UNDERSTANDING THE NEW COMPANIES AND ALLIED MATTERS ACT (CAMA) 2019 PT 2
The New Companies and Allied Matters Act (CAMA) 2019 was signed into law by President Buhari on the 7th of August 2020. The CAMA 2019 repeals the Companies and Allied Matters Act, 1990, and its subsequent amendments. It also introduces new provisions that promote the ease of doing business in the country as well as reduce regulatory hurdles.
This part talks about electronic registration of companies, name reservation, consent of the Attorney General of the Federation for registration of Limited Liability Companies, and minimum issued share capital under the new CAMA.
Section 34(2) of the new CAMA gives effect to the already existing electronic reservation and registration of Companies. The section empowers the Corporate Affairs Commission (“CAC”) to establish companies using any means of electronic communication to facilitate an automated reservation of names and registration. The process of e-registration is commendable as it is faster than the physical process, e-registration also helps to reduce cost as there will be no need to pay transport to the Commission to carry out the registration. This will help the Promoters to be more efficient and deliver the Client’s brief timeously.
Reservation of Name
Section 31 (5) of the new CAMA has empowered the Corporate Affairs Commission to withdraw or cancel any approval given where it discovers that the approval was fraudulently or improperly procured.
Consent of the Attorney General of the Federation for memorandum of Companies Ltd by Guarantee.
Section 26(5) of CAMA 2004, which provides that the Memorandum of a company limited by Guarantee shall not be registered without the authority of the Attorney General of the Federation, has been deleted by the new CAMA. It replaces this with a duty on the Commission to cause the application to be advertised in Three (3) national newspapers. This will ameliorate the difficulty of registering a Limited by Guarantee Company and make the process less tedious for the Promoters.
Minimum Issued Share Capital
Section 27(2) of the new CAMA 2020 upwardly reviews the minimum issued share capital for both private and public companies. For private companies, it has been increased from N10,000.00 to N100,000.00 while for public companies, from N500,000 to N2,000,000.00.
The use of issued share capital under the new CAMA as opposed to the previous use of authorized share capital under the old CAMA
The new CAMA also increases the minimum liability of members of a Company Limited by Guarantee from N10,000 to N100,000.
The Implication is that there will be an increase of Stamp Duty fee for registering a Company with the minimum share capital. The fees for registering a Public Company with the minimum share capital will also increase.