I read in The Punch of February 21, 2013 an advertorial by the Corporate Affairs Commission (CAC), the agency of government responsible for registration of companies, among other functions and duties as provided by the Companies and Allied Matters Act (CAMA). The commission itself is established by the CAMA.
In the advertorial were rates chargeable for the various services for registration of companies. Initially, I thought the essence of the advertisement was only for public information but found at the end of the advertorial, to my amazement and shock, that the commission has now removed the requirement that only legal practitioners can present an application for incorporation of companies. The CAC advertised that a director or subscriber to a company can now present an application for incorporation of a company. The reason given for this is to reduce the cost of doing business.
This advertisement and information provided by the commission is ultra vires its powers of incorporation of companies and is illegal. What the CAC has been alleged all the while to be doing de jure by allowing persons other than legal practitioners to present documents to it for filing and incorporation of companies has now been made de facto. Indeed, sometime in the year 2012, legal practitioners in Abuja had to protest at the CAC head office over its conduct of taking away statutory business from them by allowing non-lawyers to file and register companies.
The law is clear on who has the duty of registration of companies. Section 35 (1) of the CAMA, which is on the registration of companies, provides: “As from the commencement of this Act, a company shall be formed as set out in this section.” Section 35 (2) (a) provides: “There shall be delivered to this Commission the Memorandum of Association and Articles of Association complying with the provisions of this Part of this Act.”
The Memorandum of Association and Articles of Association are the fulcrum upon which a company revolves and are an aspect of a company that must be handled by a lawyer. They are to a company what the heart and lungs are to a human being. Further, the documents have to be in compliance with the provisions of “this Act”. Section 35 (3) of CAMA says, “A statutory declaration in the prescribed form by a legal practitioner that those requirements of this Act for the registration of a company have been complied with shall be produced to the commission.” The totality of these provisions is that a legal practitioner must act in the incorporation of a company (i) by ensuring that the provisions of the Act are complied with and (ii) signing a form that the provisions have been complied with. Else, is a director or subscriber to a company able to establish that a company has complied with the provisions of the Act or any law relating to the formation of a company even if they are not legal practitioners?
The announcement by the CAC removing a lawyer from compulsorily presenting a company for registration for the reason of reducing costs is like asking patients to go directly to the pharmacy to buy drugs without seeing a doctor in order to save cost of health care. This is absolutely wrong and is injurious to doing business rather than saving cost. It will encourage applicant companies to attempt to present documents to the commission for registration without availing such applicant companies of the services of legal practitioners at the behest of the commission in flagrant non-compliance with the provisions of the law on registration of companies. As a consequence, such companies will be presented for incorporation without compliance with the provisions of the Act or relevant laws.
A legal practitioner by law must be involved in the incorporation of companies. The CAC must forthwith withdraw the misleading advertorial it issued and discontinue from issuing same in the interest of sound business formation and administration in Nigeria. There are so many ways the government can reduce the cost of doing business than by removing a vital professional service in the chain of business formation.
Dio is a legal practitioner based in Lagos.
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