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The companies and allied matters act 2020, otherwise termed CAMA 2020, is a primary legislation enacted to provide for the establishment of the corporate affairs commission and guide the processes involved in the Incorporation of a company, partnership which includes the addition of new forms of partnership namely, limited liability partnership[1], limited partnership[2], foreign limited partnership, registration of business name[3], incorporated trustees[4] and establishment of administrative proceedings committee[5]. This legislation is aimed at easing corporate activities. The incorporation of a company comes in two folds, namely the pre-incorporation, Incorporation. The pre-incorporation entails preliminaries such as eliciting information from the client, Incorporation entailing the registration proper, and the post-incorporation activities/filing.
The phrase “change is constant” appears not to leave out corporate entities, hence the need to make alterations as and when due and desired.
This work seeks to highlight the concepts of post-incorporation in the Nigerian corporate world under the act. Post-incorporation matters are any issue of modification embarked on by the corporate entity in furtherance of its existence, complying with directives as provided by the law. It includes interfacing with regulatory bodies such as the Corporate Affairs Commission, Securities and Exchange Commission, Central Bank of Nigeria, Nigerian Investment Promotion Commission, and others.
Gone are the days when post-incorporation activities were done physically only. CAMA 2020 has eased users off this stress. Filings can now be done both physically and virtually.
The matters include but are not limited to
Section 729 of CAMA provides,
“Every company, after incorporation, shall— (a) paint or affix, and keep painted or affixed, its name and registration number on the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily legible ; (b) have its name engraved in legible characters on its seal, where the company has a seal ; and (c) have its name and registration number mentioned in legible characters in all business letters of the company and in all notices, advertisements, and other official publications of the company, and in all bills of exchange, promissory notes, endorsements, cheques, and orders for money or goods purporting to be signed by or on behalf of the company, and in all bills or parcels, invoices, receipts, and letters of credit of the company.”
There are some necessary steps to take after Incorporation but before the commencement of business. These are;
Default of this statutory directive can result in payment of a fine as determined by the commission, lifting the veil of the company, and personal liability by the officers or holders of such bill of exchange.[8]
Filings of annual returns
Rendering of returns entails the filing of annual returns to be done once at least every year[9]. Annual returns for registered entities is a statutory requirement under CAMA 2020. It provides for the delivery of this return within 15 months of Incorporation and not later than 18 months. Companies have the grace to keep mum in the year of Incorporation. The default of this corporate obligation can cause the status of the company to be inactive. Asides from this, monetary sanctions are attached as determined by the commission. The filing is done virtually.
Change of name of company[10]
Change or alteration of the name of a registered business is a factor of choice or compellation, choice when it is voluntary, compellation when it is forced by the regulatory body upon receipt of complaints by aggrieved persons, self-knowledge by CAC, and other factors listed in the Act. Where the name of the company is identical to an earlier subsisting registered entity calculated to deceive, incompatible with a national image. The company affected may be ordered to change its name with the approval of the commission within six (6) weeks of registration of such[11]. Voluntary change occurs upon the passage of a resolution by the company, with the approval of the commission, while compulsory change is at the instance of the Commission
Alteration of Memorandum and Articles of Association[12]
The memorandum of a company is its constitution. It provides for the interface between the company and the public while the article of association guides members of the company as to their internal activities. Alteration of this document is via a special resolution, by Implication, which requires a two-thirds vote of members, and their proxies. Such as alteration of business objects[13], Alteration of restriction on powers of the company[14], and Alteration of share capital.[15] Under the alteration of share capital, we have the increase, reduction, and consolidation.
Increase in share capital[16]
It is trite to note that a private company must not have less than one hundred thousand nairas (#100,000) in value of its minimum issued share capital, and two million nairas (#2,000,000) for a public company as entrenched in section 27 of CAMA. A company having a share capital may decide to increase its shares where it receives a lot of share subscriptions exceeding its share capital threshold. Only public or private companies are limited by shares; private or public unlimited companies deal with shares. By ordinary resolution, any of these companies may increase their shares with the necessary post-resolution filings. Where a company increases its share capital, the increase will only take effect if 25%of its issued share capital inclusive of the increase is paid up
Reduction of share capital[17]
The regulatory framework guiding this process does not encourage the reduction of share capital. Hence it’s no easy-peasy as a post-incorporation exercise. Its procedure requires judicial sanction, issuance of special notices, the passage of the special resolution, and waiting time for receipt of objections. The necessary factors to successfully complete this process are
No company shall reduce its share capital except as authorized by the article of association
Conversion, otherwise known as the reregistration of companies, happens for diverse reasons: economic reasons, legislation and policies, and survival strategy.
Public companies may convert to private for different reasons. The economic downturn and autonomous control over the business can birth this decision. Its process is somewhat alike the procedure for the reduction of share capital. It involves passing a special resolution and consequential filings at the commission.
Private companies can likewise tow the path of conversion to the public, where the company wishes to enjoy the incentives that follow a public status. One is being listed as a publicly quoted company on the stock exchange, receiving public offers, amongst others. This procedure also requires the issues of notice of the company’s meeting, passing a resolution to effect such change, and effecting consequential alteration in the memorandum of association.
These registers are compendiums of details of members, activities, and general information about the firm. Some of these are:
A Corporate Search Report confirms due incorporation registration of a company or organization with CAC. It facilitates the opening and operating of Bank Accounts for the company Bankers and other financial institutions. It is used for verification of the corporate profile of a company, to verify compliance, and look into the history of corporate organizations and details of the officials, directors, and shareholders.
A corporate search contains the date of search, place of search, name of the company, company registration number, registered office address of the company, date of Incorporation, the business of a company limited by shares, objects of a company limited, borrowing powers, share capital, shareholders and their holdings, directors, company secretary, any change in the registered particulars such as alteration conversion or re-registration, encumbrance(s), remarks (If any), name and signature of the legal practitioner who conducted the search, forwarding/ covering letter to accompany the search report.
Summarily, it is commercially and professionally expedient that clients undergo this process with the eagle eye of professional/accredited users, including legal practitioners and others.
[1] Part C CAMA 2020
[2] Part D CAMA 2020
[3] Part E CAMA 2020
[4] Part F CAMA 2020
[5] Part G CAMA 2020
[6] Section 98 CAMA
[7] Section 99 CAMA
[8] Section 733(4) CAMA
[9] Ss 417, 418, 419, 420 CAMA
[10] Ss. 30, 31 CAMA
[11] Section 30(1) CAMA
[12] Ss 49, 53 CAMA
[13] Section 51 CAMA
[14] Section 50 CAMA
[15] Ss. 125-133 CAMA
[16] Section 128 CAMA
[17] Section 130 CAMA
[18] Section 63 CAMA
[19] Section 56 CAMA
[20] Section 68 CAMA
[21] Section 71 CAMA
[22] Ss 75, 77 CAMA
[23] section 109 CAMA
[24] Section 120 CAMA
[25] Section 111 CAMA
[26] Section 122 CAMA
[27] Section 215 CAMA
[28] Section 216 CAMA
[29] Section 218 CAMA
[30] Section 266(1) CAMA
[31] Section 320 CAMA
[32] Ss. 336, 337 CAMA
[33] Section 374 CAMA
[34] Section 301 CAMA
[35] Ss. 318, 319 CAMA
Written by Olawunmi Ojo and Kikiire Oluwatobi for The Trusted Advisors
Email us: info@cms.trustedadvisorslaw.com