Revised CAMA: A fillip for an enabling business environment
The Senate on May 15 passed the reviewed Companies and Allied Matters Act, commonly known as CAMA. It is the first time in 28 years that the law on company registration and code of governance has received legislative attention. Commendably, the Legislature has rolled out the drums to celebrate the legislation. Kudos.
The shared joy at the Senate passage of the Bill should mean natural concurrence by the House of Representatives and assent to the Bill by the President. A business-like approach to the process of getting this Bill past the goal posts into becoming the law of the federation is the right approach. It ties in with the prevailing mood of the nation and expectations.
Senate President Olusola Saraki crowed at the passage of the bill. “This is a pro-business law. This bill that we have just passed will show the audacity that we have to move Nigerian businesses into a new era of success and development”, Saraki stated. The Senate and its leader noted that the new bill would help to make the business environment of Nigeria as competitive as the best around the world.
The Senate further stated, “It will allow business owners to now register their businesses in a faster and more efficient way, using technology; removes all the unnecessary regulatory provisions, such as the requirement for ‘annual general meetings’ and ‘company secretaries. It reduces the minimum share capital for all companies and start-ups in Nigeria, which will encourage more investments and create new jobs.”
CAMA, as proposed by the Senate, provides some exciting developments. The existing law had roots in the Companies Law of 1948 of England, modified for Nigeria. Fundamental changes include the fact of allowing one person to incorporate a company as against two or more in the old law, thus allowing the opportunity to operate as a separate legal entity without the risk of loss of personal assets. It has reduced the minimum share capital to encourage more investments, and also removed the requirement for statutory declaration of compliance.
The new CAMA, the Senate says, removes needless burdens on small companies who are no longer required to engage a Company Secretary or hold Annual General Meetings, most of which in the past was just a mimicry of the practice by big corporates. Significantly, the new CAMA creates a new class of corporate entity, the Limited Liability Partnership. It should encourage collaborations in structured formats. There is also greater flexibility for management of corporate debt and insolvency. Finally, the new CAMA modernises the process of incorporation by encouraging and validating e-registration that enables entrepreneurs to register a company from any location.
The new law makes the Company Secretary optional rather than mandatory for private companies as was the case with the existing law, Section 293(1) of the Companies and Allied Matters Act Chapter C20 LFN 2004 (“CAMA”). The Senate seemed to have taken the side of those who argue that the role of Company Secretary is not directly concerned with company management but is merely administrative and therefore needless for small firms. Moreover, the qualifications for a Company Secretary for private companies was nebulous in the old law. So, too, was the qualification for directors: the old CAMA did not spell out requirements for directors but went a distance in stating what disqualifies persons from being directors.
What happens to the many entities, encompassing lawyers, company secretaries and accountants, that earned their living from offering company registration services? Does the new CAMA eliminate their services? What are the implications of this paradigm shift for all stakeholders?
We commend the Senate on the passage of this vital bill. It has fulfilled a crucial part of its remit in checking and updating legislation concerning various areas of national life. Enabling business legislation is critical for driving local and foreign investments as well as channelling the energies and funds of citizens into productive ventures. It incorporates recommendations by various bodies such as the Nigerian Bar Association in areas such as financial assistance by a company to its shareholders. What stakeholder suggestions did it include and which did it leave out? Other stakeholders should join the House of Representatives to take a close look at the Bill and ensure it reflects necessary amendments, given the long time it takes to effect changes.
The next steps are equally necessary. The House of Representatives should act on the Bill as well and quickly, too, bringing forth its version and ensuring speedy resolution of any differences. Presidential assent should equally happen fast.
Implementation would require well thought out plans. The Corporate Affairs Commission may require re-jigging and empowerment to bring the provisions of the new CAMA into effect expeditiously. Then there would be a need for internal and external stakeholder enlightenment campaigns on understanding the new CAMA. Every aspect of the new rules and their implications would need expatiation and adumbration.
We welcome the new CAMA for its promise of serving as one more fillip towards a positive and enabling environment for business and corporate governance in Nigeria.