Since the signing into law of the new Company and Allied Matters Act (CAMA) by President Muhammadu Buhari on August 7, 2020, It has generated heated controversy, particularly those stoked by religious groups. The brick-bats have been on the provision of Section 839 subsections 1 and 2 of the new law which deals with the power of the Registrar-General of the Corporate Affairs Commission (CAC) and the supervising minister to strictly regulate religious bodies and non-governmental organisations.
The law also empowers the Registrar-General to suspend trustees of a not-for-profit organisation and appoint an interim manager or managers to co-ordinate its affairs where it reasonably believes that there had been any misconduct or mismanagement, or where the affairs of the association are being run fraudulently or where it is necessary or desirable for the purpose of public interest. The reports and debates one sees in the media nowadays areas if this new CAMA is the worst legislation to have come out of Nigeria. This controversy being created over the provision of the law should not be allowed to rubbish the other 869 sections.
We should not make another mistake of throwing away the baby with the bathwater. This present CAMA is another bold attempt to introduce revolutionary, radical and game-changing laws, policies and programmes that will largely advance the ease of doing business, unleash the potentials of our youth and create economic progress across the board.
The idea of reforming the law that governs the registration, operation and regulation of business which the new CAMA seeks to achieve is an idea which, to paraphrase Victor Hugo, has long been overdue. It is the reason why the Eighth Senate which commenced the process of amending the 1990 law decided to focus on a comprehensive review of all laws that could impact on the economy of the nation.
It is obvious that working on the CAMA was an intimidating task. It remains a law with intense technicality and deep provisions. The current law is spread across 604 pages and has 870 sections. The amendment process had presented intimidating obstacles to committees of past National Assembly sessions due to the volume of work required, both in terms of technical work needed and the intense legislative process.
To deal with these encumbrances was the reason why the Eighth Senate created the National Assembly Business Environment Roundtable (NASSBER), a forum for constant interaction, engagement and co-operation between the legislature, private sector, academia and professionals like the Nigeria Bar Association (NBA), development partners and even, Civil Society Organisations (CSOs).
This forum helped to look at about 54 laws relating to ease of doing business, creating investment opportunities and making Nigeria a preferred destination for investors coming to Africa. Though some of the bills resulting from these efforts did not get signed into law, the ones that scaled through like the Bankruptcy and Insolvency Act 2011 (Repeal and Re-enactment) 2015, Secured Transactions in Movable Assets Act, Credit Bureau Reporting Act and Federal Competitions and Consumer Protection Commission Act have helped in repositioning the economy and opening new opportunities for creative youngsters who dared to join the band of small and medium entrepreneurs in the country.
The reason why the new CAMA should be celebrated as a beacon of hope for Nigeria is the numerous benefits it provides for present and future small and medium scale entrepreneurs. The law seeks to liberalize the environment and makes it easier for them to begin and gradually grow. It eases the burden of starting businesses for these young people.
For example, there are ten easily identifiable take-away for the youths. The first is the amendment to Section 18 (2) to make provision for single member companies. That means a young Nigerian can on its own incorporate a company.
Second take away is that if two or more young people decide to form a company which will not be subjected to the rigour of a limited liability company, they now have the option of staying as partners but yet enjoy the advantages of a limited liability company. The provision for limited partnership or what can be referred to as limited liability partnership creates a new legal entity which will be body corporate and exist separate from the partners, yet it remains a partnership. This model combines the flexibility and tax status of partnership with limited liability for its members. The process of incorporation is less stringent and formal. Also, the method of dissolution is less procedural as compared to a limited liability company.
Another take away for our youth in the new CAMA is that application for reservation of a name of the potential company can be done through electronic means. Thus, the mobile phone, a laptop or iPad becomes the tool of application instead of running around with files bursting with papers. This advantage was conferred with the Amendment to Section 32 (1). The fourth take-away is that these young men and women willing to start a company do not need to pay huge sum of money to engage a lawyer to file the application for incorporation of a company on their behalf. That is the import of the amendment to Section 18 (2).
In the same manner, small companies are exempted from the mandatory requirement to appoint a company secretary. That is what was achieved with the amendment of Section 293 of the old law which has now been replaced with the provision of Section 330. The new section states that “Except in the case of a small company, every public company shall have a secretary”.
Also, the amendment of Section 213 has excluded small and single-member companies from the requirement to hold annual general meetings. Section 237 of the new law states that “except in the case of a small company and/or any company having a single shareholder, every company shall in each year hold a general meeting as its annual general meeting”. This is another huge burden off the neck of youths running a company.
To further strengthen the capital base of companies, Section 27 (2) has been amended to increase the minimum threshold of authorised share capital of individual companies from N10,000 to N100,000 while that of public companies has been increased from N500,000 to N2 million.
Again, the new CAMA has introduced a process for the administration and rescue of near insolvent entities. This new process enables such businesses to keep running or operating under the supervision of an administrator for a period of 12 months. The company itself as an entity, one of its directors or creditor can apply for the appointment of an Administrator. This provision is aimed at saving jobs in a company, even when the company is battling with insolvency issues.
There is also the provision in Section 94 which amends Section 119 of the old law which is about beneficiary ownership disclosure. This provision makes it possible for anybody who wishes to know who and who has a beneficial interest in a company to easily access the information. This provision has a significant impact on the anti-graft battle as well as the corporate integrity and practices by companies and individuals. Public officials and individuals who use their companies as a front to defraud the government or engage in unethical practices will no longer be having a field day. Members of the public can easily lift the veil to identify the individuals behind the various companies.
The tenth take away for youths is contained in the amendment to Section 115 to make shares a transferable personal property. In the amendment to Section 25 (5), the new CAMA has expunged the need for companies limited by guarantee to get the approval of the Attorney General of the Federation (AGF) for their memorandum of understanding. What is now required is to get the application advertised in three national newspapers. This is to allow members of the public who have objections to the objects to file their complaints with the Corporate Affairs Commission (CAC).
In the same manner, Section 26 (12) was amended by Section 26 (18) to increase the liability of members of a company limited by guarantee from N10, 000 to N100,000. With the new amendment to Section 121 of the old law through a new provision in Section 147, it is now unlawful for a company to issue shares at a discount.
These benefits of the CAMA are expected to be utilized alongside the ones embedded in the Secured Transactions law which established a National Collateral Registry that will free up a new stream of opportunities for small and medium entrepreneurs to access capital using their flexible assets like cars, machinery, cell phones and household items directed. Also, the Federal Competition and Consumer Protection discouraged the growth of monopolies and deployment of sharp practices to stifle competition. These are laws that can open up the country to new investment, fresh energy, bright ideas, quality products and services.
This law is a reflection and representation of the new paradigm of governance where engagement with stakeholders is a strategy for best result and performance. Both the ninth National Assembly and the Presidency which prioritized a revisit of the bill earlier introduced and passed by the Eighth National Assembly deserve accolades and they must not stop at this level. Members of the Eighth Assembly who went through the rigour of passing the bills should also hold their heads high. With the presidential assent, the country has demonstrated what continuity in governance and consistency of policies can achieve for our nation.
What is necessary at this point is implementation. The government should be insistent, strict and consistent in ensuring diligent implementation of the law.
The legislature should also be deliberate, honest and methodical in its oversight functions on the implementation of the new CAMA and to ensure that nothing derails the objectives.
At this point, let me further canvass that there are other progressive bills passed by the Eighth National Assembly that can help modernize the economy which did not become laws because either they did not get concurrence from both chambers of the National Assembly or presidential assent were denied them. These include the Public Procurement Act (Amendment) Bill, Petroleum Industry Bill, Nigerian Ports and Harbour Authority (Amendment) Bill, National Road Funds (Establishment) Bill, National Transport Commission Act 2001 (Amendment) Bill, Warehouse Receipts (Amendment) Bill, Investment and Securities Act (Amendment) Bill, Customs Excise Management Bill and National Railway Authority Bill.
It is important to emphasize that those who have objections to the provision of Section 839 of the law should engage with the National Assembly and the Presidency to convince the members on the need for amendment. This will be a better approach than to wholesomely condemn a legislation that has so many benefits for the country and her people.
The new CAMA will not only bring Nigeria up to speed in terms of global best practices, it will eliminate some of our unemployment problems and the attendant security cum social-economic and cultural crises. That is why I enjoin all Nigerians to give the law a chance. As time goes on, if there are any minuses and pluses that need to be made on the law, it’s operations will make them obvious and they will be taken care of with time.
Olaniyonu is based in Abuja and tweets through @Yusupholaniyonu.
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