May 23, 2018

The Repeal And Re-Enactment Of The Companies And Allied Matters Act 1990 (Cap C20, Lfn 2004); What to expect? | Oyewole Gboyega

The Premise – After 28 long and hard years of its existence, the Companies and Allied Matters Act of 1990 is finally going to be overhauled in favour of a new Act which would be cited similarly. The repeal and re-enactment planned by the National Assembly by virtue of the Bill for An Act to Repeal the Companies and Allied Matters Act 1990 (Cap C20, LFN 2004) is long overdue considering the fact that the Act had been severely left behind by the times and had become a hindrance to modern and efficient corporate governance practices as well as general economic development.

The Expectation – There is an expectation that the re-enacted law would address several issues which have been problematic for companies and for the Corporate Affairs Commission in the past and this has prompted many to look carefully at the Bill that has been pass by the National Assembly.

Bottom-line – A few notable changes and additions to the law are as follows:

The Governing Board of the Commission – the issue of the leadership of the Corporate Affairs Commission has been properly defined in the bill; expressly referring to the leaders of the Commission as the “Governing Board” and not as “Members” as was the case before. Furthermore, in the appointment of a representative of the accountancy profession to the leadership of the Commission, the Institute of Chartered Accountants would no longer be the sole organisation whose members would be considered as other professional bodies in the accounting profession would have a shot at a seat at the table.

A representative of the Institute of Chartered Secretaries would now form part of the leadership as well as a representative from the Federal Ministry of Industry Trade and Investment. These additions are key corporate governance practices which ensure the diversity of any Board to aid creative problem solving and well rounded decision and policy making. The functions of the “Governing Board” are also clearly spelled out in the Bill and the chief of these is policy making for the Commission. This most definitely would ensure that the Commission has a clear focus and goal at all times.

Requirement for Pre-action Notice – this is a crucial change as it would drastically alter the procedure for filing lawsuits against the Corporate Affairs Commission. The Bill requires that before a suit can be commenced against the Commission, a pre-action notice must be issued and served on it. This protection has been afforded several other federal government agencies and it is good to see that said protection has been expanded to the Commission.

The Right to Form a CompanyAnother key change is the fact that 1 person may now incorporate a private company so long as the provisions of the Act in respect of same are complied with as opposed to the previous position where there had to be at least two persons. This would make for ease of commencement of a business.

Company Limited by Guaranteethe requirement for the consent of the Attorney General to the incorporation of a company limited by guarantee has been dispensed with under the Bill. This is a very welcome development as the cumbersome nature of obtaining the Attorney general’s consent has always been a massive stumbling block to the incorporation of companies limited by guarantee which are essential to social development.

Disclosure of Capacity by Shareholder – the issue of shareholder transparency which has long been a concern has been dealt with by the Bill. Every shareholder would be required to disclose to the company within 7 days of becoming a member, the capacity in which he holds the shares and if he holds them as a beneficial owner. There is also obligation placed on the company to disclose this information to the Commission.

Place of Meeting – a very progressive change to the law is that private companies are now free to hold general meetings electronically provided that such meetings are conducted in accordance with regulations to be made by the Commission from time to time.

Oyewole Gboyega
Source -