Experts applaud CAMA 2020

…say it will boost SMEs, ease of doing business

By ADEBAYO OBAJEMU

With the signing into law of the be Companies and Allied Matters Bill,  many experts spoken to by BusinessHallmark say the development has enormous potential to usher in a new era in business.

Recall that on 7th August, 2020, President Muhammadu Buhari signed the Companies and Allied Matters Act, which was recently passed by the National Assembly into law. The new CAMA 2020 Act ushers in new provisions to reflect modern commercial realities as well as reduce compliance costs and regulatory hurdles for businesses in Nigeria.

Note that the CAMA 2020 repeals the CAMA 1990 and amongst other provisions brings the following changes, such as provisions for a single member/shareholder limited liability companies. Also, Authorized Share Capital has now given way to Minimum Share Capital. The implication is that promoters of a business do not need to pay for shares that are not needed at a specific time with the introduction of minimum share capital provision.

Another thing to note is that filing, share transfer and meetings can now be done electronically by private companies. Another improvement for the business world is that Annual General Meetings can now be held virtually for all companies, this might have been inspired by the pandemic.

Also the introduction of Statement of Compliance ensures that one can be signed by an applicant or his agent confirming that the legal requirements with respect to registration have been complied with. This will serve as an alternative to the requirement to submit a Declaration of Compliance, which required the signature of a lawyer or attestation before a notary public.

There is also exemption of small companies or companies with single shareholders from the requirement to appoint Auditors. While the requirement for appointment of a company secretary is now optional for private companies.

James Abiodun, a stock broker said the law is a great in innovation that will  bring needed development. He says introduction and Limited Liability Partnerships in Nigeria which provides the organizational flexibility and tax status of a partnership with the limited liability of members of a company for partnerships is highly desired.

Professor Muhammed Dansi of the Economics Department, Kogi State University said “the signing of the Companies and Allied Matters Bill into law is a welcome development as it is expected to improve the ease of registration, commencement and operation of businesses in Nigeria by providing simpler processes and lessening regulatory compliance burden.

“For example”, he says , “the provision of single member companies as well as the removal of requirement to appoint statutory auditors for small companies will reduce cost and compliance processes for such companies”.

“The provision for Limited Liability Partnerships is in line with modern trends in corporate law and means such entities will have more flexibility in doing business and their proprietors, will enjoy the same protection that Limited Liability Companies enjoy.

The provisions for electronic filing and virtual meetings is in line with the realities brought to the fore by COVID-19 and will also improve the use of technology in corporate governance and compliance, likewise, other provisions that seek to enhance transparency in the operations of companies such as the requirement for disclosure of persons with significant control in companies (Section 119 of the new Act) and the restriction on multiple directorship in public companies, along with the enhanced provisions for minority shareholder protection.

“Overall, the repeal of CAMA 1990 and the enactment of this Act is a welcome development for businesses in Nigeria, especially coming 30 years apart, when business practices, commercial transactions and the laws and practices governing them have significantly changed globally.

“It is hoped that in implementing the law, the Corporate Affairs Commission and other relevant government agencies will keep to the spirit of the amendment, which is to enhance the overall ease of doing business in Nigeria and minimise the compliance burden for companies.”

Mr. Ambrose Omordion, Chief Research Officer at Investa Consulting told this newspaper that “newly signed CAMA Act will make Nigeria a powerful destination of capital.

“As you can see the new CAMA law introduces some corporate legal innovations aimed at boosting the ease of doing business”.

‘This position is shared by Dr. Olufemi Omoyele, a management expert who says “that the new Act that was recently signed into law by President Muhammadu Buhari, would reposition Nigeria as a powerful destination of capital.

In his own take, the Group Chief Executive Officer of FMDQ, Bola Onadele, said the country’s financial market and the economy as a whole would receive the long-awaited boost to encourage economic development with the new CAMA. Most analysts are of the view that the new Act has brought about some corporate legal innovations aimed at boosting the ease of doing business in the country.

 FMDQ’s Onadele pointed out that the implementation of the new CAMA would lead to a new wave of innovative developments in the Nigerian financial market and as well as improve the ease of doing business in the country.

“With the increasing sophistication of the global financial markets comes the need for domestic markets to develop their architecture and infrastructures to support requisite advancement as well as align with international standards, and the new CAMA 2020 will position Nigeria and its capital market at par with its international counterparts.’’

“Chief of the several impactful provisions in the CAMA 2020, is the inclusion of netting and bankruptcy remoteness provisions which signal the birth of a new financial market in Nigeria.’’

“The CAMA 2020 commendably sets the tone for the actualisation of key innovations in the market, providing enabling legal backing for netting, bankruptcy remoteness and attendant regulatory frameworks for the smooth functioning of financial markets in Nigeria,” he said.

Going further, noted that these game-changing provisions would provide the remedy to critical legal deficiencies that were affecting the development of the financial markets. Onadele disclosed that the netting provisions in the CAMA would address the credit risk challenges, operational and legal bottlenecks of gross settlement for spot and derivatives transactions.

He said the derivatives market would enhance market liquidity, improve price discovery, reduce risk capital charges and transaction costs as well as increase financial markets stability.