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CAMA reform moves doing business in Nigeria closer to Digital Age 29 Jun 2018

On May 15, 2018, the Nigerian Senate repealed and re-enacted the Companies and Allied Matters Act (CAMA). Following the passage of the CAMA Bill 2018, the Senate’s public relations machinery went into overdrive, calling the move the “biggest business reform bill in Nigeria in over 28 years.’’ To be fair, there is some substance to that claim given the fact that CAMA was enacted by a decree in 1990 during the somewhat business-friendly Ibrahim Babangida dictatorship.

The CAMA legislation – yet to be passed by the House of Representatives and assented to by the President – has loosened several regulatory bottlenecks relating to starting businesses. Nigeria was ranked 130th out of 190 economies in Starting a Business category of the World Bank’s Doing Business 2018 report. According to the Senate, the proposed legislation is pro-business; it will promote innovation and encourage enterprise. The law’s provisions are in line with modern technological realities. Therefore, it is expected that it will increase investments and job creation.

Some of the portions of the new law stood out for me and will be the thrust of this article. For example, the option of electronic registration of companies, as the amended Section 34(2) now provides for, is vital in our new digital world. This was also given more bite by the removal of the requirement for a company’s seal. In these days of digital signatures and online methods of authentication, the idea of finding a lawyer to go to the Corporate Affairs Commission (CAC), stand in line, wait a few days, get paper documentation, and then getting someone else to cast a company seal is retrograde.

The prospect of submitting electronic copies of company incorporation documents from the comfort of one’s home is vital in today’s round-the-clock business environment, in much the same way I was able to register a business in Nevada, United States without having ever been there.

Furthermore, Section 213 now allows small companies to hold their annual general meetings (AGMs) electronically, provided that such meetings are conducted in accordance with regulations made by the CAC. There is absolutely no need for people to start jumping on Ifesinachi buses or buying plane tickets in order to attend a company’s AGM when data is affordable enough and of sufficient quality to make attendance possible via Skype. Finally, Nigeria is beginning its belated waltz into the digital age.

Section 18 of the amended bill gives a single individual the ability to start and run a company. Under the old CAMA, there was a requirement for two or more people to be signatories before a business could be registered. The new provision is very good, especially in the SME and start-up environment where an idea is all that is needed to start a business. Under such environment, looking for the right partner could actually be a bit of a hindrance.

Another legislative change that would make it easier to start a company is in Section 31 of the amended CAMA. That section makes it possible to apply for the reservation of company names via the internet. Just imagine you had been thinking about a new company name and you have a bright idea at 3am; you can get up from your bed, walk to your laptop, and reserve the name until everything falls in place for you to start the business. In the old days, you’d have to go back to sleep, and may have forgotten the name by 6:00am when you finally wake up.

In fairness, the CAC has automated some significant aspects of the company registration process. For instance, for some time now, you could check the registration status of your company online. However, company registration in Nigeria remains a predominantly paper-and-stamp affair.

These above changes to the CAMA legislation are the ones that rock my boat at first reading of the new amendments. I encourage readers to read up on the proposed law.

Cheta Nwanze is Head of Research at SBM Intelligence