Despite the controversies generated by the recent signing of the Companies and Allied matters (CAMA) Act 2020 into law, the new law is the most important business regulation in the country, as it has significant impact on doing business, competitiveness, attracting investments, and economic growth.
The Partner & Head Tax and Regulatory Services, PricewaterhouseCoopers, (PwC Nigeria), who spoke during a virtual ‘Capacity Enhancement Workshop for Journalists’, said the law is “good.”
He said, for instance, the new law made provisions for a single member/shareholder companies whereby a private company can be established with only one member or shareholder.
He said some of the key provisions and changes introduced by the new law, compared to the old version that had been in operation since 1990.
Oyedele said filing, share transfer and meetings can now be done electronically by private companies, just as Annual General Meetings (AGMs) could now be held virtually for companies.
CAMA 2020 also exempts small firms or those with single shareholders from the requirement to appoint auditors. Also, the requirement for appointment of a company secretary is now optional for private companies.
He also pointed out that the new law allowed the introduction of limited partnerships 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.
improve its ease of doing business index.
Authorised share capital has also been replaced with minimum share capital, meaning 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.
The PwC’s tax head also said the new law “Protects minority interest even as it has administrative arrangements to rescue a company or help it achieve better results.”
Indeed, for a company in distress, the Act introduced a framework to keep it alive as against allowing the company to become insolvent with respect to company’s voluntary arrangements, administrations and netting.
Oyedele in his presentation titled “CAMA 2020: Nigeria’s Competitiveness and Ease of Doing Business,” however, stated that going forward, there is the need to gazette the law in line with the Authentication law with a future commencement date to facilitate ease of transition.
He also emphasised the importance of effective implementation, and noted the need to harmonise CAMA with other laws such as the Companies Income Tax Act (CITA), which, according to him, still requires audited accounts by all companies regardless of size. “In addition, more flexibility is required for foreign companies who wish to operate business in Nigeria such that a branch registration should be permitted while incorporating a subsidiary will be optional.
“It is also necessary to ensure that the new law is kept under constant review with more frequent amendments or re-enactment say every five years,” Oyedele advised.