Reforming The Business Climate In Nigeria: Critical Changes Introduced By The Companies And Allied Matters Bill, 2018

(E.) Regulation and Compliance

New mechanisms for making regulations more effective, and compliance a lot easier, are introduced into the governing framework for supervising business entities. These include the following:

• A more inclusive CAC Governing Board

  In constituting the Governing Board of the CAC, the CAM Bill provides in section 2(2)(f) that one representative of the Nigerian Association of Small and Medium Enterprises shall be appointed by the Minister of Trade and Investment on the recommendation of the Association. This will ensure that inputs from MSMEs are factored into policy formulation at the CAC. This is expected to promote policies and regulations that are conducive to the growth of MSMEs.

• Power of the CAC to initiate investigation of a company

  In addition to circumstances where the court orders investigation into the affairs of a company, as is the case under the 1990 Act, the CAM Bill has in section 359(2) conferred on the CAC power to suo moto initiate investigation into the affairs of a company, by appointing one or more competent inspectors to investigate the affairs of the company and report on them, where it appears to the CAC that there are circumstances suggesting that the provisions of the law have been contravened through acts of omission or commission by the company. This is expected to enhance CAC’s regulatory capacity and ensure quick intervention in the affairs of companies in the interest of the public.

• Treatment of Related Associations as one

  The CAM Bill in section 832 provides for the treatment of any two or more associations having the same trustees to be treated as a single association. This is without prejudice to the provisions of section 850 on mergers of Incorporated Trustees. This provision is expected to facilitate effective supervision and regulation of registered association with related operations. It is equally expected to promote accountability and enforcement of compliance, as well as establish nexus between associations for the purpose of determining control and ultimate ownership of property.

• Pre-Action Notice to precede institution of court actions

  From the commencement of the CAM Bill, no suit shall be commenced against the CAC before the expiration of a period of thirty (30) days after a written notice of intention to commence the suit shall have been served upon the CAC by the intending plaintiff or his agent. Section 17(2) of the CAM Bill states that the required Pre-Action Notice shall clearly and explicitly state: (a) the cause of action; (b) the particulars of the claim; (c) the name and place of abode of the intending plaintiff; and (d) the relief sought. This provision is expected to reduce litigation for the CAC as faster resolution of issues is facilitated with reduced cost.

Comment:

Considering the far reaching provisions contained in the CAM Bill, its passage by the National Assembly represents a significant milestone in Nigeria’s efforts at putting in place a framework that promotes EoDB and reduces regulatory hurdles.

Promoted by the CAC with the collaborative efforts of key public and private sector stakeholders supported by the Enabling Business Environment Secretariat (“EBES”), the Section on Business Law of the Nigerian Bar Association (NBA-SBL), Nigerian Economic Summit Group (NESG), the National Assembly Business Environment Roundtable (NASSBER) and leading commercial law firms; the CAM Bill is expected to receive presidential assent and become operational without further delay.

Notably, substantial parts of the changes provided in the CAM Bill have been promoted and are currently being implemented as key reform initiatives of the Presidential Enabling Business Environment Council (“PEBEC”), under the series of National Action Plans on the Ease of Doing Business in Nigeria (“NAPs”). EBES was established in 2016 to implement the mandate and vision of PEBEC with fantastic outcome of moving Nigeria phenomenally twenty-four (24) places up the World Bank EoDB Index; from 169th position to 145th position globally between 2017 and 2018 as well as naming Nigeria as one of the top ten (10) most reformed economies in the world. It is also expected that the provisions of the CAM Bill would enhance the current aspiration of PEBEC/EBES to move Nigeria to a sub-100 position in the Doing Business Report which would be released in October this year.

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