How the new CAMA 2020 affects your company
SAME-DAY POST INCORPORATION
The Corporate Affairs Commission has made it possible for changes being made to company information to be processed and delivered the same day. Companies can now officially fast-tracked any changes submitted at the commission through their solicitors. For instance, when appointing a new Director, new shareholders, new secretary or filing of annual returns, in as much as you submit the application before 1 pm in a day, your application will be ready the same day at the prescribed fee.
However, all your documents have to be accurate and as prescribed by the regulations. Once your solicitor certifies that your documents are accurate, be sure to get your application processed and returned to you the same day, latest the next day due to logistics issues.
SHARE CAPITAL REQUIREMENTS
There has always been prescribed minimum share capital for some specialized companies. The new CAMA 2020 did not erode that. You will therefore need to know the minimum share capital required if you want to go into any of the following businesses be it new or existing companies. For Tourism, 30 million share capital minimum is required
Security company – 10 million
Lottery – 5 million
Private jet – 20 million.
Download the CAMA 2020 to learn more
REGISTRATION OF COMPANIES LIMITED BY GUARANTEE NOW MADE EASIER
Prior to CAMA 2020, Companies limited by guarantee take the longest duration to register. It can take as long as a year. This is because the Attorney General’s consent is needed.
This has now been cured by the new law. According to Section 26 of CAMA 2020, after 30 days of applying for the consent and the consent is not forthcoming, the CAC shall step in with prescribed action which will do away with the need for the Attorney General’s consent. This will go a long way in simplifying the registration of companies limited by guarantee
COMPANY CHANGE OF NAME LIST
The names of companies as published on the CAC website do not state which company has changed name or not. The list comprises all company names. You will see a company that has changed its name having both the old name and new name listed separately as two separate companies. Thankfully, this has been addressed by Section 30 of CAMA 2020.
CAC will henceforth publish such companies annually in a national daily as well as the website. The public will be able to know which company has changed its name as well as know the new name.
REGISTRATIONS FRAUDULENTLY PROCURED
In the cause of our corporate practice, we have seen some certificates of registration carrying RCs (Registration number) belonging to another company. Upon conducting a corporate search, you will notice that there can only be one definition to this. It was fraudulently procured. Section 41 of CAMA 2020 has empowered the CAC to mop up and cancel such certificates in circulation.
This is however without prejudice to those who may have incurred losses as a result of such fraudulent registration. Feel free to verify that your company is duly listed on the CAC website.
EXEMPTED FOREIGN COMPANIES FROM REGISTRATION
In as much as it is no news that some foreign companies are not required to be incorporated when carrying on their business in Nigeria, section 80 of CAMA 2020 has prescribed that such companies should be published annually in the official gazette as well as the CAC’s website.
Names of foreign companies whose exemption has been revoked shall also be published. This will foster accountability and transparency.
NOTE: There are requirements to be met to qualify for exemption from registration in Nigeria as a foreign company.
SHARE CAPITALS TO BE FULLY ISSUED
It is not uncommon to have some companies reserve some of their shares for future use. For example, a company that has 100 million share capital might allot only 25 million shares to subscribers, reserving 75 million for future use. After all, this meets the requirements of CAMA 2004 that at least 25% of the company’s shares must be allotted.
However, section 124 of CAMA 2020 has prescribed that all shares are to be allotted, leaving no unissued shares. This comes with the June 30th, 2021 deadline.
What does this mean for companies having unissued shares? They are expected to allot their unissued shares on or before the deadline at no cost. Failure of which will expose both the company and every officer to a daily fine or penalty.
BOARD RESOLUTION FOR ALLOTMENT OF SHARES
Allotment of shares was strictly done by special or ordinary resolution. However according to section 149 of CAMA 2020, upon meeting certain criteria, companies can now allot shares via a board resolution
SOCIAL DISTANCING BURDENS IN GENERAL AND BOARD MEETINGS
The current realities as regards the Covid 19 pandemic have caused the CAMA 2020 to place more importance on virtual meetings than before. According to section 240 and 289 of CAMA 2020, virtual meetings are as valid as any other meeting. Even though virtual meetings seem not to have a particular venue, the registered address of the company can still be stated as the venue of the meeting provided by a director and company secretary if any is present at the stated address. Any other address in Nigeria suffices though where the registered address cannot be used.
PROTECTING PERSONAL INFORMATION FROM PUBLIC VIEW
According to section 326 of CAMA 2020, One can restrict or hide his/her residential address or other personal information from public view at a fee. Reasons will however be given for such restriction.
Example of such reasons can be a threat of imminent danger, belonging to security or law enforcement agencies, or having diplomatic status. This claim is to be supported by evidence such as a police report or employment letter.
There is a caveat though; your concealed information may be disclosed to relevant authorities where highly necessary
WHAT IS A SMALL COMPANY/BIG COMPANY
A small company is a private company and having an annual turnover of not more than 120 million Naira, a net asset of not more than 60 million Naira, and having no foreign or government participation. In addition, the directors hold more than 51% of its equity share capital. If your company does not match any of the stated above, you are operating what CAMA 2020 calls a big company.
CERTIFICATE OF COMPLIANCE IN PLACE OF FINANCIAL STATEMENT
For small companies, you are no longer required to submit financial statement while filing annual returns. Just attach to your annual returns forms a certificate of compliance in the prescribed form according to section 423 of CAMA 2020 and you are good to go.
LIMITED LIABILITY PARTNERSHIP OR LIMITED PARTNERSHIP
Looking at section 753 and 797 of CAMA 2020, You can now register a Limited Liability Partnership or a Limited Partnership in Nigeria. It is a hybrid of a company and a Business name. In layman’s terms, it is a like business name that has a legal personality separate from the partners and also has perpetual succession. What this means is, unlike business names, the partners in an LLP have limited personal liabilities.
Their assets cannot be used to settle the partnership’s debt beyond their contributions unless they acted fraudulently. One will need to know however that while an LLP limits the liabilities of all its partners, a Limited Partnership limits the liabilities of only some of its partners and not all.
An LP has a minimum of 2 partners and a maximum of 20 partners. CAMA 2020 is however silent on the maximum number of partners in a LLP.
FOREIGN COMPANIES
Foreign limited liability companies or limited liability partnership are required to duly register their entities in Nigeria before legally carrying on business in Nigeria as prescribed in section 78, 788 of CAMA 2020 unless they have been exempted by the minister according to section 80 of CAMA 2020 having met the prerequisites. Any act of any foreign company contrary to this is void and even liable to an offence.
CHANGES AS RELATES TO NGOs, ASSOCIATIONS, RELIGIOUS BODIES REFERRED TO AS INCORPORATED TRUSTEES
The Commission has been empowered to suspend an erring Trustee following laid down procedures.
