15 key reforms from Nigeria’s first revision of corporate law in 30yrs

Nigerian President Muhammadu Buhari on Friday assented to the Companies and Allied Matters (CAMA) Bill 2020.

It’s the first reform of the CAMA, one of the most important pieces of business legislation in Africa’s most populous nation, since it was first introduced 30 years ago in 1990.

The 1990 CAMA had become a clog in the wheel of progress for new businesses with outdated laws that complicated the ease of business.

The reforms in the revised CAMA which were championed by the private sector have been widely applauded by the business community and tipped to improve the ease of doing business in Nigeria which ranked 131 of 190 countries surveyed by the World Bank in the 2020 ease of doing business index.

1. The revised CAMA allows single member/shareholder companies to be incorporated in Nigeria. Before now the minimum number of shareholders was two. This will prove particularly beneficial for Micro businesses who are owned by one person and hirtherto restricted from registering or forced to use proxy co-founders or directors. The new practice of single membership aligns with global trends such as in Singapore, India & the UK.
2. The new CAMA also makes it easier and cheaper for small and medium-sized enterprises to register in Nigeria, by reducing filing fees. The charge is now 0.35 percent of the value of the initial charge.
3. The new CAMA makes provisions for electronic filing, electronic share transfer and e-meetings for private companies. Certified true copies of electronically-filed documents are now admissible in court; possessing equal validity with the original documents.
4. The new CAMA also enhances minority shareholder protection, by prohibiting a person from simultaneously holding the positions of Chairman and CEO of a private company. It also prohibits anyone from serving as a director in more than 5 public companies.
5. The new CAMA allows for the creation of “limited liability partnerships” (LLP) and “limited partnerships” (LP) – which combine the tax benefits of a partnership with the greater liability protection of the owners of a private company. The need for Consent of the Attorney General for companies limited by Guarantee has also been deleted.
6. The new CAMA now requires the disclosure of persons with significant control/shareholding in companies, as well as the capacity of shareholding, and also nominees of interested persons, in a register of beneficial owners, to enhance corporate accountability and transparency.
7. The new CAMA permits remote general meetings for private companies. Small companies (as defined by the Act) and single shareholder companies are also now exempted from the requirement of having to hold Annual General Meetings (AGM).
8. With the new CAMA, having a Company Secretary is now optional for private companies.
9. Procuring a company seal is no longer a mandatory requirement for companies, in line with international best practice.
10. The new CAMA replaces authorised share capital with minimum share capital, to reduce the cost of incorporating companies.
11. Statutory audit of accounts is now optional for Incorporated companies that are yet to commence operations or with turnover of less than N10 million and balance sheet size of not more than N5 million for a financial year. This exempts banks & insurance companies or as prescribed by CAC.
12. The new CAMA contains rescue provisions for insolvent companies.
13. Applicants can now sign their statement of compliance and no longer have need for lawyers for the process.
14. The new law also means Incorporated Trustees can now merge.
15. CAC has been empowered to cancel name conflicts or fraud, rather than having to go to court.