The President’s assent to the new Companies and Allied Matters Act (CAMA) 2020, on August 7, 2020, which repeals and replaces Companies and Allied Matters Act, 1990[1] (the “Repealed Act”).
The ‘CAMA 2020’ is one of the most impactful piece of legislation signed in 2020, and is designed to enable ease of doing business in Nigeria, especially for micro, small and medium-scale enterprises which are the engine of the Nigerian economy.
This is a milestone and a beginning of a long journey to building a technologically-viable structure in doing business in the country. Allowing single shareholder/single director in small companies.
Under the CAMA 2020, a private company may hold its general meetings electronically provided that such meetings are conducted in accordance with the articles of the company.
With other innovations that reflect the current digital age are: company records can be maintained in electronic format; electronic share transfer forms will be accepted by all companies; notices of meetings can be given by electronic mail to any member who has provided the company an electronic mail address; and any document required to be annexed to the annual return may be delivered to the CAC either in hard or soft copy.
Also, under the CAMA 2020, a small company is seen as a company that amongst other criteria has a turnover of not more than N120 million and a net asset value of not more than N60 million.
Meanwhile, the cost of registering security interests at the CAC has been reduced by 65% for private companies and 82.5% for public companies. Prior to the CAMA 2020, the CAC filing fee for registering security interests was 1% of the secured amount (for private companies) and 2% of the secured amount (for public companies). Under the CAMA 2020, the CAC cannot charge more than 0.35% of the secured amount.
Going forward, the amended law has exempted small companies from having their financial records audited and makes provisions for two or more persons, one of whom must be resident in Nigeria, to form a company under a Limited Liability Partnership (LLP), as a separate legal entity. It also excludes one partner from liability for the wrongful acts of another.
