Nigeria’s Corporate Affairs Commission has commenced the process.of amending its enabling law- the Companies Allied Matters Act- inorder to strengthen its regulatory and enforcement powers in line with changing economic circumstances and modern business practices.
The ammendment would try to remove those flaws impeding the operationalty of the CAC, especially in business start ups.
The CAC had put out a plan to rescue ailing businesses and established what it calls a ‘business rescue advisory committee’ to render free advisory services to prevent unnecessary liquidation of companies.
A key focus of the draft bill seen by BusinessDay is therefore to establish a legal framework that would enable it carry out its proposed business rescue and recovery process that would help ailing businesses in the country.
The proposed law also makes provision for companies with single shareholder and director to repeal the provision for statutory declaration by a legal practitioner in company declaration.
The CAMA has not undergone any serious ammendment since its promulgation in 1990 and experts say this makes it inadequate to address modern day challenges in company regulation administration and practice.
The draft bill would therefore repeal the CAMA Act and re-enact the Companies and Allied Matters Act, 2016.
Nigeria currently ranks 169 out of 189 countries in the World Bank global doing business line-up. A major challenge as indicated by the report is the difficulty in starting a business where the country ranks 139.
“The process of amending CAMA needs to pursued speedily, as most of the factors hindering the ease of business start-up are inherent in the law,” Churchill Williams, CAC Director, Public Affairs told BusinessDay in a chat on Thursday.
“The review is on furtherance of the Commission’s determination to improve the investment climate in Nigeria.”
Williams says the Commission is seeking to amend CAMA to address what he called momentous challenges in the following areas; strengthening the regulatory and enforcement powers of the CAC; making provisions for online registration of companies which the CAC is pursuing vigorously.
The new law would also review penalties for default, empower the CAC to remove erring directors and officers in line with the practice in most companies registries globally.
It would also help to define the role of CAC in the implementation of code of best practices.
Stakeholders from the CAC and Nigerian Stock Exchange (NSE) in May expressed overwhelmingly support for total overhaul of the CAMA Act in order to remove various bureaucracy and other challenges impeding existing and new businesses.
According to them, the implementation of CAMA over the years was being impeded in e-commerce, e-stamping, e-filing, across border insolvency, business rescue and firmer regulatory powers.
In a memorandum seen earlier by BusinessDay, Bello Mahmud, CAC Registrar General, had called for stiff sanctions for failure by various companies which fail to appoint Company Secretary in line with the provisions in section 293 of CAMA, and provision for option to pay administrative penalty if the company desires to avoid criminal prosecution.
The memorandum signed by Justin Nidiya, on behalf of the RG also recommended that the review of monetary thresholds with option to pay administrative penalty should not be restricted to S. 293 alone but extended to all similar provisions in the Act such as sections 27(2), 46(10), 53(7), 55, 83(4), 85(4), 129(2) and 329(6), among others.
Noting that the proposed amendments of 235 sections would make cross-referencing and construction difficult, Nidiya emphasised the need to “pursue repeal and re-enactment of CAMA.
The proposed amendments have been referred to Okey Enalamah, minister of Trade and Investments, for consideration before being referred to the National Assembly for consideration after necessary approval by the Federal Executive Council, Williams further told BusinessDay.
Onyinye Nwachukwu
