On Saturday, 8th August 2020 President Muhammadu Buhari via his twitter handle announced the signing into law; the Companies and Allied Matters Act (CAMA), 2020. It should be noted that the bill was signed on Friday, 7th August 2020.
The newly signed CAMA bill, now CAMA act, 2020 will enhance the ease of doing business for Small and Medium-Scale Enterprises (SMSEs), as single member/shareholder companies can now be incorporated in Nigeria. Prior to this bill, the minimum number of shareholders was two(2).
Similarly, the introduction of the ‘statement of compliance’ ( which can be signed by the applicant or his agent) to confirm therein that the requirements of the law as to registration have been complied with. Before now, it was mandatory to submit a Declaration of Compliance, which must be signed by a lawyer or attested to before a notary public. A Statement of Compliance however need not be signed by a lawyer.
Another important provision of the act which directly affect SMSEs, allow for voluntary participation in statutory audits of accounts by registered companies that are yet to commence operations; as well as companies with turnover of less than N10m and balance sheet size of not more than N5m in one financial year, but excluding banks and insurance companies. Furthermore, Annual General Meetings (AGMs) are now optional for companies with one shareholder.
The provisions of the new CAMA act includes several corporate legal innovations that are directed towards enhancing the ease of doing business in Nigeria, while keeping regulatory bottle necks at the minimal. Below are the highlights of CAMA 2020 as established in the press release by Femi Adeshina, special adviser to the president on media & publicity.
a. Filing fee reductions and other reforms to make it easier and cheaper for small and medium-sized enterprises to register and reform their businesses in Nigeria;
b. Allowing corporate promoters of companies to establish private companies with a single member or shareholder, and creating limited liability partnerships and limited partnerships to give investors and business people alternative forms of carrying out their business in an efficient and flexible way;
c. Innovating processes and procedures to ease the operations of companies, such as introducing Statements of Compliance; replacing “authorised share capital” with minimum share capital to reduce costs of incorporating companies; and providing for electronic filing, electronic share transfers, e-meetings as well as remote general meetings for private companies in response to the disruptions to close contact physical meetings due to the COVID-19 pandemic;
d. Requiring the disclosure of persons with significant control of companies in a register of beneficial owners to enhance corporate accountability and transparency; and
e. Enhancing the minority shareholder protection and engagement; introducing enhanced business rescue reforms for insolvent companies; and permitting the merger of Incorporated Trustees for associations that share similar aims and objectives.