The new companies and allied matters act will enhance the ease of doing business.
Last Friday President Muhammadu Buhari signed into law the Companies and Allied Matters Bill, 2020 (CAMA Bill 2020). By that singular action, the Companies and Allied Matters Act 1990, (CAMA 1990), which came into force 30 years ago stands repealed and replaced with the extant Companies and Allied Matters Act 2020 (CAMA 2020). A perusal of CAMA 2020 reveals that it is in every sense a revolutionary piece of legislation containing many corporate legal innovations geared towards not only enhancing the ease of doing business in Nigeria but also profoundly influencing the direction of corporate activities and their regulations in order to promote millennial entrepreneurship and economic prosperity in Nigeria. For example, CAMA 2020 has made ample provisions for, inter alia, enhanced protection of minority shareholder rights (Rule in FOSS V HARBOTTLE enhanced); merger of incorporated trustees and associations that share same objectives, electronic filling, and electronic share transfer and e-meetings for private companies. Unlike CAMA 1990, CAMA 2020 now allows corporate promoters of companies to establish private companies with just one single member or one shareholder; creates limited liability partnerships and limited partnerships to give investors value for their investments and alternative forms of carrying out their businesses. Under CAMA 2020, small companies are no longer mandated to appoint auditors at annual general meetings to audit their financial records; statement of compliance can be signed by a non-lawyer; appointment of company secretary now optional for private companies.
Enacting a revolutionary piece of legislation such as CAMA 2020 is one thing, getting the Corporate Affairs Commission (CAC) to discharge its functions diligently is a different thing entirely. The two must not be mixed up. After all, CAMA 202O is not a self-operating robot. It requires diligent CAC staffers to make it work. In fact the functionality of CAMA 2020 is dependent to a large extent on the functionality of CAC. Corruption begets corruption. If the CAC staffers are corrupt then CAMA 2020 and technological innovation driving it will be corrupt too. In the same vein, if the staffers of CAC are not business-friendly then CAMA 2020 and the technological innovation driving it will not be business-friendly.
The CAC was founded in 1990 under CAMA 1990 to, inter alia, regulate and supervise the formation of companies; establish and maintain a company registry and arrange and conduct an investigation into the affairs of any company in Nigeria. But unfortunately the CAC has not been living up to the aforesaid despite the fact that the CAC headquarters in Abuja and CAC Zonal offices across Nigeria are fully computerized and managed with the latest technological innovation. Mind you, CAMA 1990 was a revolutionary technological innovation. Yet it failed to reduce the human inefficiency and incompetence at the CAC. To begin with, the CAC has a history of poor record-keeping despite the new technology at its disposal. Corporate documents and papers filed at the CAC oftentimes are lost within the precinct of the CAC. Oftentimes jobs at the CAC are delayed owing to the breakdown of the computerized CAC operations. Searches for availability of company names at the CAC, which is supposed to be a simple job, is hardly accurate. Some companies with identical names have been registered at the CAC. Whereas registration of private limited liability companies lasts not more than one day in other countries, at our CAC it takes not less three weeks or even months unless the applicant is ready to pay a "extortion fee". Sadly enough, registration of social clubs, NGOs, churches, etc., under part 'C' of the Companies and Allied Matters Act, 1990 could last up to three years.
On several occasions the CAC had announced to the public that company registration in Nigeria could be expeditiously done on-line and that the certificate of such registered company could be printed online in one's office or bedroom. But this is just a ruse. In practice, online company registration is still a mirage in Nigeria. You may succeed in filling the requisite forms for the company incorporation online, but you can hardly complete the incorporation exercise in one month or even two months. Why? Because the CAC Server is always breaking down. The CAC payment Portal is epileptic. More importantly, under the watch of CAC, many scammers operate fictitious companies and use them to commit all sorts of scam undetected. Under the watch of CAC, many corrupt politicians hide under fictitious companies or under crony shareholders and directors to launder or siphon funds resulting from illegal contracts awards or transactions. In July 2008 the then Assistant Director, Compliance, Corporate Affairs, Commission (CAC), Abuja (who is now the Registrar-General of the CAC), Alhaji Garba Abubarkar, shocked the nation when he revealed that 90% of companies in Nigeria were not registered. The Registrar-General of the CAC made this disclosure at that time because the probes carried out revealed that contracts running into billions of Naira were awarded to many unregistered companies in Nigeria.
For months now, the CAC has not been allowing customers to collect their certificates and other CAC documents. Why? Because the CAC says that owing to the COVID-19 pandemic it has now hired some courier companies to be delivering all certificates and CAC documents to all customers. What are the names of these courier companies so that customers may locate their respective offices and collect their certificates or documents from them? CAC has refused to disclose their names. Any deadline given to the courier companies to deliver the certificates and documents? Apparently none. Which means a customer who urgently needs his certificate or other documents for urgent business could be frustrated waiting for a certificate or documents that may never be delivered to him. This was why last two week, some corporate lawyers and CAC customers staged a peaceful protest in front of CAC Headquarters, Abuja
Consequently the CAC is overdue for genuine human reform. The CAC has been rendered dysfunctional over the years due to human problem, not lack of technological innovation. Therefore CAC staffers should adopt the right attitude to work. They should be business-friendly. They should stop creating unnecessary structures or bureaucracies which delay the completion of jobs at the CAC. For example, it is not a rocket science to dispatch certificates and documents to customers. If the CAC must use courier companies to do so, then the dispatching must be completed within one week. Deadlines for treating applications should be specifically spelt out and adhered to. Let the CAC Server be functional at all times. Ditto for the CAC payment portal. Customers should be allowed to register their companies online within 24 hours as done in many climes today. Applications for certified true copies of documents, changes, alteration of share capital, etc., should be treated online within 24 hours. CAC Zonal offices across Nigeria should function properly. Filling of annual returns of companies and incorporated trustees should be done online and receipts issued accordingly. All leakages at the CAC should be blocked to minimize corporate fraud and scams by government officials. Nigeria is a booming market for many foreign firms. But such firms cannot invest in Nigeria if CAC is efficient. Doubtless an efficient CAC will attract foreign investment and accelerate economic growth in Nigeria.