BULLET POINTS ON "CAMA 2020: UNDERSTANDING THE IMPLICATIONS OF ENTREPRENEURS AND BUSINESSES - Welcome to Lumenar's blog

Trending

Saturday, 15 August 2020

BULLET POINTS ON "CAMA 2020: UNDERSTANDING THE IMPLICATIONS OF ENTREPRENEURS AND BUSINESSES

Chinecherem Ubaka


It was an enlightening experience as I listened to Mr. Tolulope Sonaik noe, a representative of the Registrar-General of the Corporate Affairs Commission (CAC), dissect the provisions of the new CAMA, 2020. He noted that the CAMA, 2020 has over 200 new provisions and innovations. Below are some of the novel provisions he pointed out. 

1. The Attorney-General's consent is still required for the registration of a company limited by guarantee. However, under the new act, the Attorney-General has 30 days to respond. 

2. The difference between a business name and a single member company lies in the fact that a the latter grants the individual all the benefits of a corporate status. Furthermore, in the event that the single member dies, what happens to the company? The company can still remain in existence depending on the succession law of the owner. With regards to business names, once the owner dies, the business dies too. He also noted that the single member company provision is an entry barrier because it could grow.

3. Now, the directors and 1st directors can register their businesses directly or through a legal practitioner. When the directors register their companies themselves, they file Statement  of Compliance. Under the 1990 Act, it is a mandatory requirement for  accredited legal practitioners to register the company and file Statutory Declaration of Compliance.

4. It is now optional for companies to make use of company's seal.

5. The law now permits electronic transfer of shares.

6. The law has reduced the cost of perfecting loan documentation with CAC. Under 1990 CAMA, 10% for every million. Now, it is not more than 0.345% of the whole sum.

7. There is a difference between small companies and private companies. All small companies are private companies but not all private companies are small companies. A small company has not more than N60m as it's net assets and it's subcribers holds at least 61% of the shares. Thus, only small companies can dispense with the need of a company secretary. 

8. The CAMA now allows for e-filings and e-meetings to reduce cost and increase shareholder's participation.

9. Public companies are now required to display audited accounts on their websites to promote corporate transparency.

10. Companies are free from audited accounts if they have not being doing business. This will put an end to the incessant irregularities in annual returns and audited accounts of some companies.

11. The CAMA, 2020 introduced a new business rescue mechanism i.e. Company Administration. There is a difference between this and receivership. The company administrator is primarily saddled with the responsibility of rescuing the company. Such that even when the company administrator leaves, the company still thrives. On the other hand, a receiver is not bothered about how the company fares after he leaves. The receivership practice is indeed hostile to companies in distress.

12. The CAMA, 2020 introduced a new form of dissolving a company. It is called De-registration.  This is an alternative to winding-up and it is less expensive.

13. The Limited Liability Partnership (LLP) combines the features of partnership and a company. It is similar to a company in terms of structure. Regulatory wise, it is different. For a LLP, you need two disignated partners and they act as directors and the regulatory bodies hold them responsible.

14. Under Limited Partnership (LP), there are sleeping partners and general partners. For e.g. a public servant can invest in a business partnership and become a sleeping partner.

15. The CAC cannot unilaterally dissolve an incorporated trustee. Such powers cannot be exercised without a court order. Thus, he noted that CAC cannot turn into a monster. He made reference to Sec 839 and 842 of CAMA, 2020.

16. We start enjoying the provisions of the new CAMA as soon as it is gazetted.

Keywords: CAMA 2020, COMPANY, CORPORATE, BUSINESS, CAC

Chinecherem Ubaka is a legal practitioner based in Lagos State, Nigeria. She can be contacted via lumenaogo@gmail.com

No comments:

Post a comment