As part of the commitments of the Federal Government of Nigeria to continuously create an enabling environment for doing business, on February 13, 2023, the Business Facilitation Bill 2022 (also known as the Omnibus Bill) was signed into law. The main objective of the Act is to “promote the ease of doing business in Nigeria and eliminate bottlenecks”. To actualize this objective, the Act amends various business-related legislations. In this newsletter, we highlighted some of these amendments and their possible impact on the Nigerian business environment.
CONSEQUENTIAL AMENDMENTS
- Amendments to the Companies and Allied Matters Act (CAMA)2020:
a) Increase in share capital– The Act has amended the provisions of Sections 127(1) and 149(1) of CAMA to the effect that a company may increase its issued share capital by the allotment of new shares, either in a general meeting or by a resolution of the board of directors, subject to the condition or direction that may be imposed in the Articles or the Company in general meeting. The existing provisions of Section 127(1) of CAMA states that a company may increase its share capital only by the members in general meeting, and not otherwise. This amendment eliminates any constraint or limitation which a company may experience where it seeks to increase its share capital, without the requirement of a general meeting of its shareholders, provided that the shareholders in general meeting or the company’s articles have authorized the board to issue such resolutions.
Consequently, a company may have to amend its articles to empower the directors to increase its share capital where this is not already provided in its articles. The company may in the alternative have its members sign a resolution empowering the directors to do so and setting the parameters for the exercise of this authority.
b) Return of allotment of shares: The Act by amending the provisions of Section 154(1) of CAMA has shortened the period within which to make a return on allotment of shares to the Corporate Affairs Commission (CAC) from one (1) month to fifteen (15) days. Companies are therefore required from to ensure that necessary returns and filings are made with the CAC within this time.
c) Accounting standards for a company’s financial statement: By virtue of the amendment made to Section 378(1) of CAMA, a company’s financial statement must comply only with the requirements of the accounting standards as prescribed by the Financial Reporting Council of Nigeria (FRCN). This amendment eliminates completely the requirement to comply with the accounting standard as provided in the First Schedule of CAMA and the requirements of the FRCN, as stated in the existing provisions of CAMA.
2. Foreign Exchange (Monitoring and Miscellaneous Provisions) (FOREX) Act, 2004:
The Act by amending the FOREX Act has provided for various grounds on which the Central Bank of Nigeria (CBN) may revoke the appointment of an authorized dealer or buyer licensed to deal in foreign exchange. Some of these grounds include-
- failure to utilize the license within 30 days;
- failure to commence its exchange business within 6 months from the date of issuance;
- failure to comply with a directive under the FOREX Act;
- where the entity conducts or intends to administer its business in a manner that threatens the interest of customers or potential customers; and
- failure to disclose in its application, any material information known to the entity or reasonably expected to have been known by the entity, etc.
3. National Office for Technology Acquisition and Promotion (NOTAP) Act, 2004:
By virtue of the provisions of Section 5(2) NOTAP Act, there is an obligation to register with NOTAP not later than 60 days of execution, every contract or agreement entered into by any person in Nigeria with a person outside Nigeria relating to the use of trademarks, patented inventions, supply of technical expertise, supply of basic or detailed engineering, etc. Following the amendment of this provision by the Act however, companies in their first two years of business operation shall not be liable to late registration penalties where such contracts are registered before the end of the second year of their business operation”.
To qualify for this exemption for late filing, the company must:
- not be more than 2 years in operation;
- ensure that the contract or agreement is filed not later than the end of the second year of its operation.
4. Trademarks Act, 2004:
Under the Trademarks Act, a trademark is required to be registered in respect of particular goods or classes of goods, and subject to this registration, no person shall have the right to institute an action against any person for the infringement of an unregistered trademark. Under the Trademarks Act, no provision was made for the definition of “goods”, neither is there any provision for such definition under the Interpretation Act of 1990.
Following the amendment to Section 67 of the Trademarks Act, “goods” has been defined to include services. Consequently, the definition of trademark under the Trademark Act has been amended thus-
“trademark” means a mark used or proposed to be used in relation to goods or services for the purpose of indicating a connection between the goods or services and a person having the right, either as a proprietor or as a registered user, to use the mark, with or without any indication of the identity of that person, and may include shape of goods, their packaging, and combination of colours.”
This amendment provides more clarity on what the words “goods” as used by the Trademark Act means and also enlarges the scope to include services provided by a person.
CONCLUSION
The provisions of the Act are a welcome development, as we hope that it improves the ease of doing business in Nigeria, and also enhances the efficiency of the working relationships between businesses and regulatory authorities. There is no certainty about when the Act shall become effective. We expect that directives will be issued by the heads of the various authorities regarding the amendments made by the Act and their implementation.
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Read the original publication at Pavestons.