BACKGROUND

The Companies and Allied Matters Act (Chapter C20) Laws of the Federation of Nigeria 2004 ("CAMA 1990") was initially made law in Nigeria in 1990 as a decree of the military government.  It was modelled on the English Companies Act 1985.  For thirty years, there were no significant amendments to the CAMA 1990, notwithstanding that England has, over the past three decades, amended and replaced its own Companies Act.  Nigerian companies had to, essentially, rely on a 30-year old law to govern the way businesses operate in our dynamic and exponentially evolving global community.  However, this all changed on Friday the 7th of August 2020, when President Muhammadu Buhari, gave his assent to the Companies and Allied Matters Act 2020 ("CAMA 2020"). 

In the course of a 12-part series, Udo Udoma & Belo-Osagie will provide a review of the provisions of the CAMA 2020, highlighting changes that have been introduced into the body of Nigerian company law by this ground-breaking legislation.

TEMPLATE CONSTITUTIONAL DOCUMENTS

The CAMA 1990 set out templates of articles of association ("Articles") for different types of companies. These were all set out in Table A of the First Schedule and contained provisions relating to classes of shares, meetings and voting.  These templates have been deleted in the CAMA 2020 and the CAMA 2020 provides in section 33(1) that the Minister of Trade may, by regulations, prescribe model Articles for companies.  In practice, these regulations would be prepared by the CAC and issued to the public after they have been approved by the Minister.  This change is progressive as it will ensure that the form of constitutional documents can be amended by the CAC and Minister as required without the need for an amendment of the Act through the formal legislative process.

Section 33(2) and (3) of CAMA 2020 also provides that, different models of Articles can be prescribed for different types of companies, and companies are permitted to adopt all or any of the provisions of model Articles. Section 33(4) provides that in relation to existing companies, any amendment of model Articles by regulations will not affect companies that were incorporated before the amendment takes effect. Section 34 provides that for new companies that are incorporated after the CAMA 2020 was signed into law, upon incorporation, the relevant model Articles in force as at the date of registration of the new company will form part of that company's Articles (even where the company has registered Articles at incorporation), unless the relevant model Articles are specifically excluded or modified.

Under the CAMA 1990, every company was required to have a common seal, the use of which had to be regulated by the company's Articles. This seal, which was also usually referred to as the "company seal" was typically affixed to agreements, deeds and other official documents executed by companies.  The requirement for every company to have a common seal has been deleted in the CAMA 2020.  As a result by virtue of section 98, a company may choose to have a common seal but need not have one.

The CAMA 2020 in section 103 addresses situations where another law or regulation requires a document to be executed under the common seal of a company or prescribes consequences for not sealing.  In such circumstances, the CAMA 2020 provides that the relevant document would be deemed to have satisfied the provisions of that law or regulation if the document is signed (a) in the case of a document or proceeding requiring authentication, by a director, secretary, or other authorised officer of the company; or (b) in the case of a document described or expressed as a deed, either by (i) a director and the secretary of the company (ii) at least 2 directors of the company; or (iii) a director of the company in the presence of at least one witness who has attested the signature.

If a company chooses to have a common seal, the design and the use of the seal must be regulated by the company's Articles. The CAMA 2020 also requires that the name of the relevant company must be engraved in legible characters on the seal.

Other entities that are permitted, under the CAMA 2020, to have a common seal, if they so choose, are limited liability partnerships and incorporated trustees.   

The CAMA 2020 in section 320 introduces a new statutory register that must be kept by companies.  This register, called the Register of Directors' Residential Addresses, is required to state the usual residential addresses of the company's directors. This register differs from the Register of Directors that section 318 of CAMA 2020 also requires companies to maintain; the Register of Directors only contains information on the "service address" of a director which, in some cases, is the company's registered office.  If, however, a director's usual residential address is the same as his service address (as indicated in the company's Register of Directors), then the Register of Directors' Residential Addresses only needs to contain an entry to that effect.  Section 321 of the CAMA 2020 provides that If there is any change in the information contained in the Register of Directors or the Register of Directors' Residential Addresses, the company must notify the CAC of such change within 14 days. 

To address questions of security, the CAMA 2020 in sections 323 to 329 provides for the restriction on use and disclosure of directors' address.  The sections provide that information relating to a director's usual residential address is considered to be protected information and, this information does not cease to be protected information when the director resigns from the board of that company. What this means is that the company cannot use or disclose this information in relation to any director without the consent of the relevant director unless it is for the purpose of (i) communicating with the relevant director (ii) complying with the requirements of the CAMA Bill or (iii) complying with a court order.  There are similar restrictions on the CAC's ability to use or disclose such protected information.   The CAC may, however, disclose such information to a credit reference agency or to a public authority - subject to any regulations issued by the Minister prescribing conditions that must be satisfied before protected information relating to a director may be disclosed to any such public authority.

The CAMA 2020 in section 119 also introduces a new statutory register to be maintained by Nigerian companies - a register of persons with significant control.  In the CAMA 1990, persons holding shares amounting to 10% or more of a public company were deemed to be 'substantial shareholders' and were required to make disclosures to the company.  In section 120 of the CAMA 2020, this threshold has been reduced to 5%.  In addition, disclosures will now be required of persons with significant control (i.e. persons who hold 5% or more of the voting rights) in private and public companies, as well as limited liability partnerships.  Going forward, every person who holds 5% or more of the voting rights in a company must notify the company within 7 days and state the particulars of such control.

These innovations of the CAMA 2020 are to promote transparency and strengthen the ability of companies and the government to combat asset shielding.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.