Editor's note: The newly enacted Companies and Allied Matters Act (CAMA), 2020 repeals the Companies and Allied Matters Act, Cap. C20, Laws of the Federation of Nigeria, 2004.
In this piece, Legit.ng's contributor, Saheed Akinola esq, a legal practitioner, human rights crusader and writer, writes about some ways by which small companies benefit from new CAMA 2020.
Saheed gives legal advice on a variety of issues bordering on rights violation and he could be reached via:firstname.lastname@example.org +2348032493960.
This write-up tends to bring to the fore some of the beneficial provisions of CAMA 2020 to small companies. Notable innovations/reforms under the new Companies and Allied Matters Act (CAMA) 2020 include the following:
1. Single-member/shareholder for private companies
By virtue of the provision of S.18 (2) of the new CAMA, it is now possible to establish a private company with only one (1) member or shareholder. This is a plus for small companies and entrepreneurs because it has totally resolved business registration bottlenecks.
A lot of businesses have been forced into unnecessary partnerships because prior to the new CAMA, to legally own a business in Nigeria, you needed to provide at least two or more people as co-owners of the business.
2. Replacement of authorised share capital with minimum share capital
The concept of ‘Authorized share capital’ has now been replaced in S.27 of the Act with the concept of ‘Minimum share capital’ with minimum share capital promoter(s) of a business not required to pay for shares not needed at a specific time.
This implies 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.
3. Introduction of the statement of compliance
Section 40 (1) provides for 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 the applicant has complied with the registration and requirements.
4. Power to cancel or withdraw a reserved name
Power of the Corporate Affairs Commission to any time before a certificate of incorporation is issued, withdraw or cancel a reserved name if it discovers that such name is identical with that by which a company in existence is already registered, or so nearly resembles it as to be likely to deceive under Section 31(3) CAMA.
5. Signing of the statement of compliance
Statement of Compliance to be signed by the applicant or his agent confirming that the requirements of the law with respect to registration has been complied with thereby expunging the need for a legal practitioner or Notary Public attestation under Section 40 CAMA 2020.
6. Power to cancel or withdraw the issued certificate of incorporation
CAC is given the power to cancel or revoke a certificate of incorporation issued under this Act where it is discovered that the certificate was fraudulently, unlawfully or improperly procured under Section 41(7) CAMA 2020.
7. Procurement of a common seal is no longer a mandatory requirement
The procurement of a Common Seal is no longer a mandatory requirement according to S.98 of the new CAMA. With the amended Act, 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 digital so you don’t need the seal.
9. Reduction of filing fees for registration of charges
The total fee payable to the CAC for filing has been reduced to 0.35% of the value of the charge with a projected 65% reduction in the associated cost payable under Section 222 (12) CAMA 2020.
10. Holding of Annual General Meeting
Small companies and/or any company having a single shareholder are not mandated to hold an Annual General Meeting under Section 237(1) CAMA 2020.
11. Private company can now hold online meetings
The new CAMA provides for remote or virtual general meetings, provided that such meetings are conducted in accordance with the Articles of Association of the company by virtue of Section 240(2) CAMA 2020.
This will facilitate participation at such meetings from any location within and outside the shores of the country, at minimal costs, without having to travel anywhere. Also, Section 240(1) provides that with the exception of small companies and companies having a single shareholder, all statutory and annual general meetings shall be held in Nigeria.
12. Exemption from appointing Auditors
Provision for exemption of small companies or any company having a single shareholder from the appointment of auditors at the Annual General Meeting to audit their financial records under Section 402(1)(b) CAMA 2020.
13. Exemption from the appointment of company secretary
The appointment of a Company Secretary is now optional for private companies. According to S. 330 (1) of the new CAMA, the appointment of a company secretary is only mandatory for public companies.
14. 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.
15. Electronic means of application and filing and electronic share transfer:
The CAMA 2020 provides for the electronic submission/filing of incorporation and other documents as well as the use of electronic signature. You can now register your business from anywhere in the country via the e-registration portal. This provision is in line with the Evidence Act and the realities of technological advancement. It also gives full effect to the current online registration regime by the CAC.
16. Admissibility of electronically filed documents
Section 860(1)(2) CAMA 2020 provides for certified true copies of electronically filed documents to be admissible in evidence as same will have equal validity as the original documents.
The above provisions are some of the areas where the Act has tried to embrace technological changes in the world of business. They are major improvements in company regulation and practice and will enhance productivity and promote ease of doing business in Nigeria. These have drastically reduced the bottleneck in the registration of startups and small companies.
Meanwhile, Legit.ng had previously reported that Yiaga Africa and other Civil Society Organisations kicked off advocacy against the CAMA 2020 in a bid to ensure further legislation.
It was reported that to ensure their advocacy comes to fruition, a stakeholders roundtable on CAMA 2020 was held in Abuja.