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Transmit CAM Bill 2018 For Assent Into Law, Now - Business Community

Doing Business in Nigeria	5495 VIEWS
Doing Business in Nigeria
5495 VIEWS

Wednesday, March 27, 2019 / 05:30PM / Proshare Business & WebTV

Introduction

Laws are like catalysts, they ignite action. Local and foreign investors alike are waiting anxiously to see Nigeria's President Sign the National Assembly-passed CAM Bill 2018 into law to activate growth and kick start expansion in the fledgling MSME subsector.

Not only will the CAM Bill support the transformation of existing businesses, it will also encourage the emergence of fresh enterprises as game changing pioneers of new technologies, services and products. This in turn will achieve a number of goals:

Reduce youth unemployment (unemployment and underemployment rate for Nigeria is currently wedged at 43.2% in Q3 2018)
Encourage business growth
Reduce Inflation Rate (innovativeness will likely dissolve supply side challenges thereby gradually encouraging the consumer price index to fall, inflation rate for January 2019 was officially put at 11.31%)
Unleash creativity (this will come about by young Nigerians who will use their inventiveness to create applications and products that meet the needs of Generation Z and the millennials)
Reduce startup costs (this will emerge as a result of a downward review of the stamp duty and filing costs as new company registrants will consider the minimum investment share capital to start their business rather than authorized share capital which typically is raised to accommodate future capital expansion (in other words the new law eliminates the need to front load capital).

As part of its advocacy for global corporate best business practices the Nigerian business community has made an urgent call to the national assembly urging it to complete the legislative process regarding the CAM Bill 2018 and transmit same to the Presidency for accent into law. The business community recognizes the commitment of the 8th National Assembly in getting the nation to this stage and wish to emphasize the dual responsibility and burden of ensuring that the Bill becomes law under this legislative term, given its journey to this point; and the international dimension of the nation's commitment to executing reforms.

The business community notes that the accountability requirement of the World Bank target as well as the Federal Government's PEBEC target compels the nation to act swiftly in passing and signing this Bill in the interest of growth, development and employment.

One of the distinguishing features of dynamic and disruptive developments in some of the world's fastest growing economies is the scale and rate of reforms carried out in their business environments.

The rate of growth in an economy is usually proportional to the rate of reforms carried out in the country.

Taking Georgia as Case Study

Georgia is an interesting example of a nation that is today a reference point in the "Ease of Doing Business" reforms rankings. From a low performer, Georgia is now one of the top 10 countries in the World Bank's 2019 Doing Business Ranking.

According to Mercy Tambon, World Bank Regional Director for the South Caucasus, "I am very pleased with Georgia's performance in the Doing Business index. The country has continued to advance its position in the rankings over the past three years. This is a testimony of the Government's commitment to a progressive reform agenda to improve the business environment."

Georgia implemented key reforms in the following areas;

1. Georgia made it easier to start a business by cutting or simplifying post-registration procedures (tax registration, social security registration, licensing);

2. Georgia made it easier to pay taxes by introducing new or significantly revised tax laws, simplifying tax compliance processes and decreasing the number of tax fillings or payments;

3. Georgia made it easier to enforce contracts by expanding court automation through introduction of electronic payments and processes, automatic assignment of cases to judges and by publishing judgements.

Nigeria can also emerge as a reference point in the Ease of Doing Business at the regional and global level, and the first level is the transmitting of the CAM Bill 2018 from the National Assembly to the President for signing.

The CAM Bill 2018 is a game changer that will transform the Nigerian business landscape. Some of the Major Highlights of the new CAM Bill include;

Section 2

Inputs from MSME at the policy formulation level of the commission.
Promotion of policies that will enhance the regulatory environment for and growth of Micro, Small and Medium Enterprises (MSMEs).

Section 17

Reduction litigation for the Commission.
Faster resolution of issues with the Commission.
Lower cost to resolution of disputes by the Commission.

Section 18

Reduction of entry barriers for smaller businesses.
Migration of sole-proprietorships from the business names to companies.
Reduction in shareholder-wranglings arising from distrust and mutual suspicion.
No requirement of secretary.
No annual general meeting.
Minor may only join in formation of and not solely form a company.

Section 26

Faster registration of companies limited by guarantee.
Cheaper registration of companies limited by guarantee.
Increase in registration of companies limited by guarantee seeking to provide much needed aid and empowerment for the Nigerian people.

Section 29

Reduction of cost of registration (no front-loading of costs).
Support of operations of MSMEs.
Prevention of opportunities for unlawful dealings in unissued shares.

Section 30

Enhancement of the regulatory capacity of the Commission.
Reduction of resort to the Court by the Commission to enforce direction.

Section 32 & 34

No requirement to register articles of association where model articles apply.

Section 40

Statement of compliance not required to be under oath.
Cheaper cost of registration.
Directly registration by directors or subscribers of companies.
Faster registration of companies.

Section 98

Enhancement of ease of doing business.
Authentication of documents may be simply by signatures of directors and secretary or other persons so authorized.

Section 119

Enhancement of corporate transparency with regards to ownership and control of companies and limited liability partnerships (LLPs).
Prevention of asset shielding.
Combats money laundering, terrorism financing and other illicit or criminal activities using companies as vehicles.

Section 176 (1)

Enhancement of ease of doing business.

Section 223

Reduction in cost.
Enhancement of ease of doing business.

Section 238 (1)

Reduces operational burden.
Enhancement of ease of doing business by MSMEs.

Section 241 (2)

Participation from any location.
Cheaper access to meetings.
Promotion of higher level of shareholder participation.
Enhancement of ease of doing business by MSMEs.

Section 241 (2)

Reduction in conflict of interests.
Enhancement of directors' effectiveness in management of companies.
Promotion of corporate transparency and accountability.

Section 359 (2)

Quick intervention in the interest of the public
Enhancement in the regulatory capacity of the Commission.

Section 375 (6)

Promotion of corporate transparency and accountability.

Section 359 (2)

Enhancement of ease of doing business by MSMEs.
Enhancement of the integrity of accounts by MSMEs.

Sections 435-443

Opportunity for company in distress to initiate a composition or scheme of arrangement in settlement of its debt.
Available even where the company is in administration or under winding up.

Sections 444-550

Affords company in distress an alternative to receivership.
Primary objective to rescue the company, the whole or any of its undertaking.
However appointed, Administrator represents interest of company's creditors as a whole.

Section 693

Dormant company or company with no undischarged obligation may initiate.
Enhancement of supervision of active companies.

Sections 719-722

Allows a party to terminate financial contract if the other party becomes insolvent.
Mitigates risks associated with performance of large financial transactions.
Promotes financial stability and investor confidence.

Sections 747-795

Enjoys privileges of a body corporate.
Less formal and stringent incorporation requirements.
Profit sharing is by written agreement between partners.
Combines organizational flexibility of partnership with limited liability for its members.

Sections 796-811

Promotion of access to private equity funds.
Limitation of liability for "sleeping" partners who provide funds.

Section 832

Enhancement of supervision and regulation of registered associations with related operations.
Promotion of accountability and compliance enforcement by establishing nexus between associations to determine control and ultimate ownership of property.

Section 843

Facilitates giving effect to the law where an association did not determine the similar institution to which the properties should be transferred before dissolution.

Section 850

Consolidation of activities by Associations with similar objects if it would enhance the realization of their objectives.

Section 852

Faster resolution of administrative disputes.
Cheaper alternative to litigation.

Section 850

Window to recreate records.
Legal basis for current practice of the Commission.

Section 801

Enhancement of service delivery.
Cheaper cost of obtaining and providing service.

One major observation is the provision for technological developments and advancements, like "Crowdfunding" which was not included in the legislation.

It is important for the CAM Bill 2018 to be reviewed periodically to integrate the new realities in the global socio-economic space.

Nigeria has a bold target of achieving the top 100 countries in the World Bank Doing Business Report ranking by 2020. The CAM Bill 2018 provides the vehicle for accelerated reforms that will also lead to economic growth.

This is a great opportunity for the Nigerian business environment and it cannot afford to miss the opportunity of signing a significant bill that will improve the business climate in the country.

Kindly Download - Companies and Allied Matters Act, 2020

Download the January 23, 2018 REPORT OF THE TECHNICAL ADVISORY COMMITTEE ON THE COMPANIES & ALLIED MATTERS ACT (AMENDMENT) BILL SUBMITTED TO THE SENATE COMMITTEE ON TRADE AND INVESTMENT