The Business Facilitation (Miscellaneous Provisions) Act (the “Act”) became law when, on 14 February 2023, the President of the Federal Republic of Nigeria, Muhammadu Buhari, signed the bill passed by the Senate in December 2022. The Act is a legislative brainchild of the Presidential Enabling Business Environment Council aimed principally at removing bureaucratic bottlenecks and administrative impediments to doing business in Nigeria.
The Act was passed in a bid to ensure that Nigeria is conducive for business operations by providing regulatory ease, ensuring transparency, efficiency, and productivity in order to, ultimately, catalyze the growth of the economy.
The Act amends certain provisions of relevant legislations such as the Companies Allied Matters Act (“CAMA”), Nigerian Export Promotion Council Act, Customs and Excise Management Act, Export Prohibition Act, Financial Reporting Council Act, Foreign Exchange (Monitoring and Miscellaneous Act), Immigration Act, Industrial Inspectorate Act, Industrial Training Fund Act, Investment and Securities Act, National Housing Fund Act, National Office for Technological Acquisition and Promotion Act, National Planning Commission Act, Nigerian Customs Service Board Act, Nigerian Investment Promotion Commission Act, Nigerian Oil and Gas Industry Content Development Act, Nigerian Ports Authority Act, Patents and Designs Act, Pension Reform Act, Standards Organisation of Nigeria Act, and Trademarks Act.
Whilst the Act is yet to be gazetted, we expect the gazetted version to mirror the provisions of the Act as assented by the President. This article sets out the impact of the key provisions of the Act in relation to CAMA.
1. Transparency Requirements for MDAs: The Act requires Ministries, Departments and Agencies (MDAs) of the Federal Government that provide products and services to the public to publish and keep updated a complete list of requirements to obtain such products and services. The said products and services include, among other things: permits; licenses; waivers; tax-related processes; filings; approvals; registrations; and certifications, to be performed or conducted in accordance with the functions of the relevant MDA.
MDAs are also now mandated to communicate the approval or rejection of an application within the time stipulated in its published list. Where an application for a product is not concluded within the stipulated timeline, such application will be deemed approved and granted. In addition, where an application is rejected within the timeline, the MDA is obligated to communicate the rejection to the applicant setting out the grounds for the rejection.
2. Key Changes under CAMA: Regarding CAMA specifically, some key changes introduced to the same by the Act are as outlined in the table below.
| No. | Item | Provision |
|---|---|---|
| 1. | Exemption from incorporation | The Act provides additional ground for exemption from incorporation; it stipulates that foreign companies intending to carry on business in Nigeria may now be exempted from incorporating as a separate entity by an act of the National Assembly.1 |
| 2. | Procedure for increasing share capital | The Act amends section 127(1) of CAMA such that companies may now increase their share capital either in general meeting or through a resolution passed by the Board of Directors.2 This amendment provides flexibility for companies looking to increase their share capital |
| 3. | Preemptive rights | The Act eliminates the requirement for public companies to first offer newly issued shares to their existing shareholders, in proportion to their existing shareholdings, and makes this requirement applicable only to private companies. This amendment tackles the associated difficulty of cost and time that a public company may encounter in carrying out a rights issue. In addition, the Act clarifies that for private companies, where any such offer is not accepted within 21 days of the notice, the same shall be deemed declined. The previous position was that such an offer had to be accepted within a “reasonable time” – this was considered vague and unclear |
| 4. | Electronic share certificates | The Act amends section 171 of CAMA which provides for the issue of share certificates and introduces a new subsection stipulating that a “certificate” may be in physical or electronic form. |
| 5. | Virtual meetings for public companies | The Act provides that both public companies and private companies may hold their general meetings electronically provided that such meetings are conducted in accordance with the relevant company’s articles of association |
| 6. | Electronic notices and electronic voting | The Act amends section 244 of CAMA to permit a company to give notices to its members by any electronic means. The Act also amends the procedure for voting under section 248 of CAMA to include electronic voting |
| 7. | Number of independent directors of public companies | The Act has amended section 275 of CAMA to now provide that a public company shall have at least one-third of the total number of its directors as independent directors. Prior to this amendment, public companies were required to have a minimum of three (3) Independent Directors. This amendment has increased the proportion of independent directors expected to be on the board of a public company. The goal is that, ultimately, this will promote the quality of board decision-making and increase transparency and accountability in public companies |
| 8. | New threshold for determining insolvency | Previously, a company was deemed to be unable to pay its debt (and thus insolvent) when it is indebted to a creditor for a sum exceeding N200,000 and has neglected to pay the same three (3) weeks after the creditor has served a demand notice on it. The Act, however, does not specify a monetary threshold but allows for such threshold to be determined by a regulation issued by the Corporate Affairs Commission (i.e., the corporate registry in Nigeria). |
The Act represents a major legislative framework for Nigeria to deliver an enabling business atmosphere for companies and ultimately achieve economic development. The amendments are indeed laudable as they aim to tackle the pain points of companies. It is hoped that like the Finance Acts, subsequent iterations of the Act are passed periodically to address regulatory loopholes and help keep our laws relevant for addressing emerging global business trends.
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Read the original publication at Dentons & ACAS-Law.