President Muhammadu Buhari signed into law the new Companies and Allied Matters Act (CAMA) on August 7, 2020.
The new CAMA is Nigeria’s most significant business legislation in 30 years and it introduces new provisions that promote ease of doing business and reduces regulatory hurdles.
Some of the major provisions are listed below:
Exemptions from 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.
Business Rescue Provisions for Insolvent Companies
The new Act introduces a framework for rescuing a company in distress and to keep it alive as against allowing such entity to become insolvent. This will be similar to the chapter 11 bankruptcy provisions available to American companies to undertake reorganizations.
Restrictions on Multiple Directorships in public Companies
Section 307 (1) of the Act prohibits a person from being a director in more than 5 public companies at a time.
Improves Minority Shareholder Protection
Section 265 (6) restricts firms from appointing a director to hold the office of the Chairman and Chief Executive Officer of a private company.
People can now set up a Company with Single Member Shareholder
The new CAMA now makes it possible to establish a private company with only one (1) member or shareholder.
Reduction of Filing Fees
Under Section 223 (12) of the new Act, the total fees payable to the CAC for filing has been reduced to 0.35 percent of the value of the charge. This is expected to lead to up to 65 percent reduction in charges associated with the CAC filings.
Introduction of Statement of Compliance
The new Act introduces that Statement of Compliance be signed by an applicant or his agent, confirming therein the requirements of law as to registration has been complied with.
This serves as an alternative to the requirement to submit a Declaration of Compliance signed by a lawyer or attested to by a notary public.
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, promoters of a business need not pay for shares not needed at a specific time.
Exemption from Appointing Auditors
Small companies or any company having a single shareholder are no longer mandated to appoint auditors at the annual general meeting to audit their financial records according to S. 402 of the new CAMA.
No Mandatory Requirement of Common Seal
According to S.98 of the new CAMA: Every company is required under the previous Act to have a common seal, the use of which is to be regulated by the Articles of Association. This has been expunged from the requirement.
Provision for Virtual AGMs
The new CAMA also provides for remote or virtual general meetings, provided that such meetings are conducted in accordance with the Articles of Association of the Company.
Provision for Electronic Filing, Share Transfer, Meetings
According to S.861, the new CAMA provides that certified true copies of electronically filed documents are admissible in evidence, with equal validity with the original documents. Section 176 (1) also provides that instruments of transfer of shares shall include electronic means.