1. INTRODUCTION

1.1. The most notable addition to the business industry in the first half of the year 2023 emerged on 10th February 2023 with the signing of the first facilitation bill into law. The Business Facilitation (Miscellaneous Provisions) Act 2023 (the “Act”) marks a pivotal point in ridding bureaucratic constraints from businesses conducted in Nigeria, thus seeking to provide an enabling environment for businesses in the Nigerian milieu. The Act, which is applicable throughout Nigeria and purports to ensure efficiency and transparency in the public service, amends 21 business-related laws.

1.2. Chief among the 21 business-related laws amended by the Act are the Companies and Allied Matters Act 2020 (“CAMA”), the Investment and Securities Act (“ISA”), and Trademarks Act (“TA”), which form the focal point of our analysis.

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2. GENERAL PROVISIONS

2.1. The Act mandates the Ministries, Departments, and Agencies (“MDA”) of the Federal Government, which provide products and services, to publish a complete list of requirements required to obtain the products and services.

2.2. According to the Act, if you apply for a government service and the relevant MDA does not communicate their approval or rejection within the specified time mentioned in the published list, your application will be considered approved and granted automatically.

2.3. To ensure transparency, Ministries, Departments, and Agencies (MDAs) providing products and services are required to publish a complete list of requirements. Whether you submit your application physically or electronically, it is essential to keep a copy as proof of the submission date, which determines the starting point of the application timeline.

2.4. It is important for officers of the relevant MDAs to act promptly on applications. Failure to do so within the stipulated timeline, without a lawful reason, will be considered misconduct. Such misconduct can lead to disciplinary proceedings under the civil or public service rules, ensuring accountability and efficient service delivery.

2.5. Section 8 of the Act emphasizes the significance of automating all application processes at the Corporate Affairs Commission (CAC). The Registrar-General of the CAC is responsible for ensuring that the entire application process, from start to finish, is fully automated. This step aims to streamline procedures and improve overall efficiency.

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3. AMENDMENTS PROVIDED BY THE BUSINESS FACILITATION (MISCELLANEOUS PROVISIONS) ACT TO CERTAIN PORTIONS OF THE COMPANIES AND ALLIED MATTERS ACT 2020

3.1. Part I of the Schedule to the Act provides for the amendments to CAMA which we note in the following foregoing paragraphs.

Foreign companies intending to carry on business in Nigeria

3.2. Before the Act, Section 78(3) of the Companies and Allied Matters Act (CAMA) dealt with foreign companies wishing to conduct business in Nigeria. However, the Act introduced a new provision, subsection (c), which states that foreign companies can be exempted from registration under CAMA if they are already exempted under any other existing law passed by the National Assembly.

3.3. In simpler terms, this means that the Act now allows foreign companies to seek exemption from registration under CAMA if they are already exempted under another law passed by the National Assembly.

3.4. To better understand the impact of this addition, it is important to consider the provisions of Section 80(1) (a-d) and Section 78(3) (a-b) in conjunction with the new subsection (c). These sections outline the conditions and requirements for foreign companies conducting business in Nigeria.

3.5. In summary, the Act has introduced an additional ground for foreign companies to potentially be exempted from registration under CAMA. This change provides more flexibility and options for foreign companies seeking to operate in Nigeria, as they may now be eligible for exemption under other applicable laws.

Increase of issued share capital and notice of increase

3.6. Previously, Section 127(1) of the Companies and Allied Matters Act (CAMA) stated that a company could only increase its share capital through the allotment of shares at a general meeting of the company. However, the Act has made a change to this provision through Section 3 of the Schedule.

3.7. The new Section 127(1) of CAMA provides that “A company having a share capital can increase its issued share capital by allotment of new shares of such amount as it considers expedient-

a. In a general meeting;

b. by a resolution of the board of directors, subject to the condition or directions that may be imposed in the Articles or by the company in a general meeting.”

In simpler terms, the Act now allows companies to increase their share capital through the allotment of new shares either at a general meeting or through a resolution by the board of directors. This change provides more flexibility for companies in deciding how to increase their share capital and reflects a more practical approach to corporate decision-making.

Pre-emptive rights of existing Shareholders

3.8. Section 4 of the Schedule to the Act brings about some changes to Section 142 of the Companies and Allied Matters Act (CAMA) related to the pre-emptive right of shareholders in private companies.

3.9. Firstly, the amendment in Section 4 corrects a typographical error by inserting the word "Private" after the letter "A" in the first line of Section 142(1) of CAMA. This correction clarifies that the principle of pre-emptive right applies specifically to private companies. Pre-emptive right allows existing shareholders to have the first opportunity to purchase additional shares before they are offered to external parties.

3.10. Secondly, the Act introduces a new paragraph "c" in Section 142(2) of CAMA, which outlines the timeline for accepting an offer of shares to existing shareholders. According to the new provision, if an offer is made to existing shareholders, they have a maximum of 21 days to accept the offer. If the offer is not accepted within this timeframe, it will be considered declined automatically.

3.11. Before this amendment, the previous provision did not specify a specific time frame for the deemed decline of an offer. It only referred to a "reasonable time," which was open to interpretation. The introduction of the 21-day timeline brings clarity and sets a clear maximum period for shareholders to respond to share offers.

Authority to allot shares

3.12. Section 5 of the Act brings about a change in Section 149(1) of the Companies and Allied Matters Act (CAMA) regarding the authority to allot shares in a company. Previously, Section 149(1) stated that the power to allot shares is generally vested in the company. However, for a private company, this power could be delegated to the directors, subject to any conditions or directions specified in the company's Articles of Association or by a resolution passed during a general meeting.

3.13. The new provision substitutes Section 149(1) with a clearer rule. According to the new provision, the directors of a company cannot exercise the power to allot shares unless they have express authority to do so. It states that “The powers to allot shares of a company are not exercised by the directors of a company unless express authority to do so has been vested in the board of directors by-

i. The company in a general meeting or

ii. The company’s articles.”

This change aims to ensure that the power to allot shares is clearly defined and in line with the decisions made by the shareholders or the provisions stated in the company's Articles of Association.

Return as to allotment

3.14. The new provision substitutes the one-month timeline with a shorter duration of 15 days. Now, companies limited by shares, both private and public, are required to submit their returns on allotment to the CAC within 15 days. This means that companies have a reduced timeframe to provide the required documents and information regarding the allotment of shares.

3.15. This change aims to promote timeliness and efficiency in the reporting of share allotments, enabling the CAC to have up-to-date and accurate information regarding the allocation of shares in companies.

Issue of Share Certificates

3.16. Section 7 of the Schedule to the Act introduces changes to Section 171 of the Companies and Allied Matters Act (CAMA) regarding the issue of share certificates. Previously, the section did not specify the form in which share certificates could be issued.

3.17. The amendment adds a new subsection 7 to Section 171, clarifying that a share certificate can be issued in either physical or electronic form. This means that companies now have the option to provide shareholders with share certificates in traditional paper form or electronically, such as in digital or electronic record formats.

Instrument of Transfer

3.18. Section 8 amends Section 181 of CAMA, which deals with the transfer of shares. Firstly, the marginal note, which provides a summary of the content, is changed from "Certification of Transfer" to "Instrument of Transfer." This amendment provides a more accurate description of the subject matter covered in Section 181, which focuses on the instrument (document) used for transferring shares rather than the certification of the transfer.

3.19. Additionally, the Act substitutes Section 181(1) with a new subsection. The new provision replaces the phrase “...certificate of transfer" in the penultimate line with "…instrument of Transfer." This change aligns the language used in the section with the amended marginal note, ensuring consistency and clarity in the terminology.

Preferential payment to debenture holders in certain cases

3.20. Section 9 of the Schedule to the Act replaces the previous Section 207(4) of CAMA with a new provision taking into account the provision of Section 204 of CAMA. The new Section 207 provides thus “Notwithstanding any provision in this Bill or any other law to the contrary and without prejudice to the provisions of

Section 204, all sums realized from the property covered by the floating charge shall be applied in the discharge of the principal, interest, and costs owing to the debenture holders:

3.21. Provided that if there is a surplus, such surplus shall be paid to the liquidator to be applied in payment of the ordinary unsecured debts of the company unless the company is also subject to an insolvency proceeding, in which case the surplus shall be distributed in accordance with the relevant insolvency legislation applicable to the company.”

Appointment of Directors

3.22. Section 10 of the Schedule to the Act amends the provisions of Section 275(2) of CAMA, which deals with the appointment of directors in public companies. Previously, the section did not specify any consequences for non-compliance with its provisions.

3.23. The amendment introduces a new subsection (2) to Section 275, which states: "Any contravention of this section shall be liable to a penalty as the Commission shall specify in its regulation." This means that if a public company fails to comply with the requirements of Section 275 regarding the appointment of directors, it will be subject to a penalty determined by the relevant regulatory commission.

3.24. The introduction of this penalty provision aims to ensure compliance with the rules governing the appointment of directors in public companies and provides a deterrent against non-compliance.

Electronic Annual General Meeting (AGM)

3.25. Section 11 of the Schedule to the Act introduces changes to Section 240(2) of CAMA, which relates to the Annual General Meeting (AGM) of companies. The amendment substitutes the word “may” with the word “shall,” indicating that certain companies are now required to hold their AGMs electronically. The new provision states: "A private company having a single shareholder shall not be required to hold its Annual General Meeting in the year the company is incorporated. The meeting may be held electronically as may be provided in the Articles of Association of the company."

3.26. This means that private companies with a single shareholder are no longer required to hold an AGM in the year of incorporation. Additionally, such companies have the option to hold their AGMs electronically, as long as it is specified in the company's Articles of Association. This change allows for greater flexibility and convenience in conducting AGMs for single-shareholder private companies.

Duty to Attend Meetings

3.27. Section 12 of the Schedule to the Act introduces a new subsection (c) to Section 238 of CAMA, which deals with the duties of a company director to attend meetings. The new subsection (c) specifies a timeline for attending meetings: "A director of a company shall attend meetings of the company either physically or electronically at least quarterly in a financial year."

3.28. This means that directors of companies are now required to attend meetings at least once every quarter, whether in person or electronically. This change ensures regular participation of directors in company meetings and helps to enhance corporate governance and oversight.

Definition of Audited Financial Statements

3.29. Section 14 of the Schedule to the Act introduces a new definition of Audited Financial Statements to be included in Section 434(3) of CAMA. The new definition provides clarity on what constitutes audited financial statements: "Audited Financial Statements means annual financial statements of a company as audited by an auditor in compliance with this Act or any other relevant enactment.”

3.30. This definition helps to ensure a consistent understanding of audited financial statements and aligns with the requirements of CAMA and other relevant laws.

Scope of Audit Committee

3.31. Section 15 of the Schedule to the Act expands the scope of the audit committee in public companies, amending Section 404(4) (a) of CAMA. The amendment adds a new paragraph (iii), which specifies additional responsibilities for the audit committee: "In the case of a public company, an audit committee shall consist of five directors of the company and shareholders of the company (one of whom shall be an independent director) appointed at the Annual General Meeting, and the committee shall have the following duties: (a) to ascertain whether the accounting and reporting policies of the company are in accordance with legal requirements and agreed ethical principles. (iii) the audit committee shall be responsible for the oversight of risk management.”

3.32. This means that the audit committee in public companies is now also responsible for overseeing risk management, in addition to its existing duties related to accounting and reporting policies.

Filing of Annual Returns

3.33. Section 16 of the Schedule to the Act introduces changes to Section 421(1) of CAMA, which deals with the filing of annual returns by companies. The amendment provides a new timeline for filing annual returns: "A company, not having a share capital shall, not later than the 30th day of June each year (except the year in which it is incorporated), deliver to the Commission an annual return in the prescribed form showing particulars of the company as at the date of the return."

3.34. This means that companies without share capital are required to file their annual returns with the Corporate Affairs Commission (CAC) by the 30th of June each year, except for the year in which they are incorporated. This change provides a clear deadline for filing annual returns and helps to ensure timely submission of company information.

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4. AMENDMENTS TO THE INVESTMENTS AND SECURITIES ACT, 2007

Definition of “Collective Investment Scheme”

4.1. The new definition for collective investment scheme provided by the Schedule to the Act now reads as follows “Collective investment scheme means a scheme in whatever form, including mutual funds under which the property is held in trust for the investors, whether they are corporately structured or in any other form and any other scheme authorized and approved by the Commission.”

Restriction of borrowing powers of unit trust scheme

4.2. The Schedule to the Act modifies Section 157 of ISA, regarding the borrowing powers of unit trust schemes. The amendment provides a new timeline for the approval of a unit trust scheme’s borrowing from the Commission.

4.3. Previously, Section 157 stated that the Commission's approval was required for any borrowing by a unit trust scheme. However, the amendment now specifies that if the Commission does not respond to the approval request within 14 days from the receipt of the application, the request shall be deemed approved. This means that the unit trust scheme can proceed with the borrowing without the need for explicit approval from the Commission if there is no response within the specified timeframe. This amendment aims to streamline the process and provide clarity regarding the timelines for obtaining approval for unit trust scheme borrowings.

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5. AMENDMENTS TO THE TRADEMARKS ACT 2004

Filling of returns

5.1. The Act introduces amendments to the Trademarks Act regarding the submission of returns. Specifically, it addresses the requirement for companies not having a share capital to file annual returns with the Corporate Affairs Commission (CAC) by the 30th of June each year, except for the year of incorporation. This amendment aligns with the changes introduced in Section 16 of the Schedule to the Act, which specifies the deadline for filing annual returns for companies without share capital.

Amendment to Section 15 of the Trademarks Act

5.2. Section 15 of the Trademarks Act provides a statutory period for the expiration of a registered trademark, which is renewable for 14 years from the date of registration. The new amendment reduces this period to 7 years. This amendment aims to reduce the time frame for the renewal of trademarks and ensures that trademarks are renewed more frequently, reflecting a more dynamic and updated registry of trademarks.

Amendment to Section 16 of the Trademarks Act

5.3. Section 16 of the Trademarks Act, which addresses the renewal of trademarks, has been amended to reflect the changes in the statutory period. The new amendment reduces the renewal period from 14 years to 7 years. This change aligns with the amendment to Section 15 of the Trademarks Act, ensuring consistency in the statutory period for trademark renewal.

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