(19) REGISTER OF SECRETARIES MANDATORY FOR PUBLIC COMPANIES- S 336, 337, 338
All companies were required to keep a register of secretaries under the repealed 1990 Act. However, section 336 of CAMA 2020 now requires public companies to maintain a register of secretaries and the required particulars are provided for in Sections 337 & 338.
(20) EXEMPTION FROM THE APPOINTMENT OF COMPANY SECRETARY: SECTION 330 CAMA 2020
Section 293 of the Repealed 1990 Act made the appointment of a company secretary legally obligatory for every company and where the office of the company secretary is vacant or he/she is unable to act for any reason, the assistant secretary, deputy secretary or any person appointed in that behalf by the directors may act. However, by virtue of Section 330 of CAMA 2020, the appointment of a company secretary is optional and no longer mandatory for small companies and only compulsory for public companies.
Section 330(2) and (4) further provides that where a public company has not appointed a secretary before the commencement of CAMA 2020, The company shall make such appointment within 6 (six) months of its commencement. Where a public company contravenes the provisions of this section, the company and the directors of the company are liable to a fine in such amount as the Corporate Affairs Commission shall specify and, in the case of continued contravention, to a daily penalty in such amount as the Commission shall specify. Note that even though the new Act has no commencement date and has not been gazetted, it is believed to have been effective from the date it was assented to by the president.
AUDIT RECORD AND AUDITOR(S)
(21) PUBLIC COMPANIES SHALL KEEP ITS AUDITED ACCOUNTS DISPLAYED ON ITS WEBSITE- SECTION 374(6)
CAMA 2020 mandates every public company to have a website and also display their Audited Accounts on Websites in furtherance of the objective of promoting corporate transparency and accountability. Accountability and transparency is embedded in the constitutional principles and values of an open and democratic commercial organization and is also the apex of the corporate governance approach which in turn will allow the company to perform efficiently.
(22) APPOINTMENT OF AUDITORS AND AUDIT OF ACCOUNTS BY SMALL COMPANY
By the provision of Section 402 of the newly enacted CAMA, a company having a single shareholder or a small company by virtue of 394 are no longer mandated to appoint auditors at the Annual general meeting to audit their financial records and audit of accounts in respect of a financial year.
(23) EXEMPTION FROM APPOINTING AUDITORS AND FROM AUDIT REQUIREMENTS: SECTION 401, 402, 394 CAMA 2020
Under the repealed Act all companies are expected at each annual general meeting (AGM) to appoint auditor(s) to audit the financial statements of the company and to hold office from the conclusion of that meeting until the conclusion of the next AGM. However, by the provision of Section 402 of the New CAMA all Small companies within the meaning of section 394 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. Furthermore, Public or private companies that have not carried out business since incorporation (other than an insurance company or a bank or any other company as may be prescribed by the CAC) are also exempted from the requirements of the law relating to the audit of accounts in respect of a financial year.
(24) DISCLOSURE OF PERSONS WITH SIGNIFICANT CONTROL IN PUBLIC AND PRIVATE COMPANIES- 119, 120 CAMA 2020
Section 119 of the new Act introduces new transparency provision with an obligation for entities to disclose the capacity of shareholding of its members. Shareholders and every person with significant control over a company shall, within 7 (seven) days of becoming such a person, indicate to the company in writing the particulars of such control, capacity in which shares are held, either as beneficial owner or as a nominee of an interested person and the company after receiving or coming into possession of the information shall not later than one month from the receipt of the information or any change therein, notify the Commission of that information provided that a company shall in every annual return, disclose the information required in respect of the year for which the return is made.
(25) CONDITION FOR BECOMING A SHAREHOLDER WITH SIGNIFICANT CONTROL- SECTION 120(2)
Section 120 (2) of CAMA 2020 now provides that a person is deemed a substantial shareholder in a public company if he holds under his name or by his nominee, shares in the company which entitle him to exercise at least 5% of the unrestricted voting rights at any general meeting of the company.
It is therefore a statutory requirement that such notice is given to the Commission, where;
- any person becomes a substantial shareholder, within 14 days of receipt of the notice from the substantial shareholder or upon becoming aware that a person is a substantial holder; and
- any person ceases to be a substantial shareholder, within 14 days of becoming aware of such cessation.
(26) COMPANIES CAN NOW VALIDATE AN IMPROPERLY ISSUED SHARE WITHOUT GOING TO COURT- SECTION 148 (1) (2) (3)
CAMA 1990 provided that improperly issued or allotted shares can only be validated by the court (FHC) upon the court being satisfied that in all the circumstances specified in the Repealed Act that it is just and equitable to validate the allotment or issuance of the shares.
However, by virtue of Section 148 of CAMA 2020 the company itself is now empowered to validate the issuance or allotment of such shares within 30 (thirty) days of an application made by a holder, mortgagee of those shares or by a creditor of the company by way of a special resolution.
The affected party need not apply to court and may also apply to the court where the company neglects or refuses take the appropriate steps as provided above.
(27) CONDITIONS FOR QUALIFYING AS A PRIVATE COMPANY UNDER THE ACT – SECTION 394(3)
A company qualifies as small in relation to its first financial year if the requirements are met in that year, and in relation to a subsequent financial year if the requirements are met and/or qualifies as small in that year and in the preceding financial year.
A small company is innovatively defined as a private company which in any year satisfies the following qualifying requirements:
- maximum turnover of N120,000,000, or such other amount as may be fixed by the CAC;
- a net assets value of not more than N60,000,000, or such other amount as CAC may determine;
- has no alien as member;
- none of its members is a government, government corporation or agency or its nominee; and
Where it has a share capital, the directors hold at least 51% of its equity share capital.
(28) SUSPENSION OF TRUSTEES AND MERGER OF INCORPORATED TRUSTEES – SECTION 839, 869
Section 869 of the new Act provides for merger between two or more associations with similar aims and objects under such terms and conditions as may be prescribed by the Commission, therefore incorporated trustees with similar aims are now permitted to merge. Proper attention must still be paid to the requirements for merger in Federal Competition and Consumer Protection Act 2018 (FCCPA) since the Federal Competition and Consumer Protection Commission (FCCPC) is the highest statutory institution with reference to merger.
Furthermore, Section 839 of CAMA 2020, which makes provision pertaining to the power to suspend the trustees of an association and appoint an interim manager by the Corporate Affairs Commission has generated unprecedented raucous controversies in the realm of Nigerian Corporate Law as some persons has averred that the new provision is an attempt to witch-hunt religious and charitable organizations in the country. This protest is actually misconstrued and premised on wrong interpretations of Section 839 of the new enactment, it must now be correctly noted and unequivocally pointed out that the commission does not have the unilateral power to suspend the trustees of an organisation out rightly as only the court of Law being the Federal High Court (FHC) can give such order after thoroughly assessing credible and reasonable evidence presented to it alongside a petition for such removal of trustee by the Commission (CAC) or members consisting one-fifth of the association.
(29) PROVISION OF BUSINESS RESCUE PLAN FOR INSOLVENT COMPANIES- SECTION 434-442, 443-549, 718-721.
The new enactment makes provision for the rescue of businesses of Insolvent Companies, a new framework for rescuing a company in distress and to keep it alive as against allowing such corporate entity become insolvent. These provisions include:
- Company Voluntary Arrangements (S.434 to S.442),
- Administration (S.443 to S.549) and
- Netting (S.718 to S.721).
With these statutory options made available it is expected that companies in financial crises will make use of any of the available options instead of undergoing a compulsory winding up.
Going forward, financially distressed companies can partake in business rescue re-organization such as a Company Voluntary Arrangement and Administration instead of Winding Up. The Act further provides for suspension of the enforcement of securities, court actions, sequestration of assets, etc. while a company is undergoing Administration. Where certain undervalued transactions have led to a company’s financial distress a court order can be obtained restoring it to its previous position and a company will also be able to disclaim onerous contracts with the leave of court.
Furthermore Contracts for the supply of essential services may be entered into or continued on the basis that the supplier obtains a personal guarantee by the officeholder in charge of rescuing the company during winding up or a re-organization.
The Act has also modified the conditions for Winding up and clearly set out the rights of secured creditors in Winding up. Therefore the minimum enabling debt for bringing a Winding up petition against a company will be N200, 000 (Two Hundred Thousand Naira) as against the previous criteria of a debt sum of N2,000 (Two Thousand Naira) and claims of holders of fixed charges will rank in priority to other claims and expenses upon the commencement of winding up proceedings.
(30) A PUBLIC COMPANY CAN NOW BE RE-REGISTERED AS AN UNLIMITED COMPANY- SECTION 75, 76
An essential addition to the provisions on the re-registration of companies is the option of re-registration of a public company as an unlimited company provided that the conditions stipulated in section 75 of CAMA 2020 are fulfilled being that all the members of the company have assented to its being so re-registered, the company has not been previously re-registered as a limited or unlimited company, and the application for re-registration is brought in the prescribed manner as provided in section 76.
OLUWATOYIN BAMIDELE, ONI
LL.B(HONS), BL,ACARB, ISCL (SIITGO), DGL RI.
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