How the new CAMA is a win for Small Businesses and Tech!
On the 7thof August, 2020, the Nigerian President signed into law the new Companies and Allied Matters Act (CAMA). The new law introduces provisions that seeks to establish an efficient means of regulating businesses, minimize the compliance burden on small and medium enterprises (SMEs) and generally promote the ease of doing business in Nigeria.
As a technology company, we at 618 Bees are particularly excited about the provision for electronic filing and virtual board meetings. These are long over due provisions that are in tune with technological advancements and best practices the world over. We have curated a few notable provisions of the new law, explaining the ease it will bring to the businesses we deal with everyday;
Changes to the Business Registration Process/Requirements
i. Introduction of sole company ownership: this means that a single individual can now can now act as both a shareholder and a director to register a limited liability company as opposed to the minimum requirement of two directors/shareholders.
ii. The replacement of authorized share capital with minimum share capital: this means companies need only subscribe and issue shares on an as-needed basis. Companies can no longer have shares in reserve but will need to increase their share capital whenever they need to allot more shares.
iii.Introduction of limited liability partnerships and limited partnerships.
iv. The exclusion of mandatory appointment of company secretaries by private companies.
v. Removal of Attorney General’s Consent for a Company Limited by Guarantee – The new CAMA now provides that this application process will require publication in three (3) National Newspapers instead of obtaining the Attorney General of the Federation’s consent.
vii. Provision of Model Articles of Association – The Corporate Affairs Commission (CAC) would also prescribe a model Articles of Association that would apply to companies, except where a company chooses to register its preferred Articles of Association.
viii. Introduction of statement of compliance: this means that during the registration process an applicant or its agent can now confirm that the requirements of the law are being complied with and serves as an alternative to the Declaration of Compliance by a lawyer or attested to by a Notary Public.
2.Introduction of Electronic Filing
The Corporate Affairs Commission will now accept electronic filings, electronic signatures and electronic share transfer. This I find as one of the most innovative changes to the CAMA as it will surely ease the filing and compliance process for both Solicitors and their clients. This is in line with the times and best practices all around the world.
3.Introduction of Virtual Board Meetings
Companies are now allowed to have their Board Meetings virtually and this is expected to facilitate participation from any location at minimal costs.Considering the effect of the coronavirus on businesses worldwide, running remote board meetings now seems like the way forward. It presents a great opportunity for companies to break some unhelpful habits and rituals in the boardroom, and run more focused and productive meetings which will in turn make leadership more productive and also save time and money for the company.
4.The exclusion of mandatory requirement of audit of accounts by private companies.
Small companies or any company with a single shareholder are no longer mandated to appoint auditors at the AGM to audit their financial records.
- The removal of the compulsory requirement for companies to own a common seal
Companies are no longer mandated to have a common seal. While the new CAMA may have taken away the statutory requirement of this company tool, its important to note that certain other organisations may require companies to use a common seal for some form of documentation process. An example will be the requirement for its use in opening a corporate bank account.
- Elimination of Court order as a condition precedent for share reduction
In order to enhance the ease and flexibility of operating a private company, the new CAMA has now removed the requirement of obtaining a court order prior to reduction of share capital. Consequently, a special resolution passed by the shareholders of the company may be sufficient to reduce share capital.
- The prohibition of an individual holding the positions of both chairman and CEO of a private limited liability company
The separation of the role of Board Chairman and CEO will definitely enhance corporate accountability and transparency.
The new CAMA appears to complement the key objective of the Presidential Enabling Business Environment Council in building an enabling business environment. It is expected that the Corporate Affairs commission in the coming weeks will put in place measures to enable its full effect and benefits.
We will keep you updated on further developments on this new Act especially as it relates to its administration by the CAC.
For further enquiries on the above, please contact: firstname.lastname@example.org, 09017190079.
Team 618 Bees
The information in this blog post (“post”) is provided for general informational purposes only, no information contained in this post should be construed as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through this post without seeking the appropriate legal or professional advice from the particular facts and circumstances at issue from a lawyer. This post is protected by intellectual property law and regulations. It may however be shared using appropriate sharing tools provided that our authorship is always acknowledged and this Disclaimer Notice attached