New company Act gathers support

By Anthony Areh

Capital market operators have expressed optimism that the amended Companies and Allied  Matters Act, (CAMA) 2020 assented  to by President Muhammadu Buhari would boost foreign direct investment in the country.

They said in Lagos that the amended CAMA, if well implemented, had the potential to increase foreign direct investment with attendant positive impact on foreign exchange market as well as exchange rate.

Buhari, on Aug. 7 in Abuja, assented to the CAMA Bill, 2020 recently passed by the National Assembly.

The Bill, now Companies and Allied Matters Act, 2020 (“the Act”), repeals and replaces the extant Companies and Allied Matters Act, 1990, and introduces several corporate legal innovations aimed at enhancing ease of doing business in the country.

Some of such innovation are reduction in filing fee and other reforms to encourage small and medium enterprises; provisions for the establishment of private companies with a single shareholder and limited liability partnerships and limited partnerships, among others.

Uche Uwaleke, Professor of Finance and Capital Market at the Nasarawa State University Keffi, said that the amended Act would boost foreign direct investment and investor confidence.

“There is no doubt that the amended Companies & Allied Matters Act represents a boost to the capital in Nigeria and the economy in general.

“It speaks to the ease of doing Business and has the potential to increase foreign direct investment with attendant positive impact on forex market and exchange rate.

“The provisions in the Act that will make this possible include reduction in filing fees for registration and permission to hold virtual Annual General Meetings which reduces costs considerably,” Uwaleke said.

He said that the allowance now made for limited partnerships would likely increase the number of companies that could qualify for listing on any of the Exchanges as Securities Exchanges do not admit partnership forms of business organisation.

Uwaleke anticipated that there would be an improvement in corporate governance of quoted companies by prohibiting anyone from serving as director in more than five public companies and making provision  for the protection of minority shareholders.

According to him, speedy filing of returns, now enhanced via electronic filing, and e-meetings will reduce the number of companies at the risk of delisting from the Nigerian Stock  Exchange due to late filing of returns.

Uwaleke stated further that encumbrances faced by small companies would reduce as they no longer need to appoint auditors or company secretaries.

“This could have positive impact for the Alternative Securities Market where small companies are listed,” he stated.

Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., said the amended Act came at the right time as the economy needed all the support to propel economic activities.

“It is a welcome development as cost of registering companies will reduce and the whole process has been made easy to encourage junior entrepreneurs and small businesses,” Omordion said.

He, however, called for proper implementation of the amended CAMA to enhance ease of doing business in the country.

Also speaking, Mr Moses Igbrude, immediate-past Publicity  Secretary, Independent Shareholders Association of Nigeria (ISAN), commended all the stakeholders behind the success of the amendment from conceptual stage to the final stage of signing it into law.