After a clause by clause consideration and voice vote on the report of its Trade and Investments Committee, the Nigerian Senate passed the Companies and Allied Matters Act (CAMA) Amendment Bill (A Bill for an Act to Repeal the Companies and Allied Matters Act, 2004 Cap. C20) on 15th May 2018. The Bill now awaits Presidential Assent.
After 27 years of the operation of CAMA, without modification, the Bill is being touted as “one of the most important legislations” in Nigeria and a “pro-business law” legislation. The changes are aimed at making Nigeria’s business environment competitive.
Highlights
1. Nigerians and foreign investors can now register limited liability partnerships.
2. The requirement for at least 2 shareholders or directors is no longer compulsory for small companies, as a single individual can now establish a private limited liability company.
3. Small companies no longer require company secretaries or to hold AGMs.
4. Minimum share capital has been reduced. The Bill also proposes to establish a minimum issued share capital; this provision is applicable to both public and private companies, thereby enabling the payment of stamp duties only on the issued share capital and not the entire authorized share capital.
5. Companies will be allowed to reduce their share capital, by passing a special resolution without the usual practice of applying to the courts, for a confirmation of the reduction.
6. Beneficial holders of shares must now disclose the interests of others in the shares.
7. Persons being proposed for appointment as directors of public companies must now disclose other directorships.
8. Business rescue proceedings (proceedings to facilitate the rehabilitation of a company that is financially distressed) now provided for. The Bill has introduced a company insolvency regime which will no longer focus on a company’s demise, but on its rescue.
9. Companies will now be permitted to provide financial assistance to their shareholders under the new Bill.
10. The Bill has provisions which exempt small companies from appointing auditors:
- if it has not carried on business since its incorporation; or in a particular financial year; and
- where the company’s turnover is not more than N10m, and its balance sheet total is not more than N5m.
Overall the Bill aims to reform business, promote the use of technology, remove all unnecessary regulations for small companies and encourage start-ups with less stringent provisions. Undoubtedly, adoption of the changes will also boost Nigeria’s ranking the World Bank Ease of Doing Business index, Click here for the full story.
We will publish a comprehensive review of the Bill soon