Olajide Olutuyi, Co-Founder/ CEO, Top-Olax Energy Limited
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Religious bodies and CAMA 2020 09 Sep 2020
From left: General Overseer of the Redeemed Christian Church of God, Pastor E. A. Adeboye; Nigerian
President Muhammadu Buhari; Vice President Yemi Osinbajo; and Chief of Staff to the President
Ibrahim Gambari during a meeting last month in Aso Rock Villa, Abuja
A lot of brouhaha has been generated since the enactment of the Companies and Allied Matters Act (CAMA) 2020 in Nigeria. The Act, which was signed into law by President Muhammadu Buhari last month, was yet to be gazetted at the time of writing this article. Although it is not perfect, the vilification of the new Act or CAMA 2020, as it is now widely known, has overshadowed its benefits.
The new law could be considered one of the major business legislations in the country in several years. The Act should help in enhancing the ease of doing business in Nigeria. For this, kudos must be given to the Presidential Enabling Business Environment Council (PEBEC).
Section 18(2) of the new Act provides that a company can now have just one shareholder as against the requirement for more than one shareholder under the now-repealed CAMA 1990. Under CAMA 2020, Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs), which hitherto were not available in Nigeria, can now be set up in the country. LLPs are very common in developed countries and professionals like lawyers and accountants would appreciate the introduction of such entities in terms of how they improve the business environment in Nigeria.
CAMA 2020 allows for remote or virtual general meetings of private companies, provided such meetings are in accordance with the company’s Articles of Association. This is in line with global best practices. The law also recognises electronic filing of certified true copies of a company’s documents.
Under Section 300(1) of the new Act, the hitherto mandatory requirement for a company secretary is now optional for private companies and mandatory for public companies. Section 402 of the new Act makes it optional for small business to appoint auditors.
The new Act encourages more transparency by requiring full disclosure of persons with significant control of companies. This implies that a company can no longer be controlled by a person hiding behind a veil.
The new Act also provides for the reduction of filing fees for registration of charges payable to the Corporate Affairs Commission (CAC). Section 223(12) reduces the fees payable to 0.35 per cent of the value of the charges. This amounts to about 65 per cent reduction when compared to the requirement in the repealed Act. Furthermore, the procurement of a common seal, which was hitherto mandatory, is no longer a requirement.
As a business owner, I find these changes and others very critical to improving the operation of businesses in Nigeria. However, all these important provisions have been overshadowed by Section 839 of the new Act.
The contentious section has been called so many names in the last weeks. Some have called it “satanic”, others called it “ungodly”. These labels are misguided.
Section 839 (1) of the new Act allows the Commission to, under certain circumstances, suspend the trustees of an association and appoint an interim manager or managers to manage the affairs of the association. The circumstances that could warrant such action include misconduct or mismanagement in the administration of the association or if the affairs of the association are being run fraudulently. One of the questions to ask is whether critics of the new law are suggesting, for instance, that there should be no repercussions if the associations are run fraudulently.
Unbeknownst to those screaming blue murder, there is a sterner provision in CAMA 1990. Section 691 of the repealed law states that a corporate body may be dissolved and goes on to specify the conditions that may warrant the dissolution, including by the court on a petition brought by the Commission or the association’s trustees. As a matter of fact, I find CAMA 1990 a more stringent law than CAMA 2020, as the former law calls for outright dissolution.
Promoters of associations and religious institutions need to realise that the only reason they are not paying tax is because the associations were set up for public good and for charitable causes. Exemption from tax ideally subjects associations to higher public scrutiny than private corporations.
For over 12 years, I have been dealing with the Canada Revenue Agency (CRA) through its Charities Directorate on the registration and granting of charitable status to organisations. Over the years, I must have been responsible for the successful applications of over 15 Nigeria-linked religious organisations. I see how the promoters of these churches struggle to come to terms with the fact that the churches are not theirs. Religious organisations, non-profits and charities rely on public trust. They exist to provide services for the benefit of the public.
To better understand the amount of public scrutiny given to charitable organisations in Canada, you will find all the directors of any charity by doing a search on the website of the CRA. You will also find their financial reports. But it is not so for private companies.
Charity fraud is a very common fraud in North America. Hence, both the CRA and the United States Internal Revenue Service (IRS) have put in place regulations and mechanisms to ensure that perpetrators are caught and prosecuted. From 1992 to 2017, the registration of about 447 Canadian charitable organisations were revoked subsequent to an audit.
For the avoidance of doubt, Nigerian laws are adequate in providing protection for charities and other associations. This should help in allaying any fears about potential CAC’s overreach. Hence, the brouhaha is very unnecessary and supererogatory.
There are two takeaways from the public outcry following the enactment of CAMA 2020. Firstly, religious institutions and their leaders stoke fear among their members. This is wrong. Democratic tenets require people and organisations, including religious institutions, to be under the law. This, however, does not preclude the fact that democracy also gives individuals and entities the right to protest against unjust legislation. But the outcry over CAMA 2020 by some religious organisations shows they are not leading their members in the direction that should make them well-informed and law-abiding citizens, and people who should be seeking the common good.
Secondly, like I mentioned in a previous column in this publication, government agencies in Nigeria are not doing exactly what they were set up to do. If the National Orientation Agency (NOA) and even CAC were operating optimally, they should have embarked on aggressive campaigns to enlighten citizens on the new law.
To be fair, some religious leaders have countered some of the claims being made as to why religious bodies cannot be regulated. For instance, some people have said the church is not under government’s authority but under the authority of God. Pastor Yomi Kasali, senior pastor of the Foundation of Truth Assembly, said: “Whoever said that absolutely does not know the bible. The church cannot exist outside a society. If they say the church is under God’s authority, why did they go to register at CAC? Why did they buy land from government and collect Certificate of Occupancy? Is it God that sold the land of that church to them? Why do they go to banks to open accounts? Why can’t they keep the money inside their churches?” According to Hakeem Yusuf, National Publicity Secretary of NAFSAT, “I don’t see anything wrong in being regulated. If we are true to the divinity, nobody should be afraid of being checked.”
Moving forward, the CAC should embark on a sensitization campaign on the new Act, including clarifying the contentious section. A training programme for associations and religious institutions on how they can be compliant with the law and be financially accountable would also be appropriate. Trustees of charities ought to understand their roles as custodians of those organisations. Hence, they must know they are accountable to the public.
The CAC should also move to remove from any association’s trustees who are not on arms’ length basis to ensure there are no conflicts of interests. As obtained in other climes, over 50 per cent of trustees of non-profits and charities must not be related, or have any ties, to the boards.
It is beyond any doubt that our religious institutions must become exemplary with financial accountability. It is time for them to start setting example for secular organisations. We must be able to pick up the bank statements of a religious institution without finding the personal expenses of the trustees in it. CAMA 2020 is a right step in the right direction and it should be embraced, while clarity should be given to the grey areas. For now, let the vilification stop.