Regulatory Regimes And The Ease Of Doing Business In Nigeria

Curiously, professionals such as solicitors who work within the legal regime for establishing business entities in Nigeria are still, undeservedly, faced with difficulties while representing their clients at the CAC. This is so because new, sometimes unpublicised regulations and/or conditions which are outside the extant laws, are imposed with little or no prior notice.

Two recent examples of undocumented rules that slow down the registration/incorporation of business entities at the CAC are; (i) the new rule on the composition of the board of directors of engineering and architectural companies in formation and (ii) the nationality of the person who is the Secretary of a company (under incorporation) in Nigeria.

Applications for the incorporation of engineering companies in recent times have been turned down by the CAC, for the mere fact that none of the directors of the companies in formation are “CORENregistered” i.e. licensed by the Council for the Regulation of Engineering in Nigeria. Similarly, applications for the registration of architectural firms have been refused for not having any of the preincorporation directors as “ARCON-registered” i.e. licensed by the Architects Registration Council of Nigeria. Before now, the CAC only required certificates of training or proficiency in the various fields of engineering or architecture from persons who are the first directors of these types of companies.

Clearly the CAC, by the additional requirement of professional registration for engineers and architects, is enforcing compliance with the relevant provisions of the Engineers (Registration, etc.) Act, Cap E11, LFN 2004 (“ERA”) and the Architects (Registration, etc.) Act, Cap A19, LFN 2004 (“ARCON Act”); which respectively provide that engineers and architects must be registered with COREN and ARCON to practise in Nigeria. However, while the ERA in section 6 makes provision for the registration of all qualified engineering firms and personnel wishing to practise in Nigeria, the ARCON Act in section 1 provides only for the registration of qualified persons who are Nigerian citizens. So, while the statutory restriction of registration only to Nigerian citizens (in the case of ARCON) is a challenge to open participation by foreigners in the economy, the CAC’s approach to enforcing compliance without prior notice or documentation further worsens the business climate for investors.

Also, the CAC has recently demanded that a person who is the Secretary of a company under incorporation in Nigeria must be a Nigerian. This new rule (which, to the best of our knowledge remains undocumented) is discouraging, particularly to foreign private companies operating or looking to operate in Nigeria, and who may prefer to have their expatriate personnel with the prescribed qualifications and statutory permits serve as company secretaries. Section 295 of the CAMA specifies the qualifications of a company secretary in Nigeria and these do not include nationality. This rule on the nationality of the company secretary is in a way, a disincentive to foreign participation in the economy and is not in sync with the principle of trade liberalisation that is driving competitiveness and growth, in other emerging economies.

At the very least, whatever the intendments of these new pre-incorporation rules administered by the CAC are, they ought to be legitimately made, properly documented and well publicised to reduce cases of administrative impediments and frustrations confronting the setting up of businesses in Nigeria. The CAC may advocate a review of the Companies Regulation 2012 to contain its new incorporation requirements, so as to ensure certainty and uniformity of rules.

Another thorny issue affecting business registration is the lack of harmonization between the data banks of the CAC and other agencies with similar functions; particularly the Commercial Law