On 7th August 2020, President Muhammed Buhari signed into the law the long-awaited Companies and Allied Matters Act, 2020 (the “Act” or “CAMA 2020”). The President’s assent effectively repealed and replaced the extant Companies and Allied Matters Act, 1990, (“CAMA 1990”). Since the signing of the CAMA 2020, business owners, lawyers, financial analysts and business enthusiasts have been put on the edge of their seats, wanting to know the salient provisions of the new law and how it will affect Nigeria’s business climate. Below are some of the provisions of the new Act.
SECTION 18(2) – THE SOLE SHAREHOLDER:
Probably the most unexpected new provision of the Act is the provision allowing for a sole shareholder for private companies. With the minimum issued share capital which is now a minimum of N100,000, a single person who holds all the issued shares of a private company can register a company as the sole shareholder.
SECTION 124 - MINIMUM ISSUED SHARE CAPITAL:
Under the Companies and Allied Matters Act 1990, companies were required to have an authorised share capital and issue at least 25% of the share capital at incorporation. The new CAMA 2020 has dispensed with the authorised share capital requirement and replaced the same with a minimum issued share capital. The minimum issued share capital is defined in Section 27( 2) (a) as N100,000 for private companies and N2,000,000 for public companies. In view of this, new companies to be registered must be registered with the minimum issued share capital of N100,000 for private companies and N2,000,000 for public companies. Any existing company with an issued share capital which is less than the minimum issued share capital prescribed in the Act must increase its share capital to the minimum issued share capital within 6 months from the commencement date of the Act..
SECTION 240 – ELECTRONIC STATUTORY AND ANNUAL GENERAL MEETINGS (AGM) AND DISCLOSURE OF THE REMUNERATION OF MANAGERS OF A COMPANY
Statutory and annual general meetings (AGM) are required to be held in Nigeria except in the case of a small company and a company with a single shareholder. In the case of private companies, AGMs can now be held electronically, in a manner provided by the articles of association of each company. In addition, the Act now mandates the disclosure of the of the remuneration of managers of a company to members at the AGM.
SECTION 275 – REQUIREMENT FOR HAVING INDEPENDENT DIRECTORS:
In line with the provisions of the existing Codes of Corporate Governance in Nigeria, public companies are now statutorily mandated to have at least 3 independent directors. The criteria for determining independent directors are also specified by the Act.
SECTIONS 322-323 - DATA PROTECTION PROVISION:
A new age provision for the protection of the directors’ information by both the company and the Corporate Affairs Commission was introduced by the Act. The provisions seek to protect the personal information of the company’s personnel, such as their addresses, except for circumstances mentioned in the Act.
SECTION 400 – MINISTER’S RIGHT TO ALTER ACCOUNTING REQUIREMENTS:
The Act gives the Minister of Industry, Trade and Investments (in collaboration with the Financial Reporting Council of Nigeria) liberty to modify the requirements or add to the classes of documents to be included in a company’s financial statements.
Although the Act is yet to be gazetted as part of laws of the Federal Republic of Nigeria, we look forward to its implementation. We urge that companies be on the alert and be prepared to make the required amendments in consonance with these new changes being introduced by the Act.
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