its own shares from. - REDUCTION OF FILLING FEES. 223[12]
There has been a decrease in respect of filling, registration and release of a charge payable to the corporate affairs commission to 0.35% of the value of the charge. - ORDINARY BUSINESS IN ANNUAL GENERAL MEETING S.238
The ordinary business to be transacted at the annual general meeting of a company now includes disclosure of remuneration of managers of a company. - EXEMPTION FROM HOLDING ANNUAL GENERAL MEETING S.237
Small companies and single shareholders companies are not required to hold annual general meetings. - VIRTUAL GENERAL MEETING S.240
Private companies may hold virtual general meetings provided that such meetings are conducted in accordance with their articles of association. - NOTICE OF GENERAL MEETING S.243[1][e]
The corporate affairs commission Is now entitled to receive notice of general meetings for public companies. - CHAIRMAN AND EXECUTIVE OFFICER S.265[6]
It is now prohibited for the chairman of a public company to also act as the chief executive officer of the same company - INDEPENDENT DIRECTORS IN PUBLIC COMPANIES S.275
It has become mandatory for public companies to have at least 3 independent directors. - DISCLOSURE OF AGE AND MULTIPLE DIRECTORSHIP S.278
A person who is sort to be appointed a director of a public company has a duty of disclosure as to his age [where he is 70 years or more] as well as if he or she holds other directorship in other public companies. - RESTRICTIONS ON MULTIPLE DIRECTORSHIP IN PUBLIC COMPANIES S.307[2] &[3]
A restriction has been placed on the number of directorship a person can hold in a given period. A person is prohibited from being a director in more than 5 public companies after the expiration of two [2] years from the commencement of CAMA 2020, the person must resign from all but 5 of the companies. - EXEMPTION FROM THE APPOINTMENT OF SECRETARY S.330[1]
The appointment of a secretary is now optional for small companies - STATEMENT OF CONSENT BY SECRETARY.339[2] [b]
A person who has been appointed the secretary of a company is required to file a statement of consent - MAJOR ASSET TRANSACTION S.342
A major asset transaction is defined as a transaction or related series of transactions involving the acquisition sale or other transfer outside the usual course of the company’s business of the company’s property or other rights the value of which is 50% or more of the book value of the company’s assets. - PUBLIC COMPANIES TO DISPLAY AUDITED ACCOUNTS ON WEBSITE S.374[6]
Every public company is mandated to display its audited accounts on its website. - SMALL COMPANIES S.395
A small company is a private company whose turnover must not be more than N120,000,000.00, its net assets value must not be more than 60,000,000.00, none of its members must be an alien, a government corporation, agency or nominee. In the case of a company having share capital, the directors between themselves must hold at least 51% of its equity share capital. - EXEMPTION FROM AUDIT REQUIREMENT S.402
Some companies such as small companies and companies that have not carried on any business since incorporation are exempted from auditing their accounts in respect of a financial year. Note; this exemption does not extend to banks and insurance companies. - PERSONS NOT QUALIFIED FOR APPOINTMENT AS AUDITOR S.403[4]
There has been an expansion of the list of persons who cannot be appointed an auditor of a company, they include, i. A debtor to the company or to a company that is deemed to be related to the company by virtue of interest in shares In an amount exceeding N500,000.00. ii. A shareholder or spouse of a shareholder of a company whose employee is an officer of the company iii. A person who is or whose partner, employee or employer is responsible for the keeping of the register of holders of debentures of the company - ANNUAL RETURNS S.425[3]
A company’s name may be struck off the companies’ register where it fails to file annual returns for a consecutive period of 10 years. - UNCLAIMED DIVIDENDS S.429
Where dividends paid by a company remain unclaimed, the company is required to publish in 2 national newspapers, a list of the unclaimed dividend and the names of the persons entitled to the dividends and attach the list as published in the national newspapers, to the notice that is sent to the members of the company for each subsequent annual general meeting after the expiration of 3 of the publication and notice, the company may invest the unclaimed dividend for its own benefit in investment outside the company. No interest can accrue on the dividends against the company. - COMPANY VOLUNTARY ARRANGEMENT S.434 TO S. 442
The new CAMA2020 has introduced a provision which states that companies that are financially troubled may propose legally binding agreements with their unsecured creditors regarding achievable repayment plans. These arrangements will assist companies facing cash flow difficulties to avoid insolvent liquidation. - ADMINISTRATION S.443 TO S. 549
The new CAMA 2020 embodies an English styled administration which would facilitate business rescue and reorganisatiom. - WINDING UP OF COMPANIES BY THE COURT S.571[e]
There has been an expansion of situations where a company will be wound up by the court. the court may wind up a company where the condition precedent to the operation of the company has ceased to exist. - INABILITY TO PAY DEBTS S.572[a]
A company would be deemed as been being unable to pay debts if it is indebted to a creditor in the sum exceeding N200,000.00 after a demand has been made by the creditor and the company has three [3]weeks thereafter neglected to discharge the debt. - TRANSACTIONS AT AN UNDERVALUE S.659
A liquidator or administrator may now avoid transactions at an undervalue in relations to companies undergoing liquidation or administration. - QUALIFICATION AS INSOLVENCY PRACTITIONER S. 705
There is now a detailed provision in relation to the qualification of an insolvency practitioner. S.707 further provides for an application for authorization to act as an insolvency practitioner. - MORATORIUM IN ARRANGEMENTS AND COMPROMISE S.717
There is a moratorium from winding up petitions and enforcement action by creditors for companies which have commenced the process of arrangement and compromise. The moratorium is for a period of 6 months. - NETTING
Provisions of a netting agreement are enforceable in accordance with the terms, including against an insolvent party, a guarantor and other security providers. A liquidator, administrator or other office holders cannot stay or avoid such arrangements. - LIMITED LIABILITY PARTNERSHIP S.746
A limited liability partnership may be incorporated when a limited liability partnership is incorporated. It will be a body corporate with a legal entity separate from its partners. - CONSTITUTION OF LIMITED PARTNERSHIP S.795
A limited partnership may be formed by not more than twenty [20] persons - POWERS OF THE CORPORATE AFFAIRS COMMISSION TO SUSPEND TRUSTEES OF AN ASSOCIATION S.839
Where there has been a misconduct or miss management or where the affairs of an association are being run fraudulently or where it is necessary or desirable to protect the property of an association or the public interest, the CAC now has the inherent powers to order or suspend the trustees of such registered associations and appoint an interim manager or managers to coordinate its affairs of the association - MERGERS OF INCORPORATED TRUSTEES S. 849
There may be a merger between two or more associations with similar aims and objectives under such terms and conditions as may be prescribed by the CAC. - CONSTITUTION OF ADMINISTRATIVE PROCEEDINGS COMMITEE S.851
The new CAMA 2020 makes provisions for the establishment of an administrative proceedings committee saddled with the responsibility of hearing persons alleged to have contravened the provisions of CAMA 2020 or its regulations and imposing administrative penalties for the contravention of the provisions of the CAMA 2020 or its regulations. - ELECTRONIC FILLINGS S.860
Any document to be filed with the corporate affairs commission for registration may be filed electronically.
Please note, that this article does not serve as a legal advice, contact a commercial/corporate lawyer for extensive legal advice on the new CAMA.
published by Starlion Legal
5th, August, 2020.
STARLION LEGAL 