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Highlights of Some Changes to the Companies and Allied Matters Act, 2020

posted 2 years ago

The Companies and Allied Matters Act (CAMA) was signed into law in Nigeria, on the 7th of August 2020. The Act introduced some provisions to reduce regulatory requirements and foster ease of business.

Highlights:

  1. Provision of single Member/Shareholder companies – S.18(2) allows a private company to be established with only one (1) Member or Shareholder.
  2. Restriction on Multiple Directorship in Public Companies – S.307(2) prohibits a person from being a director in more than five (5) public companies at a time.
  3. Disclosure of persons with significant control in companies – S.119 – 120 creates an obligation to disclose persons with significant control and substantial Shareholders and to disclose the capacity in which shares are held, either as the beneficial owner or as a nominee.
  4. Creation of Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs) – S. 746 – 795 creates Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs). This combines the organisational flexibility and tax status of a partnership with the limited liability of members of a company.
  5. Exemption from the appointment of a Company Secretary for small companies – S. 330 (1) provides that all companies except small companies shall have a company secretary, thus appointing a company secretary is not mandatory for a small company.
  6. Replacement of Authorized Share Capital with Minimum Share Capital – S.27 replaces the concept of “authorised share capital” with the concept of “minimum share capital”. With minimum share capital, promoter(s) of a business are not required to pay for shares that are not required at the material time.
  7. Virtual Annual General Meetings: The Act provides for remote or virtual general meetings, provided that such meetings are conducted in accordance with the Articles of Association of the company.
  8. Provision for electronic filing, electronic share transfer and e-meetings for private companies – The Act makes provision for electronic filing, electronic share transfer and e-meetings for private companies. S.861 provides that certified true copies of electronically filed documents are admissible in evidence, with equal validity with the original documents. S.176(1) provides that instruments of transfer of shares shall include electronic instruments of transfer.
  9. Procurement of a Common Seal is no longer mandatory – S. 98 provides that the procurement of a Common Seal is no longer a mandatory requirement. A Company may have a seal but if so, the Articles shall regulate the use of the seal.
  10. Exemption to audit accounts for Small Companies – S. 402 provides for the exemption to audit accounts of a financial year for small companies or for companies that have not carried on business since inception.
  11. Introduction of Statement of Compliance – S.40 (1) introduces the Statement of Compliance which can be signed by an applicant or his agent, confirming therein that the requirements of law as to registration of a company have been complied with. This serves as an alternative to the requirement to submit a Declaration of Compliance, which must be signed by a lawyer or attested to before a Notary Public.
  12. Merger of Incorporated Trustees – S. 849 provides for a merger between two or more associations with similar aims and objects under such terms and conditions as may be prescribed by the Corporate Affairs Commission.
  13. Reduction of Filing Fees for Registration of Charges – Under S. 222 (12) the total fees payable to the Corporate Affairs Commission for filing, registration or release of a charge has been reduced to not more than 0.35% of the value of the charge. This is a reduction of about 65%.
  14. Enhancement of Minority Shareholder Protection and Engagement – S. 265 (6) restricts firms from appointing a director to hold the office of the Chairman and Chief Executive Officer of a private company. This is a corporate governance principle to reduce dominance and control of the Board, thus ensuring that one person does not have unrestricted power.
  15. Business Rescue provisions for Insolvent Companies – The Act introduces a framework for rescuing a company in distress and to keep it alive as against allowing such entity to become insolvent. Provisions were made with respect to Company Voluntary Arrangements (S.434 to S.442), Administration (S.443 to S.549) and Netting (S.718 to S.721).

These new provisions of the Act will promote the ease of doing business for companies, promote corporate governance, disclosure and transparency.

For more information about us, kindly contact us with the details below:

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Website: www.maisonlegal.com.ng

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