Key Highlights from the Amended Company and Allied Matters Act

The reforms of the Companies and Allied Matters Act (CAMA) 2020 (as enacted by the Presidency) has been noted to be a positive development by policy makers and business analysts. Many Nigerians also believe that these reforms will eliminate regulatory hurdles and ease the business environment to stimulate growth and boost investors’ confidence in doing business in Nigeria.

The new CAMA 2020 incorporates reforms to make it easier and cheaper for small and medium-size enterprises to conduct business. Some notable highlights of the CAMA 2020 Act include;

1. The new CAMA provides for remote or virtual general meetings: This will facilitate participation from any location at minimal costs. This is especially relevant today given the disruption caused by the COVID-19 pandemic to operations around the world.
2. Provision for electronic filing: The new law also allows for electronic share transfer and e-meetings for private companies. It provides that certified true copies (CTC) of electronically filed documents are admissible in evidence with equal validity with the original documents and that instruments of transfer of shares shall include electronic instruments of transfer.
3. Enhancement of minority shareholder protection and engagement: The new CAMA restricts firms from appointing directors to hold the office of the chairman and chief executive officer of a private company.
4. Introduction of statement of compliance: The new act introduces the statement of compliance as an alternative to the requirement to submit a Declaration of Compliance.
5. Merger of Incorporated Trustees: The merger between two or more associations with similar aims and objectives is now permitted.
6. Limited Liability Partnership and Limited Partnership: The new CAMA introduces the concept of 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.
7. Reduction of filing fees for registration of charges: The total fees payable to the CAC for filing has been reduced to 0.35% of the value of the charge. This is expected to lead to up to 65% reduction in the associated cost payable.
8. Business rescue provisions for insolvent companies: The new Act introduces a framework for rescuing a company in distress and to keep it alive as against allowing such entity to become insolvent.
9. Procurement of a common seal (which was mandatory in the previous Act) is no longer a mandatory requirement: The common seal is no longer required in most jurisdictions around the world.
10. Replacement of authorized share capital with minimum share capital: The concept of ‘Authorized share capital’ has now been replaced with the concept of ‘Minimum share capital’ with minimum share capital promoter(s) of a business not required to pay for shares not needed at a specific time.
11. Exemption from appointing auditors: Small companies or any company having a single shareholder are no longer mandated to appoint auditors at the annual general meeting to audit their financial records.
12. Provision of Single Member/ Shareholder Companies: The new CAMA now makes it possible to establish a private company with only one (1) member or shareholder.
13. Exemption from the appointment of company secretary: The appointment of a Company Secretary is now optional for private companies but mandatory for public companies.
14. Restriction on multiple directorships in public companies: The Act prohibits a person being a director in more than five (5) public companies at a time.
15. Disclosure of persons with significant control: The new CAMA also requires the disclosure of persons with significant control of companies in a register of beneficial owners to enhance corporate accountability and transparency.

References:

1. 15 New Provisions In The Companies and Allied Matters Act (CAMA) 2020 That Promote Ease Of Doing Business: https://www.naijabusiness.com.ng/featured/2020/15-new-provisions-in-the-companies-and-allied-matters-act-cama-2020-that-promote-ease-of-doing-business-download-pdf/
2. How new CAMA 2020 will enhance SMEs’ ease of doing business: https://nairametrics.com/2020/08/09/how-new-cama-2020-will-enhance-smes-ease-of-doing-business/