Nigeria’s newly signed Companies and Allied Matters Act 2020 will attract Foreign Direct Investment if properly implemented, the Head Small and Medium Enterprises Advisory, First City Monument Bank, Oluyemi Rufai, has said.
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President, Muhammadu Buhari, had in August signed the revised CAMA 2020 which by implication repeals the extant law of Companies and Allied Matters Act 1990.
A look at the features of the new legislation shows a concerted effort made by the government to enhance ease of doing business in Africa’s most populous nation.
The new CAMA is also designed to enhance corporate governance and reduce regulatory hurdles which would reshape the face of Nigeria’s economic activities over time.
Hit by the pandemic and crash in oil prices, the the government sees the CAMA as a catalyst to launch the country as an entrepreneurial hub of Africa.
The government has designed the new CAMA under S. 265 (6) to protect interest of minority shareholders.
The new legislation under S.18(2) has made provision to establish a private company with only one member or shareholder.
The legislation under S.861 makes provision for electronic filing, while S.176(1) allows electronic share transfer and e-meetings for private companies.
The concept of authorised share capital has equally been replaced in S.27 of the Act with the concept of minimum share capital.
The minimum share capital allows promoter(s) of a business not to pay for shares that are not needed at a specific time.
The legislation also has provided for the establishment of a Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs) which combines the organisational flexibility and tax status of a partnership with the limited liability of members of a company.
Section 849 of the new Act provides for merger between two or more associations with similar aims and objects under such terms and conditions as may be prescribed by the Corporate Affairs Commission.
Rufai said on WebTv Market Review that the legislation will attract private equity investment into the Nigerian economy.
Rufai said, “The intention for the CAMA is right, but the issue for me is with the implementation.”
He said the government is making it easy for businesses to register, hold online meetings and has also introduced the LLPs.
He said businesses complain about multiple taxation, adding that harmonising this while implementing the CAMA will go a long way to attract Foreign Direct Investment.
He explained that Nigerian based private equity firms should learn to float multiple currency options to improve their fundings as they leverage on the new legislation in attracting FDI.
He stated, “Private equity firms should begin to come up with local currency denominated equity funds. When you hear of private equity firms, most of us look to the West, the US and Europe to attract funding. To attract FDI, the policy makers need to, believe in our country first.
“We need to be creative, come up with multi currency denominated funds and a bit of dollar as part of it.”