Nigerian President signs new Companies and Allied Matters Bill 2020 into law
The President of Nigeria, Muhammadu Buhari, signed into law, on the 8th of August 2020, the Companies and Allied Matters (Amendment) Bill. The bill, now referred to as the Companies and Allied Matters Act, 2020 (the Act) repealed the Companies and Allied Matters Act 1990 (which had been in operation for 30 years).
The Act changes Nigeria’s corporate landscape by facilitating the ease of doing business, reducing regulatory hurdles and aligning corporate operations in Nigeria with global practices and procedures.
Highlights of the Act are:
- Private companies are permitted to have only one shareholder
- The appointment of a Company Secretary is optional for private companies
- Small companies or companies having a single shareholder are no longer required to appoint external auditors to audit their financial records
- The statement of compliance with the provisions of the Act can now be signed by an applicant or his agent, thereby dispensing with the need for a lawyer or a notary public to sign the statement
- Companies are no longer required to issue authorised share capital. Hence, a company only needs to ensure its share capital is at least equal to the minimum share capital
- Introduction of Limited Partnerships (LP) and Limited Liability Partnerships (LLPs). LPs and LLPs come with the advantage of corporate limited liability while retaining the tax advantage of a partnership structure
- Introduction of electronic filing, electronic share transfer and e-meetings for private companies as well as virtual annual general meetings
- A person is restricted from being a director in more than five (5) public companies simultaneously
- Firms are not permitted to appoint a director as both the Chairman and the Chief Executive Officer of a private company, in line with prevailing corporate governance principles. This provision already exists for public companies, under the Securities and Exchange Commission’s Regulations, but has now been extended to private companies
- Introduction of business rescue provisions to assist insolvent companies
- Disclosure of the beneficial owners of shareholders to ensure transparency
The Act is a welcome development as it attempts to reform our corporate law to reflect present realities.
Please expect our newsletter, with a detailed analysis of the provisions of the Act and implications for companies and businesses.