Key Changes Introduced by CAMA 2020 - Fidelity Bank Nigeria · Key Changes Introduced by CAMA 2020 C tt 2020 13. V GMs Under S.240(2) of the new CAMA, there is provision for remote

CAMA 2020C o m p a n i e s a n d A l l i e d M a t t e r s A c t 2 0 2 0

Key Changes Introduced by

Introduction On August 7, 2020, President Muhammadu Buhari signed into law the companies and Allied Matters Act (CAMA) 2020. It is undoubtedly, our country’s most significant business legislation in 30 years and it introduces notable new provisions that facilitate ease of doing business and reduce regulatory hurdles as listed out overleaf.

CAMA 2020 Companies and Allied Matters Act 2020 2Key Changes Introduced by

CAMA 2020 Companies and Allied Matters Act 2020Key Changes Introduced by 3.

Single Member

Companies

Under S.18 (2), it is now possible for a single person to form a private company in Nigeria. This is consistent with what prevails in some other countries such as the UK, India and Singapore.

However, the person cannot be a minor.


Minimum Share Capital

S.27 of the new CAMA, replaces “authorised share capital” with “minimum share capital”. The implication being that promoter(s) of a business are not required to pay for or allocate shares that are not needed at the specific time of incorporation.


Introduction of Statement

of Compliance

S.40 (1) of the new CAMA brought in a statement of compliance to 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 before a notary public. A statement of compliance need not be signed by a lawyer.


Limited Liability

Partnerships

Under Part C and D, we now have Limited Liability Partnership as a new form of legal entity and basically combines the organisational flexibility and tax status of a partnership with limited liability for its members.

This is very important for start-ups are not stuck with the option of setting up a company, but also enjoy the benefits of partnerships which a partnership agreement beyond the regular MEMART whilst still protecting their personal assets from being sold in claims for debts, liability, or creditors.


Common Seal Is No

Longer Mandatory

Under S.98 of the new CAMA, procurement of a common seal is no longer a mandatory requirement. Most jurisdictions around the world has since expunged the requirement for companies to have a common seal from their laws.


Disclosure Of Significant

Shareholding

S.119, requires persons with significant control in a company disclose its shareholding to other shareholders.

For example, any person who has others holding shares on their behalf as trustees or proxies, whilst being shareholders themselves in same company are expected to make such disclosures.


Exemption from

Appointment of Auditors

Under S.402, small companies or companies with a single shareholder are not mandated to appoint auditors at AGMs to audit their financial records. It also provides for the exemption in relation to the audit of accounts in respect of a financial year.


Company Insolvency

Under sections 434-549; 718-721, insolvent companies can now be saved from distress and liquidation instead of outright winding up through voluntary arrangements, administration and netting.


Mergers of Incorporated

Trustees

Appointment of a company secretary is now limited Public Companies. According to S.330 (1) of the new CAMA, it is now optional for a private company whether to have a company secretary or not.


Minority Shareholder

Protection and Engagement

S.265 (6) provides that the Chairman of a public Company shall not act as the CEO of such a company.


Virtual AGMs Under S.240(2) of the new CAMA, there is provision for remote or virtual general meetings as long as such meetings are in compliance with the Articles of Association of the company. This will facilitate attendance at these meetings from any part of the world at minimal cost.

S.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.


Eletronic Filing, Share Transfer And

E-Meetings For Private Companies

S.861 of the new CAMA provides that certified true copies of electronically filed documents are admissible in evidence with equal validity with the original documents. S.176 (1) also provides that instruments of transfer of shares shall include electronic instruments of transfer.


Reduction of Filing Fees

By S.223 (12), there is a significant reduction of filing fees for registration of charges to 0.35% which implies a reduction of cost in fees relating to charges


Restriction on Multiple

Directorship In Public

Companies

By S.307(2), a person shall not be a director in more than five (5) different public limited liability companies at a time. By S.307(4), any person who is a director in more than five companies, shall at the next AGM of the companies after the expiration of 2years from the commencement of this Act resign from all but five of the companies.


Power Of The CAC To Withdraw/

Cancel A Reserved

Name

By S.31(3) of CAMA, the CAC has the power to any time before a certificate of incorporation is issued to withdraw or cancel a reserved name if it discovers that such a name is identical with that by which a company in existence already registered or so nearly resembles it as to likely to deceive.


Power of the Minister to

Prescribe Model

Articles

S.33 CAMA 2020 provides for the power of the Minister to prescribe model articles of association and allowing for different model articles prescribed for different descriptions of companies.

A company may adopt all or any of the provisions of model articles under S.33 CAMA 2020.


Power of the CAC to Withdraw, Cancel, Or Revoke A

Certifcate Of Incorporation

By S.41(7) of CAMA 2020, the CAC has the power to withdraw, cancel or revoke a certificate of incorporation where it is discovered that the certificate was fraudulently, unlawfully, or improperly procured.


Authentication and Service of

Documents

By S.101 CAMA 2020, for authentication and service of documents, 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 and an electronic signature is deemed to satisfy the requirement for signing.


Non-Prohibition of a Private

Company From Giving

Financial Assistance

S.183(4) of CAMA 2020 allows for the non- prohibition of a private company from giving financial assistance in a case where the acquisition of shares in question is or was an acquisition of shares in the company or, if it is a subsidiary of another private company.


Purchase of Shares

S.184(1) of the new act allows a limited liability company to purchase its own shares including redeemable shares.


Hoisting of Audited

Accounts

S.374 (6) of the Act stipulates each public company shall keep its audited accounts on its website.


Small Company

Designation

By S.394(3) CAMA 2020, a small company shall be described of fixed as a company by CAC from time to time whose turnover is not more than N120m and whose net assets value is not more than N60m.


Insolvency Practitioner

By S.705(1), a person is only qualified to act as an insolvency practitioner where he has obtained a degree in law, accountancy or such other relevant discipline from any recognised university or polytechnic; has a minimum of five years post qualification experience in matters relating to insolvency and authorised to so act by virtue of a certificate of membership issued by Business recovery and insolvency practitioners Association of Nigeria (BRIPAN) or his membership of any other professional body recognised by the Commission being permitted to act by or under the rules of that body and holds an authorisation granted by the commission.


Suspension of Trustees

By S.839(1), the Commission can suspend the trustees of an association and appoint an interim manager or managers to manage the affairs of an association.


Submission of Bi-Annual Statements

Trustees

By S.845(1), the trustees of an association shall submit to the commission a bi-annual statement of affairs of the association as the Commission shall specify in its regulations.


Administrative Proceedings

Committee

S.851 of the new Act establishes an Administrative Proceedings Committee but parties dissatisfied with the decisions of the committee may appeal to the Federal High Court.


Duty To Seek Comments Of

Government Department

Or Other Body

Under S.853 of the new Act, the Commission may, by regulations, require that in connection with an application for the approval of the Commission for the registration of company, limited liability partnership, limited partnership, business name or incorporated trustees, that the applicant must seek the view of a specified Government Department or other body.

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