THE PROPOSED COMPANIES AND ALLIED MATTERS ACT 2018: WHAT’S NEW?

PREFACE

It is no news that after 28 years, a new Companies and Allied Matters Act (hereinafter referred to as “CAMA”) has been passed by the National assembly to replace the current CAMA.

As expected, a lot of the provisions of the current CAMA, having been in force since 1990, have been overtaken by events. Therefore as an upwardly mobile and progressive country, there was the urgent need to reverberate our laws (particularly the ones that have to do with commercial activities) to be able to attract and retain foreign investors, and increase the ease of doing business in Nigeria. These, among other things, were what birthed CAMA 2018 which is geared towards bringing Nigeria’s foremost commercial law in tandem with the global/international standard of best practices.

The 2018 CAMA passed the third reading in May, 2018 but is yet to come into force because it has not been assented to by the President of the Federal Republic of Nigeria. So, for the purpose of this write up, it shall be referred to as ‘the proposed CAMA’ while the subsisting CAMA will be referred to as ‘1990 CAMA’.

The proposed CAMA, as passed, has 860 sections and 16 schedules as opposed to the 613 sections and 15 schedules in the 1990 CAMA – a whooping 247 extra Sections! Not to talk of the in-between alterations and all. Yes, it’s that much. In this write up, we have attempted to do a side-by-side comparison of the 1990 CAMA and the proposed CAMA to bring out the salient differences between them.

WHAT’S NEW (AND JUICY) IN THE PROPOSED CAMA?

1. E-registration

The Proposed CAMA has saddled Corporate Affairs Commission (hereinafter referred to as “The Commission”) with the duty of establishing and using any means of electronic communication to facilitate an automated reservation of names in terms of Part A, Part B and Part C of this Act; incorporation and registration under Part A, Part B and Part C of this Act; and filing of any information contemplated by this Act[1].

This, in no doubt, will largely ease the means of registering business in Nigeria as all the hassles related to the manual registration of Company can now be dispensed with.

Although the Commission has since adopted e-registration, there was no federal legislation to that effect. This anomaly has now been fixed by the proposed CAMA.

2. Pre-action Notice and Restriction on Levy of Execution

By section 17 of the proposed CAMA, no suit can now be commenced against the Commission before the expiration of a period of thirty days after a written notice of intention to commence the suit have been served upon the Commission by the intending plaintiff or his agent. The notice is to state the cause of action, particulars of the claim, name and place of abode of the intending plaintiff; and the relief(s) sought.

3. One-man Company

One of the major things that Nigerians will be grateful for in this proposed CAMA is that by virtue of Section 18 (2), one person may form and incorporate a private company by complying with the requirements of the proposed CAMA in respect of private companies.

4. Power of Minister to Prescribe Model Articles

Apart from the Articles of Association contained in the 1990 CAMA, Section 33 of the proposed CAMA has empowered the Minister to prescribe, by regulations, model articles of association for companies and different model articles may be prescribed for different descriptions of company. Section 34 applies to the default application of such model.

5. Object clause

Whereas Section 27(1)(c) of the 1990 CAMA requires a company to state its object(s), Section 35 of the proposed CAMA states that unless a company’s articles specifically restricts the objects of the company, its objects are unrestricted.

6. Minimum Issued Share Capital

Section 27 (2) (a) has upwardly reviewed the minimum issued share capital from N10,000.00 to N100,000.00 in the case of a private company and from N500,000  to N2,000,000.00, in the case of a public company[2].

7. Registration Documents

The scope of documents required for registration of a company has been expanded under the proposed CAMA. Now, among other things, Section 36 requires that if member’s liability is to be limited by share, the application for registration should contain Statement of Capital and Initial Shareholdings or statement of guarantee if member’s liability is to be limited by Guarantee. The content of these statements are contained in Sections 37 and 38 respectively.

8. Statement of Compliance

One other requirement of registration of Company in Nigeria is the submission of a statutory declaration of compliance (CAC7)

By virtue of Section 35 (3) of the 1990 CAMA “(3) A statutory declaration in the prescribed form by a legal practitioner that those requirements of this Act for the registration of a company have been complied with shall be produced to the Commission, and it may accept such a declaration as sufficient evidence of compliance.” By this provision, only a legal practitioner could fill the prescribed form CAC7.

In Section 40 of the proposed CAMA, ‘Statutory declaration in the prescribed form by a legal practitioner…’ has been tactically removed and substituted with “A statement of compliance…”. This has two meanings: firstly, that the document evidencing compliance no longer need to be by way of statutory declaration (the requirement of taking the CAC7 before a Commissioner of Oath to be notarized may now be dispensed with) as a simple ‘statement’ to that effect will suffice. Secondly, the strict condition that the declaration of compliance must be by a legal practitioner has been removed. This may mean that forthwith, any ‘qualified’ person can make the statement of compliance.

9. Electronic Signature

Where a document or proceeding is required to be authenticated by a company, the proposed CAMA provides that electronic signature on such document or proceeding  shall suffice. The proposed CAMA states: “A document or proceeding requiring authentication by a company may be signed by a director, secretary, or other authorised officer of the company, and need not be signed as a deed unless otherwise so required in this Part of this Act, provided that an electronic signature shall be deemed to satisfy the requirement for signing under this section[3].”

10. Beneficial Ownership

To ensure transparency in knowing who controls or have a say in a company, section 120 mandates every person who holds shares in the company which entitles him to exercise at least five per cent of the unrestricted voting rights at any general meeting of the company but who is not the beneficial owner of company shares held by him, to indicate to the company in writing the particulars of the identity of the person(s) interested in the shares in question within seven days (or such other period as the Commission may by regulation prescribe from time to time) of becoming a holder of the shares. The beneficial owner should also disclose whether persons interested in the same shares are parties to any agreement or arrangement relating to the exercise of any rights conferred by the holding of the shares. If default is made by any such holder, or where he makes any statement which he knows to be false in a material particular or recklessly makes any statement which is false in a material particular, he shall be liable to such fines as the Commission may prescribe by regulation.

Upon this disclosure, the company is to, within 7 days, inscribe against the name of every member in the register of members the information received and at the filing of its next annual return, notify the Commission of that information. If the company defaults, the company and every officer of the company shall be liable to such fines as the Commission may prescribe by regulation for every day during which the default continues.

11. Ease of reduction of share capital

When a private limited company desirous of reducing its share capital passes a special resolution to that effect, a copy of the minutes of the meeting showing the amount of the share capital, the number of shares into which it is to be divided, and the amount of each share; and the amount (if any) at the date of the registration deemed to be paid up on each share, shall be delivered to the Commission. The Commission will in turn register such minutes and the resolution for reducing share capital shall take effect. The minutes, when registered, shall be deemed to be substituted for the corresponding part of the company’s memorandum, and valid and alterable as if it had been originally contained in it[4]. This dispenses with the extra burden of seeking Court’s confirmation Order as contained in the 1990 CAMA.

12. Prohibition of Bearer Shares

Section 175 of the proposed CAMA has expressly prohibited bearer shares. According to the Section, no company has the power to issue bearer shares. The section further explains what a bearer share is to mean “a share which is represented by a certificate, warrant or other document (in any form or by whatever name called) which states or otherwise indicates that the bearer of the certificate is the owner of the shares.

13. Company’s Acquisition of Its Own Shares (Share buyback)

Prior to now, a company could only acquire its own shares for some specified purposes[5]. Now however, by virtue of Section 185 of the proposed CAMA, Limited Liability Company may purchase its own shares including redeemable shares if so permitted by its articles and approved by the shareholders by special resolution. Forthwith, the purpose of the acquisition need not be any of those listed out in Section 160 (2) of the 1990 CAMA. However, a company is precluded from purchasing its shares if as a result of the purchase; there would no longer be any issued shares of the company other than redeemable shares or shares held as treasury shares[6]. From the coming into force of the proposed CAMA, the procedure for a private company to acquire its own shares is that within 7 days after the passing of the special resolution by the members of the company, the company will cause to be published in two national newspapers, a notice of the proposed purchase by the company of its own shares and within 15 days after such publication, the directors of the company will make and file with the Corporate Affairs Commission, a statutory declaration of solvency, to the effect that the company is solvent and can pay its debts as they fall due, and that after the purchase of its shares, the company shall remain solvent and can pay its debts as they fall due. Within six weeks of the publication in two national newspapers, any of the company’s creditors or a dissenting shareholder who did not vote in favour of the share buyback may make an application to the court for an order cancelling the resolution. Once that application is made, the ability of the company to proceed with the share buy back shall depend on the order of the court[7].

Where a company succeeds at acquiring its own shares, section 186 of the proposed CAMA states that payment for the share buy back can only be made from the distributable profits of the company[8].

A company may buy back its shares from the existing shareholders or security holders on a proportionate basis, from the existing shareholders in a manner permitted pursuant to a scheme of arrangement sanctioned by the court, from the open market; and by purchasing the securities issued to employees of the company pursuant to a scheme of stock option or any other such similar schemes[9].

Whereas company’s acquisition of its own shares under the 1990 CAMA appears to relate to companies generally, the proposed CAMA expressly states that it relates to a Limited Liability Company alone[10].

14. Financial Assistance to members

Whereas the 1990 CAMA outrightly precluded a company from giving financial assistance to persons for the purpose of acquiring its shares, Section 184 (3) has now created exemptions to this general rule to include lending of money by the company to its member(s) in the ordinary course of its business, where the lending of money is part of the ordinary business of a company;  the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of, or subscription for, fully- paid shares in the company or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees of the company, including any director holding a salaried employment or office in the company; the making by a company of loans to persons, other than directors, bona fide in the employment of the company with a view to enabling those persons to purchase or subscribe for fully-paid shares in the company or its holding company, to be held themselves by way of beneficial ownership; any act or transaction otherwise authorised by law including (i) a distribution of a company’s assets by way of dividend lawfully made or a distribution made in the course of the company’s winding up, (ii) the allotment of bonus shares, (iii) a reduction of capital confirmed by order of the court under this Act, and (iv) a redemption or purchase of shares; anything done in pursuance of an order of the court under a scheme of arrangement; a scheme of merger or any other scheme or restructuring of a company done with the sanction of the Court; or an assistance given by a company where its principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in the company or its holding company, or the reduction or discharge of any such liability, but an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company[11].

15. Annual General Meeting

Every small company and/or any company having a single shareholder have been exempted from the mandatory requirement to convene and hold Annual General Meetings[12].

16. Protection of director’s information

Under the 1990 CAMA, there is the requirement that the register of directors containing full name and any former name or names, service address, nationality, business occupation (if any), date of birth, phone number and such other details should be made available for inspection by any member of the company without charge and by any other person on payment of 50.00k during business hours[13].

In line with the general best practices and the need for privacy, the proposed CAMA has put several measures in place to protect information relating to the director. Particularly as contained in the register of directors.

Section 322 makes provision for protecting a company director who is an individual. Forthwith, information as to a company director’s usual residential address, or that his service address is his usual residential address are classified as “protected information”. The information does not cease to be ‘protected information’ because the individual has ceased to be a director of the company.

Consequently, the proposed CAMA forbids a company from disclosing protected information except for the purpose of communicating with the director concerned, in order to comply with any requirement of the this Act as to particulars to be sent to the registrar, or to notify the Commission of Change(s) in the company’s directorship[14]. Any other disclosure has to be with the consent of the director concerned.

Section 324 explains the restriction on use or disclosure of protected information by the Commission. While section 325 states the permitted use or disclosure by the Commission.

However, the protection afforded does not preclude a court from making an order directing a company or by the Commission to disclose protected information if there is evidence that service of documents at a service address other than the director’s usual residential address is not effective to bring them to the notice of the director, or it is necessary or expedient for the information to be provided in connection with the enforcement of an order or decree of the court, and the court is otherwise satisfied that it is appropriate to make the order[15].

An order for disclosure by the Commission will only be made if the company does not have the director’s usual residential address, or has been dissolved[16].

The order may be made on the application of a liquidator, creditor or member of the company, or any other person appearing to the court to have a sufficient interest and must specify the persons to whom, and purposes for which, disclosure is authorised[17].

Section 327 carefully explains circumstances in which the Commission may put Address on the public record. The Commission, on deciding that a director’s usual residential address is to be put on the public record, shall proceed as if notice of a change of registered particulars had been given[18].

17. Company Secretary

When the provisions of sections 329 (1) ‘Except in the case of a small company, every public company shall have a secretary’ is compared with section 293 (1) 1990 CAMA (1) ‘Every company shall have a secretary.’  The import is that the regulatory burden of having a company secretary has been removed from small companies, thereby making it optional for small companies to have a company secretary.

18. Private companies need not keep Register of Secretaries

While section 292 (1) of the 1990 CAMA provides that ‘Every company shall keep at its registered office, a register of its directors and secretaries.’ The proposed CAMA says ‘Every public company shall maintain a register of secretaries…[19]’ this invariably means that private companies have been let off the hook in this regard.

19. Exemption from Audit Requirement

The proposed CAMA has exempted companies that have not carried on any business since its incorporation or whose turnover in a financial year is not more than N10 million and the balance sheet total is not more than N5million from the requirement to have its accounts audited in respect of that financial year. Such a company must however not at any time within the financial year in question carried on business as an insurance company, a bank or such other company as may be prescribed by the Commission[20].

20. Corporate Responsibility for Financial Reports

With the coming into force of the proposed CAMA, the chief executive officer and chief financial officer of a company other than a small company or persons performing similar functions shall certify in each audited financial statement that the officer who signed the audited financial statements has reviewed them, and based on the officer’s knowledge, the audited financial statements do not contain any untrue statement of material fact or omit to state a material fact, which would make the statements misleading, in the light of the circumstances under which such statement was made; and the audited financial statements and all other financial information included in the statements fairly present, in all material respects, the financial condition and results of operation of the company as of and for, the periods covered by the audited financial statements  etc. failing which such managing director, chief financial officer or person performing similar functions shall be guilty of an offence and liable on conviction to a penalty as the Commission shall specify in its regulations[21].

21. Improper Influence on Conduct of Audit

Similarly, it will now be an offence, punishable by a penalty to be specified by the Commission in its regulations, for any officer, insider or director of a company, or any other person acting under the direction of such officer, insider or director, to take any action to influence, coerce, manipulate or mislead any external auditor engaged in the performance of an audit of the financial statements of that company for the purpose of rendering such financial statements misleading[22].

22. Company Voluntary Arrangements[23]

Company voluntary arrangement is another novel provision of the proposed CAMA. It is a process whereby the directors of a company, an administrator or liquidator make a proposal to its creditors for a composition in satisfaction of its debts or a scheme of arrangement of its affairs. Under this scheme, a person is nominated (“the nominee”) to act in relation to the voluntary arrangement either as trustee or otherwise for the purpose of supervising its implementation[24].

Where the nominee is not the liquidator or administrator of the company, he shall, within twenty-eight (28) days (or such longer period as the court may allow) after he is given notice of the proposal for a voluntary arrangement, submit a report to the court stating  whether, in his opinion, meetings of the company and of its creditors should be summoned to consider the proposal, and if in his opinion such meetings should be summoned, the nominee suggests the date, time and place for the meeting to be held[25].

Where the nominee is not the liquidator or administrator, and it has been reported to the court that such meetings should be summoned, the person making the report shall (unless the court otherwise directs) summon those meetings for the time, date and place proposed in the report. On the other hand, where the nominee is the liquidator or administrator, he shall summon meetings of the company and of its creditors to consider the proposal for such a time, date and place as he thinks fit. Only creditor(s) of the company of whose claim and address is known to the person summoning the meeting will be summoned to the creditors’ meeting[26].

The meetings summoned shall decide whether to approve the proposed voluntary arrangement with or without modifications. Nevertheless, the meetings cannot approve any proposal or modification which affects the right of a secured creditor of the company to enforce his security, except with the concurrence of the creditor concerned[27].

After the conclusion of either meeting, the chairman of each meeting is to report the result of the meeting to the court, and immediately after, give notice of the result of the meeting to such persons as may be prescribed[28].

If the decision taken by the creditors’ meeting differs from that taken by the company meeting, then, a member of the company may, within 28 days, apply to the court and upon consideration of the application, the court may order the decision of the company meeting to have effect instead of the decision of the creditors’ meeting, or any other order as it thinks fit[29].

It is an offence under the proposed CAMA for a person who is an officer of the company to make any false representation or fraudulently do, or omit to do anything for the purpose of obtaining the approval of the members or creditors of a company to a proposal for a voluntary arrangement. Any person guilty of this offence is liable to imprisonment for a term of one year or a fine as the Court deems fit or both imprisonment and fine[30].

23. Administration of companies

The whole of PART B Chapter XX[31] relates to administration of Companies.

Companies, like individual, will definitely have its turbulent times. The 1990 CAMA enables a company in distress to explore options such as winding-up, merger, acquisition and compromise. The proposed CAMA has expanded the scope of options available to a company in distress to include administration. One laudable thing about this provision is that while the options available under 1990 CAMA was to ‘prepare the Company for a decent burial’, Administration on the other hand can be likened to ‘resuscitating the company or putting the Company on a life support pending when it comes round to viability.’

The proposed CAMA provides that a person may be appointed as administrator of a company by an order of the court[32], or an holder of a floating charge[33] or the company[34] or its directors[35]. He is however considered as an officer of the court, whether or not he is appointed by the court[36].

A person may be appointed as administrator of a company only if he is qualified to act as an insolvency practitioner in relation to the company[37].

The administrator of a company may do all such things as may be necessary for the management of the affairs, business and property of the company.  

The objective of the Administrator is to rescue the company, the whole or any part of its undertaking, as a going concern, achieve a better result for the company’s creditors as a whole than would be likely if the company were wound up, without first being in administration; or realize property in order to make a distribution to one or more secured or preferential creditors.

In the exercise of his functions, the administrator of a company shall perform his functions in the interests of the company’s creditors as a whole and within sixty (60) days of his appointment, prepare a detailed schedule of the company’s assets and submit a copy to the person by whom he was appointed[38].

24. Electronic meeting

Contrary to section 216 of the 1990 CAMA which provides that “all statutory and annual general meetings shall be held in Nigeria”, A private company may now hold its general meetings electronically provided that such meetings are conducted in accordance with the articles of the company[39].

25. Effect of Administration

Once an administrator is appointed, any petition for the winding-up of the company will be dismissed except if the petition was presented under grounds of public interest or with the leave of the court or if the petition was presented under special banking provisions of the Banks and Other Financial Institutions Act, the Nigerian Deposit Insurance Act or any law and rule by a financial services and markets regulator[40]. The receiver of the company either appointed by a holder of a floating charge or by a secured creditor or by the court will also vacate office[41].

Where a company is in administration, neither a resolution nor an order for the winding-up of the company will be made[42]. Also , the company shall have moratorium on other process(es) such that no step shall be taken to enforce security over the company’s property, repossess goods in the company’s possession under a hire-purchase agreement, neither shall a landlord exercise a right of forfeiture by peaceable re-entry in relation to premises let to the company, nor shall legal process, including legal proceedings, execution, distress and diligence, be instituted or continued against the company or property of the company except with the consent of the administrator or the permission of the court[43].

26. The Limited Liability Partnership

Another innovation of the proposed CAMA is the concept of limited liability partnership. This is a model structure that affords the flexibility of a partnership but clothed with the legal protection afforded companies. By the provision of the proposed CAMA, two or more persons associated for carrying on a lawful business with a view to profit may form or incorporate a limited liability partnership under the Act as a legal entity separate from that of its partners having perpetual succession[44]. At least one of the partners must be resident in Nigeria[45].

A designated partner shall be responsible for the doing of all acts, matters and things as are required to be done by the limited liability partnership in respect of compliance of the provisions of this Act including filing of any document, return, statement and the like report pursuant to the provisions of this Act and as may be specified in the limited liability partnership agreement; and liable to all penalties imposed on the limited liability partnership for any contravention of those provisions[46].

For a limited liability partnership to be incorporated, two or more persons shall subscribe their names to an incorporation document; and the incorporation document shall be filed with the Commission[47] and the Commission shall, upon satisfying that all the relevant rules have been complied with, register the incorporation document and give a certificate that the limited liability partnership is incorporated by the name specified therein[48]. Such certificate shall be conclusive evidence that the limited liability partnership is incorporated by the name specified therein. On registration, a limited liability partnership becomes a body corporate who by its name, is be capable of suing and being sued, holding property, having a common seal (if it decides to have one) among others[49].

The mutual rights and duties of the partners of a limited liability partnership, and the mutual rights and duties of a limited liability partnership and its partners, shall be governed by the limited liability partnership agreement between the partners and   In the absence of agreement as to any matter, the mutual rights and duties of the partners and the mutual rights and duties of the limited liability partnership and the partners shall be determined by the provisions relating to that matter as are set-out in the Sixteenth Schedule[50].

A person may cease to be a partner of a limited liability partnership in accordance with an agreement with the other partners or, in the absence of agreement with the other partners as to cessation of being a partner, by giving a notice in writing of not less than thirty days to the other partners of his intention to resign as partner[51].

Every partner of a limited liability partnership is, for the purpose of the business of the limited liability partnership, the agent of the limited liability partnership, but not of other partners[52]. The limited liability partnership is expected, to maintain books of Account, Other Records and Audit[53]. Every limited liability partnership is also expected to file an annual return with the Commission within sixty days of closure of its financial year failing which the limited liability partnership and every designated partner of such limited liability partnership shall each be liable to a penalty in such amount as the Commission shall specify in its regulations[54]. A partner may transfer his profits and losses interest in the limited liability to any person of his choice either wholly or in part[55]. Affairs of Limited Liability Partnership can be investigated[56] and there is provision for the winding-up and dissolution of Limited Liability Partnership[57].

No foreign limited liability partnership incorporated outside Nigeria shall carry on business in Nigeria until it is properly incorporated as a separate entity in Nigeria. Neither shall it have a place of business or an address for service of documents or processes in Nigeria for any purpose other than the receipt of notices and other documents, as matters preliminary to incorporation[58].

27. Power to consolidate Incorporated Trustees

The proposed CAMA has empowered the Commission, by virtue of its section 823 thereof, to direct that an association be treated as forming part of an already registered association, or that any two or more association having the same trustees be treated as a single association. This is aimed at curbing multi incorporation of Incorporated Trustees by same group of people under the guise of different incorporated names. Incorporated Trustees can, also on their own, may merge under such terms and conditions as may be prescribed by the Commission from time to time[59].

28. Suspension of Trustees and Appointment of Interim Manager(s)

When the proposed CAMA comes into force, it will be possible for the Commission to suspend trustees of an association and appoint interim managers to manage the affairs of an association where the Commission reasonably believes that there is misconduct or mismanagement in the administration of the association the affairs of the association are being run fraudulently, among others[60].

The suspension shall be by an order of court upon the petition of the Commission or members consisting one-fifth of the association. Upon the hearing of the petition and the appointment of the interim manager, the court with the assistance of the Commission may make provision with respect to the functions to be discharged by the interim manager(s) and such functions shall be discharged by the interim manager(s) under the supervision of the Commission.

If upon the Commission’s enquiry into the affairs of the association, it is satisfied that the allegations contained in the petition are true, such erring trustee(s) may be removed and the court may by order replace such removed trustee(s).

29. Bi-annual statement of affairs and accounting records of Incorporated Trustees

There is now a requirement that the trustees of an association shall forthwith submit a bi-annual statement of affairs of the association to the Commission failing which every trustee will be liable to a penalty for every day during which the default continues in such amount as the Commission shall specify in its regulations[61]. The trustees of an association shall ensure that accounting records are kept in respect of the association and such accounting records shall be sufficient to show and explain the transactions of the association[62]. Such accounting records of an association shall be preserved by it for a period of six years from the date on which they were made[63].

30. Establishment of administrative proceedings committee[64]

The proposed CAMA established a committee called “the Administrative Committee’’ whose main function is to provide the opportunity of being heard for persons alleged to have contravened the provisions of the proposed Act or regulations made thereunder; resolve disputes or grievances arising from the operations of this Act or its regulations; and impose administrative penalties for contravention of the provisions of this Act or its regulations in the settlement of matters before it. The decisions of the Administrative Committee are subject to confirmation by the Board and parties dissatisfied with decisions of the Administrative Committee may appeal to the Federal High Court.

The committee also has power to co-opt, at any of its meetings as observers, representatives of relevant associations, including associations of shareholders, registrars or trustees, as are considered necessary, and members so co- opted shall not count towards a quorum or have the right to vote in respect of any decisions taken by the Administrative Committee.

31. Electronic Notice

Whenever notice is required to be given in the Act, the Proposed CAMA has made it easy to serve notice because now, in addition to the notice given personally or by post, notice may also be given by electronic mail to any member who has provided the company an electronic mail address[65].

32. Duty to Seek Comments of Government Department or Other Body

Where there is the need for an applicant for registration to get approval before an intended name can be used, the Commission may by regulations require that, the applicant must seek the view of a specified Government Department in writing to indicate whether (and if so why) it has any objections to the proposed name[66].

33. Penalty for False Statements or Information

If any person in any return, report, certificate, balance sheet, or other document required by or for the purpose of any of the provisions of the proposed CAMA, willfully makes a statement which is false in any material particular knowing it to be false, he shall be guilty of an offence and liable on conviction to imprisonment for a term of two years in the case of individuals or in the case of company, to fine as the Court deems fit for every day the default continues[67].

34. Penalty for Carrying on Business without Registration

It is now unlawful for any person or association of persons to carry on business in Nigeria as a company, limited liability partnership, or under a business name without being registered under the proposed CAMA default of which the individual, corporation or every partner in the firm shall be guilty of an offence and liable on conviction to a fine, prescribed determined in accordance the Commission’s regulations from time to time, of N200.00 for every day during which the default continues[68].

35. Company seal

Various provisions of the proposed Act seem to have made the use of common seal to be optional. For instance, section 193(1) provides:

“Every company shall, within 60 days after the allotment of any of its debentures or after the registration of the transfer of any debentures, deliver to the registered holder thereof, the debenture or a certificate of the debenture stock under the common seal of the company (if the company has a common seal) or otherwise executed as a deed by the company.”[69]

Section 721(1)(b) also provides that:“ have its name engraved in legible characters on its seal, where the Company has a seal; and”[70]

And Section 832 which states that:

“The common seal of the body corporate (if there is one) shall have such device as may be specified in the constitution; and any instrument to which the common seal of the corporate body has been affixed in apparent compliance with the regulations for the use of the common seal shall be binding on the corporate body, notwithstanding any defect or circumstance affecting the execution of such instrument.”

36. Upward review of fines

All through the proposed CAMA, provisions relating to fines in the 1990 CAMA has either been upwardly reviewed or left open-ended “as the Commission shall specify in its regulations”. This gives the Commission the right to periodically review the applicable fines to ensure that it is in compliance with real time value of money. While it is un-debatable that the fines imposed in the 1990 CAMA no longer serves its punitive purpose, it is hoped that the discretion given to Commission to from time-to-time fix the applicable fines will not be abused.

37. Electronic instrument

Since a lot of things are being done electronically now, the proposed CAMA has inculcated the e-format way of doing things into the Bill. Consequently, there is reference to the use of electronic instrument in the proposed CAMA. For instance, Section 176 and 177 refers to electronic instrument of transfer in relation to transfer of shares. Section 182 also makes provision for a Certificate of transfer shall to include a certificate issued in electronic form.

CONCLUSION

The introduction of the new provisions highlighted above would greatly improve the ease of doing business in Nigeria and has a lot of economic benefits. It is hoped that it will soon be assented to by the President of the Federal Republic of Nigeria.

P.S We always love to hear from you. Kindly drop your comments in the comment section.

 

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[1] Section 8(3) CAMA Bill, 2018

[2] Compare with section 27(2) of CAMA 1990

[3] Section 102 CAMA Bill, 2018

[4] Section 133 CAMA Bill 2018 generally

[5] See Sections 160- 162 of the Companies and Allied Matters Act, 1990

[6] Section 185 (1) (f) CAMA Bill 2018

[7] Section 185 CAMA Bill 2018 generally

[8] Compare with section 161 1990 CAMA

[9] Section 187 CAMA Bill 2018

[10] Section 185 (1) CAMA Bill 2018

[11] Section 184 CAMA Bill, 2018 generally

[12] Section 238(1) CAMA Bill, 2018, compare with section 213 1990 CAMA

[13] Section 292 (6) CAMA 1990

[14] Section 323 of the CAMA Bill, 2018

[15] Section 326 (1) (a)-(b) of the CAMA Bill, 2018

[16] Section 326 (2) (a)-(b) of the CAMA Bill, 2018

[17] Section 326 (3) and (4) of the CAMA Bill, 2018

[18] Section 328 of the CAMA Bill, 2018

[19] Section 335 of the CAMA Bill, 2018

[20] Section 400 (1) and (2)

[21] Section 403 CAMA Bill,2018

[22] Section 404 CAMA Bill, 2018

[23] See sections 432-440 generally

[24] Section 432 CAMA Bill, 2018

[25] Section 433 CAMA Bill, 2018

[26] Section 434 CAMA Bill, 2018

[27] Section 435 CAMA Bill, 2018

[28] Section 435 CAMA Bill, 2018

[29] Section 436 CAMA Bill, 2018

[30] Section 439 CAMA Bill, 2018

[31] Section 441- 546 CAMA Bill, 2018

[32] See sections 446-456 of the CAMA Bill, 2018 generally

[33] See sections 470-474 of the CAMA Bill, 2018 generally

[34] See sections 457-469 of the CAMA Bill, 2018 generally

[35] Section 441 CAMA Bill, 2018

[36] Section 444 CAMA Bill, 2018

[37] Section 445 CAMA Bill, 2018

[38] Section 442 CAMA Bill, 2018

[39] Section 241(2) CAMA Bill, 2018

[40] Section 475 CAMA Bill, 2018

[41] Section 476 CAMA Bill, 2018

[42] Section 477 CAMA Bill, 2018

[43] Section 478 CAMA Bill, 2018

[44] Section 738 CAMA Bill, 2018

[45] Section 741 CAMA Bill, 2018

[46] Section 742 CAMA Bill, 2018

[47] Section 745 (1) CAMA Bill, 2018

[48] Section 746 CAMA Bill, 2018

[49] Section 748 CAMA Bill, 2018

[50] Section 754 CAMA Bill, 2018

[51] Section 755 CAMA Bill, 2018

[52] Section 757 CAMA Bill, 2018

[53] Section 764 CAMA Bill, 2018

[54] Section 765 CAMA Bill, 2018

[55] Section 766 CAMA Bill, 2018

[56] Section 767-779 CAMA Bill, 2018

[57] Section 781-782 CAMA Bill, 2018

[58] Section 780 CAMA Bill, 2018

[59] Section 841 CAMA Bill, 2018

[60] Section 831 CAMA Bill, 2018

[61] Section 837 CAMA Bill, 2018

[62] Section 838 CAMA Bill, 2018

[63] Section 839 CAMA Bill, 2018

[64] Section 843 CAMA Bill, 2018

[65] Section 245(3) CAMA Bill, 2018

[66] Section 845 CAMA Bill, 2018

[67] Section 852 CAMA Bill, 2018

[68] Section 853 CAMA Bill, 2018

[69] Compare with section 167 (1) 1990 CAMA

[70] Compare with section 548 (1) (b) 1990 CAMA