Nigeria may begin to witness increased investments, revenue generation and job creation as the Senate on Tuesday, removed the regulatory bottlenecks for opening businesses, with the passage of the Companies and Allied Matters Act (CAMA).
The repeal and re-enactment of the Companies and Allied Matters Act (CAMA) passed by the 8th Senate yesterday, 15 May, 2018, is seen as one of the biggest business reform bills passed in Nigeria in over 28 years.
The bill will help to make Nigeria’s business environment as competitive as its counterparts around the world; allow business owners to now register their businesses in a faster and more efficient way — using technology; removes all the unnecessary regulatory provisions such as the requirement for ‘annual general meetings’ and ‘company secretaries’; and reduce the minimum share capital for all companies and start-ups in Nigeria, which will encourage more investments and create new jobs.
CAMA will also create the Limited Liability Partnership (LLP) which is a new form of legal identity for businesses in Nigeria, targeted at increasing foreign investment in the country as well as give legal backing to enable Nigerians register their businesses from anywhere in the country through e-Registration system.
Speaking after the bill passed Third Reading at plenary on Tuesday, Senate President, Bukola Saraki, stated that the enactment of CAMA was a significant milestone in the 8th Senate’s Legislative Agenda.
He said the 8th Senate has made history with the repeal and re-enactment of the Companies and Allied Matters Act (CAMA), adding that this is biggest business reform bill ever passed by any legislature in the country.
“With the passage of CAMA, which is by far the biggest and one of the most far-reaching legislation ever passed in any legislature in our country, we have now put in place a regulatory framework to promote the ease of doing business and reduce regulatory hurdles.”
“This is a pro-business law. This bill that we have just passed will show the audacity that we have to move Nigerian businesses into a new era of success and development,” Saraki said.
“We are truly now walking the talk,” the President of the Senate said, “With the passage of CAMA, we are saying to the rest of the world that Nigeria is ready for business and the government of Nigeria is ready to support small scale industries to promote innovations, and encourage enterprise”
Analysts see the amendment of CAMA as a step further to attaining a better doing business environment in Africa’s largest economy, which in the long term can spur economic growth.
“The re-enactment of the CAMA will make the ease of doing business in Nigeria to be much more convenient, and this further compliments the efforts by the ease of doing business committee championed by Yemi Osinbajo, the Vice president of Nigeria,” Bismarck Rewane, MD of Financial Derivatives said.
The new CAMA bill is expected to make Nigeria’s business environment as competitive as its counterparts around the world.
“This is an excellent bill and the right “law” to be in the country. I also believe it will help to generate tax revenue for the government as more business entities can now be created in a form of company from which government can earn taxes,” Ayodele Akinwunmi, head of research, FSDH Merchant Bank limited said in an emailed response to BusinessDay.
Another benefit of the amended CAMA bill is that it will allow business owners to now register their businesses in a faster and more efficient way- using technology.
“Any law that supports ease of registering business is welcomed, as it will support economic growth in a long run,” Ibrahim Tajudeen, Head of Research at Chapel Hill.
Entrepreneurs in the country are expected to welcome the new development.
“I believe the first direct impact would be on the growth of the economy. Now unregistered start-ups can now register easily and new start-ups can now spring up,” Dayo Tinkerman , C.E.O, BrandieGroup said on phone.
“These would provide more employment opportunities and more taxes for the government,” Tinkerman further added.
The new development is widely believed would help to further improve the current position of the country on the ease of doing World Bank rankings
“Really this will ultimately be positive on my business by the time it is implemented. I will be able to register some other business ideas I have without having to go through all the rigorous processes in the present registration system and since I can have all the information I need online it would be better for me,” Tolu Craig, CEO, PTwebs said
“And it will make people begin to trust the act of doing business transactions the more online,” Craig further added
Typically, businesses in the country necessarily starts with the company law of Nigeria. In 1912, the first company law was the Companies Ordinance of 1912. This was a local enactment of the Companies (Consolidation) Act 1908 of England. Thereafter, Nigeria had the Companies Ordinance 1917 and five years later, the Companies Ordinance 1922.
The next major change was in 1968 when the Companies Decree 1968 was promulgated and that decree remained in force until the coming of the Companies and Allied Matters Decree No 1 of 1990. That decree is (with amendments) still the company law of Nigeria but it is now known as the Companies and Allied Matters Act 1990
Also business start-ups said that this new bill has three key developments that will impact positively on their businesses.
Firstly, with the amended bill, one individual can now open and run a company-unlike before when two or more people are required to run a business. This is especially good for start-ups and young entrepreneurs.
Secondly the ease of access for company registration will now be better because start-ups and small scale businesses can now register their businesses online from the comfort of their homes or offices.
And lastly, the limited liability partnership was formerly practised only in Lagos where a legal partnership has a corporate personality but now the new bill will expand the access throughout the country thereby increasing the potential for more development in the space.
On the downside risk of the bill, Johnson Chukwu, managing director/CEO of Cowry Asset Management limited pointed out that one individual owning a company defeats the law of legal entity.
Tajudeen of Chapel Hill said the ability of one person to open and register a company will reduce the potential of good governance that can be experienced in an establishment compared to when there are two or more shareholders in the company, as the one person may choose to run the company in any way that best appeals to him or her. But overall, he sees the bill as positive.