Businesses do not exist in a vacuum. They exist in an environment regulated by the government of that country. The Government and Businesses are interdependent. The private sector is the engine of a nation, but it must be regulated. Thus, Businesses must be aware of the changes in the regulatory environment and know how it impacts their operations.
The Companies and Allied Matters Act (CAMA), a regulation that oversees the affairs of all Companies and Businesses in Nigeria, underwent some changes earlier in the year. Before highlighting the changes that affect Small and Medium enterprises, it is essential to state that there’s a difference between an incorporated company and a registered business name. Reference to ‘company’ applies only to those businesses registered and incorporated with CAC. In contrast, those businesses with a ‘Registration of Business Name’ Certificate are not considered Companies under the law.
These are some of the changes you should be aware of:
- The Law has now made the incorporation of a private Company with only one member possible. So, Sole Proprietors can now incorporate Companies alone.
- The Law has made it possible for Companies to have a single director.
- It has become optional for a company to own and use a common seal.
- Considering the rising technological advancements, it has now become possible for companies to append electronic signatures to documents.
- There is now an adjustment to the categorization of small Companies. A small company has an annual turnover of not more than ₦120 million or a net asset value of not more than 60 million.
- Small Companies are not required to conduct Annual General Meetings (AGMs).
- The Act enables Companies to conduct Virtual Annual General Meetings (AGMs).
- Small Companies may decide whether or not to appoint a Company Secretary.
- Small Companies are exempted from appointing an auditor to audit their account in any financial year.
- Small Companies can now hold general meetings outside Nigeria.
- A business can now register as a Limited Partnership (LP) or a Limited Liability Partnership (LLP). The LLP’s structure combines the limited liability advantage of a company and the benefits of a partnership, e.g., tax benefits.
- The introduction of Company Rescue options, such as Administration and Company Voluntary Arrangements.
- Companies can now buy back their shares from shareholders, subject to certain conditions.
- Finally, the law provides for the electronic filing of documents at the Corporate Affairs Commission(CAC).
Hopefully, these changes will help improve the ease of doing business in Nigeria.
