The Companies and Allied Matters Act, 2020 (“the Act”), repeals and replaces the extant Companies and Allied Matters Act of 1990. The new CAMA, now seen as Nigeria’s most significant business legislation in three decades, introduces new provisions that promote the ease of doing business whilst reducing regulatory hurdles and also bringing the provisions in tangent with the technological realities of the 21st century. This is expected to ultimately promote investments, create more jobs, and promote a friendly business climate in Nigeria.
Some of the provisions of the amended bill and how it will affect businesses are explained below:
Provision of single-member/shareholder companies
S.18 (2) of the new CAMA now makes it possible to establish a private company with only one (1) member or shareholder. This is good news for growing startups and young entrepreneurs because it has totally resolved business registration bottlenecks. A lot of businesses have been forced into unnecessary partnerships because prior to the new CAMA, to legally own a business in Nigeria, you needed to provide at least two or more people as co-owners of the business.
Introduction of Statement of Compliance
Section 40 (1): There is the introduction of Statement of Compliance (SOC) signed by an Applicant (or agent), without the need for a Lawyer or Notary Public to attest to Declaration of Compliance (DOC). SOC is a requirement of the law that indicates that the applicant has complied with the registration and requirements.
Replacement of Authorized Share Capital with Minimum Share Capital
Section 27: This section replaces ‘Authorized Share Capital’ with ‘Minimum Share Capital’. This implies that the promoter(s) of a business is not required to pay for or allocate shares that are not needed at the specific time of incorporation.
Procurement of a Common Seal is no longer a mandatory requirement
The procurement of a Common Seal is no longer a mandatory requirement according to S.98 of the new CAMA. With the amended bill, companies can now authenticate documents by other means other than a common seal. This means you don’t need to stamp seals on documents anymore. The world is digital so who needs those seals.
Provision for electronic filing, electronic share transfer and e-meetings for private companies
The new CAMA makes provision for electronic filing, electronic share transfer and e-meetings for private companies. You can now register your business from anywhere in the country via the e-registration portal. The new CAMA also provides for remote or virtual general meetings, provided that such meetings are conducted in accordance with the Articles of Association of the company. This will facilitate participation at such meetings from any location within and outside the shores of the country, at minimal costs.
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 the financial records of the company. S. 402 of the new CAMA provides for the exemption in relation to the audit of accounts in respect of a financial year.
Exemption from the appointment of company secretary
The appointment of a Company Secretary is now optional for private companies. According to S. 330 (1) of the new CAMA, the appointment of a company secretary is only mandatory for public companies.
Creation of Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs)
The new Act, introduces Limited Liability Partnerships and Limited Partnerships, which combines flexibility and tax status of a partnership with the status of limited liability for members of a company. This implies that Startups are not stuck with the option of setting up a Company, but also enjoy the benefits of partnership which a partnership agreement (including vesting agreement, and founders agreements) beyond the regular Articles and Memorandum of Association, whilst still protecting their personal assets from being sold in claims for debts, liability, or creditors.
Reduction of Filing Fees for Registration of Charges
Under Section 223 (12) of the new Act, filing fees for Registration of Charges payable to the CAC (Corporate Affairs Commission) 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 under the regime
Merger of Incorporated Trustees
The new Act extends merger beyond LLCs to Incorporated Trustees. Section 849 implies that two or more NGOs, social entrepreneurs with different registered organizations, with similar goals can merge to form one (1) single organization.
Disclosure of persons with significant control in companies
Section 119 emphasizes transparency in terms of control in a company. It requires that persons with significant control in a company disclose its shareholding to other shareholders. For example, anyone who has person(s) holding shares on their behalf as trustees or proxies, whilst being shareholders themselves in same company, are expected to disclose such relationship for transparency.
Restriction on Multiple Directorship in Public Companies
S.307 (1) of the Act prohibits a person from being a director in more than five (5) public companies at a time.
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. Provisions were made with respect to Company Voluntary Arrangements (S.434 to S.442), Administration (S.443 to S.549) and Netting (S.718 to S.721).
Enhancement of Minority Shareholder Protection and Engagement
- 265 (6) restricts firms from appointing a director to hold the office of the Chairman and Chief Executive Officer of a private company.
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The Act certainly, is one of the biggest business reform bills which impacts the Nigerian business sphere. The amendments to the Act would have the overall effect of making Nigeria’s metrics of doing business more fit for today’s technological realities, encourage young investors to register companies, increase the influx of foreign investment and re-energize the private sector as the engine of growth in Nigeria.
AfDB to commit $12.5 billion to climate finance
The AfDB has announced that it will fund climate finance in Africa with an additional sum of $12.5 billion.
The African Development Bank has announced that it will fund climate finance in Africa with an additional sum of $12.5 billion.
This was disclosed by the President of the AfDB, Dr Akinwumi Adesina, at the online International Climate Adaptation Summit (CAS) 2021 on Monday. The summit aims to define the path for a decade of climate investment and transformation in the 2030s.
Adesina added that the bank would increase its climate financing by 400%, rising from 38% of its total financing in 2019, stating that Africa needed collective actions to take the climate fight seriously and adapt to ecological changes.
“We expect to reach 40 per cent in climate finance this year.
“To do more for Africa, we are building strategic partnerships,” he said.
“The AfDB and the GCA-Africa have launched the ‘Africa Adaptation Acceleration Program’ to mobilise 25 billion dollars in new climate finance for Africa—and to scale up innovative and transformative actions on climate adaptation across Africa,” he added.
Adesina also disclosed that The Bank launched the Desert-to-Power initiative — a $20 billion initiative — to build the world’s largest solar zone in the Sahel, also citing the Digital Agriculture Flagship will leverage $2 billion to deliver digital climate advisory services to reach 300 million farmers by 2030.
What you should know
- Recall Nairametrics reported that African Development Bank (AfDB) said it was committed to mobilizing the sum of $25 billion in climate finance in Africa by 2025, as well as a number of other initiatives by the bank that would address climate adaptation.
- Dr Akinwumi Adesina also revealed plans to support the Great Green Wall initiative with $6.5 billion over the next five years.
Covid-19: FG extends phase 3 eased lockdown by one month
The FG has announced the extension of the guidelines of phase 3 of the eased lockdown by one month.
The Federal Government has announced the extension of the guidelines of phase 3 of the eased lockdown by one month with effect from Tuesday, January 26, 2021.
This follows the rising cases of coronavirus disease across the country and the expiration of phase 3 of the eased lockdown.
This disclosure was made by the Chairman of the Presidential Task Force (PTF) on Covid-19, who is also the Secretary to the Government of the Federation, Boss Mustapha, at the national briefing of the task force in Abuja on Monday, January 25, 2021.
Mustapha said that over the last few weeks, the PTF had been closely following the rising number of infections reported daily in Nigeria and in other jurisdictions.
He stated that the daily statistics for Nigeria as at January 24, indicated that cases were 121,566, with about 1,270,523 tests conducted so far. The active cases were 22,834, which is about 19.4%, with 1,504 casualties and 97,228 patients discharged.
He also said that over 7 days ending January 23, the statistics showed that tests conducted were 58,974 while cases recorded were 11,179, with 62 deaths and 23,568 active cases.
What the Chairman of PTF on Covid-19 is saying
While speaking on phase 3 eased lockdown, Mustapha said the PTF is reviewing the guidelines on the implementation of phase 3 of the eased lockdown which is due to expire on Monday, January 25, 2021.
He said, “In view of the fact that our numbers are not abating, all extant measures prescribed in these guidelines are (subject to some modifications) extended by a period of one month with effect from Tuesday, January 26.’’
On PTF’s management of Covid-19, the PTF chairman said, “The management of cases is gradually improving with the availability of medical oxygen. Government is also fast-tracking the rehabilitation of existing plants and construction of new ones as approved by the President.
“The PTF has advanced in the deployment of resources for the national testing week and continues to review the bottlenecks affecting the turnaround time for testing.
“The PTF is improving on the International Travel Portal to minimise the challenges passengers keep encountering,” he said.
He also said the country is expected to take the delivery of 100,000 doses of the Covid-19 vaccine in early February with assurances that the vaccines will be safe and effective when eventually deployed.
What you should know
- The Federal Government had in September 2020, announced the easing of lockdown guidelines for phase 3 due to a drop in the number of Covid-19 infections across the country.
- However, following, a surge in the number of Covid-19 cases across the country with a record number of daily infections recorded, the Federal Government in collaboration with the State Governments has moved to ensure the strict enforcement of the Covid-19 protocols and guidelines to curb its spread.
Stay-at-Home Stocks: Microsoft, Apple, Facebook surge after upbeat results from Netflix
The Nasdaq index had earlier hit a record high on hopes of impressive earnings later this week.
Nasdaq recorded impressive buying pressures with the so-called “stay-at-home” winners, including Facebook, Apple, and Microsoft, which rose after upbeat results from Netflix Inc recorded last week.
Netflix’s share price had earlier recorded impressive gains after it beat market expectation, powering the video streaming stock to close on the account that it added more customers than expected and revealed it no longer needed debt to build its entertainment empire.
- The positive upbeat guidance on free cash prompted bullish remarks from Wall Street analysts, though some questioned how much of the subscriber growth was pulled forward.
- The Nasdaq index had earlier hit a record high on hopes of impressive earnings later this week from the likes of Apple, Facebook, and Google, but the Dow Jones Industrial Average index, dominated by industrials and airlines, struggled to keep such bullish momentum.
That said, the U.S Equity market generally pulled back from its record highs in recent days, waiting to see if COVID-19 vaccines could reduce COVID-19 infection rates globally.
The Dow Jones Industrial Average fell by 0.12%, to settle at 30,960 pints; however, the S&P 500 gained 0.36%, to close at 3,855.36 points and the Nasdaq Composite added 0.69%, to settle at 13,635.99 points.
In a note, Stephen Innes, Chief Global Market Strategist at Axi, spoke on the bullish rally sighted in U.S based tech brands.
“One argument for the outperformance could be that tech enjoys low rates, so the fixed-income performance helps amid lockdowns. After all, in a foreshadowing effect, Netflix rose 16% last week after subscriber numbers soared by a record 37mn in 2020.
“Unsurprisingly, it seems lockdowns and TV go hand in hand and by extension, so does gaming and the use of cutting-edge software and hardware components.
“And with the bulk of Tech market cap (75%) reporting during the next two weeks, it’s clear investors like the pack’s heavyweight leaders instead of buy-the-laggards, leading to these eye-catching moves. And I’m not sure that logic doesn’t make sense.”
What to expect: But at some point, the stock bears might come back to haunt the stock market. There’s nothing in the investment world that’s quite like hitting a patch of black COVID-19 economic ice when traditional investing wisdom suggests the best offence is a good defence by taking your foot off the gas pedal as the most straightforward function of damage control.