MOVE by the Senate to repeal and re-enact the twenty-eight-year-old Companies and Allied Matters, CAMA Act to promote financial stability and to reduce the time and cost of setting up a company, yesterday got a boost as the Bill scaled second reading.
A Bill for an Act to repeal the Companies and Allied Matters Act, Cap. C20, Laws of the Federation of Nigeria, 2004 and enact the Companies and Allied Matters Act, 2020 to provide for the incorporation of companies, limited liability partnerships, limited partnerships, registration of business names together with incorporation of trustees of certain communities, bodies, associations; and for related matters, 2020 (SB. 251) is sponsored by the Senate Leader, Senator Abdullahi Yahaya, All Progressives Congress, APC, Kebbi North.
The Bill also seeks to provide an efficient means of regulating businesses, minimize the compliance burden of small and medium enterprises (SMEs), enhance transparency and shareholder engagement and promote a friendly business climate in Nigeria.
In his lead Debate, Senator Yahaya said, “the proposed Bill when it becomes law projects the following advantages for the Nigerian economy:
“It will enhance Nigeria’s business environment and make it competitive amongst its international colleagues; Good start for small companies and young entrepreneurs, given the
provision for single ownership of small private companies.”
According to him, when passed, It would promote the use of technology; It will eliminate all unnecessary regulatory provisions for small companies, adding that it is expected to reduce the minimum share capital for companies and startups in Nigeria; The introduction of e-registration system will ensure global access to registration of companies; and Increase in foreign investment through the creation of a new legal entity, i.e. LLP & LP.
” The Bill seeks to provide for the incorporation of companies, registration of business names together with incorporation of Trustees of certain communities, bodies, associations and incidental matters.”
Speaking on the Economic Impact of the Provisions of the Bill, the Senate leader said, “Ensure more business-friendly regulation for Micro, Small and Medium Enterprises: The amendments to CAMA have the potential to increase activities of MSMEs, thereby growing the N igerian economy in the process;
“Fewer Compliance Obligations for Small Companies: Small companies will be free from the yearly audit process. This invariably means that cost is reduced and more money can be injected into the business for expansion. For the Nigerian economy, this translates to more jobs and a more stable economy;
“Reduction in Time and Cost of Setting up A Company: The reforms as presently obtainable at the CAC will tends to be more attractive for small businesses operating within the informal sector to be able to formalize their businesses by registering at the Corporate Affairs Commission within the shortest possible time. Today, business registration can be concluded within 3 days. This development has the potential of increasing the tax base of the country as well as increasing revenue earned from taxation of corporate entities, and diversifying the economy;
“Promotion of Financial Stability: The introduction of model netting provisions in the Bill as a means of mitigating credit risks promotes financial stability and investor confidence in the Nigerian Financial Sector; and
“Increasing Investor Confidence in the Nigerian Financial Sector as well as all sectors of the economy: Investor confidence in the Nigerian business sector and indeed, all sectors of the economy is expected to significantly improve, due to a competitive and business-friendly environment where companies are regulated in line with International best practices.”
Senator Yahaya further said that “The Bill was read for the first time in this Hallow Chambers on 10th December, 2019. The Companies and Allied Matters Act (Chapter C20) Laws of the Federation of Nigeria 2004 (CAMA) was enacted in Nigeria as a decree of the military government in 1990, and in the past 28 years, there have been no significant amendments to the CAMA. The Companies and Allied Matters Act (CAMA) is the statute that regulates the operations of Companies in Nigeria. This Law has been in force for about 28 years Without any amendment or alteration whatsoever despite the myriads of development in the global business clime.
“In a bid to tackle the seeming stagnancy and primitive methods of doing business in Nigeria as a result of the outdated enabling law which had hitherto impeded business advancement, hence the introduction of the CAMA Bill 2020 Which objectives are essential to meet up with the present international best practice as
well as promote ease of doing business.
“One essential reason for CAMA (Repeal & Re-enactment) Bill 2020 is because the Nigerian business landscape has been heavily constrained by several provisions in CAMA 1990 Which is apparently obstructing modern business practices in the light of national and global business reforms.
“It goes Without saying that the provisions of CAMA 1990 are not in tandem with global trends and it has become amply imperative to repeal the entire CAMA and re-enact it afresh.”
On the Significant Highlights of the CAMA Repeal and Re-enactment Bill, 2020, Senator Yahaya said, “A more inclusive Governing Board at the Corporate Affairs Commission (CAC): One representative of the Institute of Chartered Secretaries & Administrators of Nigeria (ICSAN) is proposed to be included on the Board of CAC, including a representative of the Nigerian Association of Small and Medium Enterprises to create an accommodating Board for input from Micro, Small, and Medium Enterprises;
“Pre-action Notice: The Bill introduces pre-action notice to be given 30 days before commencement of any suit against the commission (CAC);
$Single-member private Companies: The Bill introduces that one person may form and incorporate a small private company. This is in line with other jurisdictions like Singapore, England, and India;
“Prescribed Model of Articles of Association: Apart from the Articles of Association contained in the 1990 CAMA, the re-enactment Bill empowers the Minister to prescribe, by regulations, model articles of association for companies and different model articles may be prescribed for different descriptions of company; Consent of Attorney General of the Federation for a Company Limited by Guarantee: 3 significant changes have been introduced in this aspect.”