DIFFERENCES BETWEEN THE 2004 COMPANIES AND ALLIED MATTERS ACT AND THE 2020 COMPANIES AND ALLIED MATTERS ACT

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S/N 2004 CAMA 2020 CAMA
1.  Divided into 3 Parts (A-C)

PART A- COMPANIES

PART B- BUSINESS NAMES

PART C- INCORPORATED TRUSTEES

 

With a total of 613 Sections

Divided into 7 Parts (A-G)

PART A- CORPORATE AFFAIRS COMMISSION

PART B- INCORPORATION OF COMPANIES AND

INCIDENTAL MATTERS

PART C- THE LIMITED LIABILITY PARTNERSHIP

PART D- THE LIMITED PARTNERSHIP

PART E- BUSINESS NAMES

PART F- INCORPORATED TRUSTEES

PART G- GENERAL

 

With a total of 871 Sections 

2.  There is no provision for E-registration of companies. By virtue of Section 34(2) of CAMA 2020, the Corporate Affairs Commission would be able to establish companies using any means of electronic communication to facilitate an automated reservation of names and registrations.
3.  Section 18 of CAMA 2004 provides that any two or more persons may form and incorporate a company. The minimum number of people that can set up a private company has been reduced to one (1) by Section 18(2) of CAMA 2020
4.  No provision for limited liability partnerships to be incorporated under the Act. CAMA 2020 provides for the formation and incorporation of limited liability partnerships.
5. Section 26(5) CAMA 2004 provides that the memorandum of a company limited by Guarantee shall not be registered without the consent of the Attorney General of the Federation. CAMA 2020 Replaced this condition of getting the consent of the AG Federation with a duty on the commission to cause the application to be advertised in Three (3) national newspaper.
6.  Section 27(2) CAMA 2004 provides for the minimum share capital for a private company as N10,000 and N500,000 for a public company. CAMA 2020 upwardly reviews the minimum issued capital for both private and public company to N100,000 and N2,000,000 respectively.
7. Section 33 and 34 of 2004 CAMA provides for the form and content for the articles of association of a company which prescribe for a model article as provided by the commission. CAMA 2020 went a step further in allowing companies to have its article of association and the only instance it will follow the model prescription of the commission is when the company is unable to provide its articles of association to the commission. Section 32

CAMA 2020.

8. Section 292(6) CAMA 2004 provides for the mandatory register of directors which shall contain the necessary details of a director which shall be made available for inspection by any member of the company.

No provision for protected information for directors.

Section 323 CAMA 2020 provides and introduce certain measures to protect the directors’ information as contained in the Register of directors.
9. Section 35(3) CAMA 2004 provides that only a legal practitioner can file a statutory declaration of compliance (FORM CAC 4) Section 40 CAMA 2020 provides for just “a statement of compliance” thereby removing the statutory declaration of compliance which is only filed by a legal practitioner. The effect of this, is that:

– The document proving compliance with the Act no longer has to be by way of a statutory declaration as a simple ‘statement’ will suffice.

10. No provision for electronic signature for authentication of a document by a company. CAMA 2020 provides that a document or proceeding requiring authentication by a company may be signed by a director, secretary, or other authorized officer of the company[1], and need not be signed as a deed unless otherwise so required in this Part of this Act, provided that an electronic signature shall be deemed to satisfy the requirement for signing under this Act.
11. Every company must hold its Annual General Meetings, Section 213 CAMA 2004. Section 238 CAMA 2004, exempts all small companies as well as companies that have not more than one shareholder from the mandatory requirement of Annual General Meetings.
12. Section 292 (1) of CAMA provides that “Every company shall keep at its registered office, a register of its directors and secretaries” This provision is mandatory. 2020 CAMA provides that “Every public company shall maintain a register of secretaries…” This provision implies that public companies need not follow the previous Act (CAMA 2004) which provides for a mandatory register of Secretaries to be kept.
13. No provision for public companies to display their audited accounts on their websites. CAMA 2020 stipulates that Public companies are to display their audited accounts on their websites so that the public is kept informed of their activities.
14. CAMA 2004 makes it unlawful for any person or association to carry on business in Nigeria as a company or a business name. CAMA 2020 makes it lawful for any person or association of persons to carry on business in Nigeria as a company, limited liability partnership, or under a business name.
15. Fines are ridiculously low and can be easily payed by a defaulter The fines have been reviewed and some left open ended.
16. No provisions for electronic transfer of shares. CAMA 2020 provides for electronic transfer of shares
17. Virtual meetings is not provided for shareholders of private companies under CAMA 2004 Shareholders of private companies are allowed to convene general meetings electronically where their articles so permit.
18. No provision for an “Administrative Committee” Section 843 of the Act proposes the establishment of a committee called “the Administrative Committee.”
19. No provision for the submission of Bi-annual statement of affairs for trustees of an association. The Act brings provides for a new requirement for the trustees of an association to submit a bi-annual statement of affairs of the association to the Commission.
20. All companies must have a company secretary Small companies are not required to have a company secretary.
21. No limit on multiple directorships as long as it does not affect the directors’ fiduciary duties to each company. CAMA 2020 provides that a person shall not be a director in more than five (5) public companies. Any person who is a director in more than five (5) public companies shall, within two years from the date of the Act, resign as a director of all but five (5) of the companies. [2]

 

 

HIGHLIGHTS OF THE NEW PROVISIONS IN 2020 CAMA

  • Provision for single member/shareholder for private companies under Section 18(2) CAMA 2020 ­ The minimum number of people that can set­up a private company has been reduced to one (1) by the provisions of the CAMA 2020 which contradicts the provision of CAMA 2004 which provides for a minimum requirement of two members/shareholders.
  • Replacement of ‘Authorized Share Capital’ with reviewed “Minimum Issued Share Capital” under Section 27(2)(a)CAMA 2020 – This subsection provides that if a company has a share capital­ the memorandum of association of such company shall provide for a minimum issued share capital which the minimum shall be N100,000.00 (Hundred Thousand Naira) in the case of a private company and N2,000,000.00 (Two Million Naira), in the case of a public company, with which the company proposes to be registered, and the allotment thereof into shares of a fixed amount.
  • The Minister has the power to prescribe model Articles of Association and also allow for different model articles prescribed for different descriptions of companies. A company may decide to adopt all or any of the provisions of model articles under Section 33 CAMA 2020. This provides that it is the companies choice that will determine the article they prefer to use; this provision contradict the model article requirement which all companies must follow under the CAMA 2004.
  • Statement of Compliance to be signed by the applicant or his agent confirming that the requirements of the law with respect to registration has been complied with thereby expunging the requirement for a legal practitioner or Notary Public to attest the Statement of Compliance under CAMA 2004.
  • The use of Common Seal is no longer mandatory for companies by virtue of Section 98 CAMA 2020.
  • CAMA 2020 provides that a document or proceeding requiring authentication by a company may be signed by a director, secretary, or other authorized officer of the company, provided that an electronic signature shall be deemed to satisfy the requirement for signing a document or proceeding under Section 101 CAMA, 2020 provided that an electronic signature shall be adjudged to satisfy the requirement for signing a document or proceeding under Section 101 CAMA, 2020[3].
  • Provision for Electronic transfer of shares under Section 175(1) CAMA 2020.
  • Section 183(4) CAMA 2020, allows for the non-prohibition of a private company from giving financial assistance in a case where the acquisition of shares in question is or was an acquisition of shares in the company or, if it is a subsidiary of another private company[4].
  • Section 184(1) of the new Act allows a limited liability company to purchase its own shares including redeemable shares.
  • Small companies and/or any company having a single shareholder are not mandated to hold an Annual General Meeting under Section 237(1) CAMA 2020.
  • Shareholders of private companies are allowed to convene general meetings electronically where their articles so permit by virtue of Section 240(2) CAMA 2020. Also, Section 240(1) provides that with the exception of small companies and companies having a single shareholder, all statutory and annual general meetings shall be held in Nigeria[5].
  • Section 265(6) CAMA 2020 allows for the enhancing of minority protection through the restriction of a director from simultaneously holding the office of Chairman and Chief Executive Officer of a public company.
  • The new act prohibits a person from being a director in more than five public companies at a time under Section307(1) CAMA 2020.
  • Exemption from appointment of company secretary for small private companies has been introduced under Section330(1) CAMA 2020.
  • Section 374(6) of the Act stipulates each public company shall keep its audited accounts displayed on its website.
  • Section 839(1) of the new Act allows the Commission to by order suspend the trustees of an association and appoint an interim manager or managers to manage the affairs of an association.
  • Section 845(1) CAMA 2020 provides for a new requirement for the trustees of an association to submit a bi­annual statement of affairs of the association to the Commission of which a failure to comply will render every trustee liable to a penalty for every day during which the default continues.
  • Merger of Incorporated Trustees has been introduced as two or more associations with similar aims and objects under such terms and conditions as may be prescribed by the CAC can be merged under Section 849 CAMA 2020.
  • Section 851 of the new Act establishes an Administrative Proceedings Committee.
  • Section 860(1)(2) CAMA 2020 provides for certified true copies of electronically filed documents to be admissible in evidence as same will have equal validity as the original documents.

 

 

REFERENCES:

[1] Banwo & Ighodalo ‘Companies and Allied Matters Act 2020: Reforming Provisions That Impact the Nigerian Business Community’ 11 Aug 2020.

[2] Alsec Nominees Limited ‘ CAMA 2020- Highlights of new provisions on governance and management’

[3] Banwo & Ighodalo ‘Companies and Allied Matters Act 2020: Reforming Provisions That Impact the Nigerian Business Community’ 11 Aug 2020.

[4] Section 183(4) Companies and Allied Matters Act,2004.

[5] Section 240 Companies and Allied Matters Act, 2020.

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