SUMMARY OF CAMA 2020 AND HOW IT AFFECTS SMALL BUSINESSES
- osaghae osamuyi
- Aug 15, 2020
- 3 min read
The new Companies Allied Matters Act (CAMA) 2020 is expected to enhance the ease of doing business in Nigeria. The new document has repealed and replaced the extant CAMA 1990 with key amendments that would remove some bottlenecks from the old act.
The revised Act will make Nigeria’s business environment as competitive as its counterparts around the world.
This important news requires everyone in the business community to pay attention. You may never be able to go through the entire 606 pages document but this is a summary of the aspects that is of great interest to small businesses.
It is important as an entrepreneur to be aware of laws governing operations of businesses in your country of operation. Of course this new Act has improved the ease of doing business in Nigeria.
The following areas are of great importance to you as a small business owner in the entire 606 pages document.
Minimum Number of Shareholders in a Private Limited Liability Company
The minimum number of persons that could start a private company was two (2) but now only an individual can start a private company. This is a great improvement because my first company I registered I was forced to have a partner when actually I did not need one anyone.
E-registration
Although CAC has been practicing this, this is has been incorporated into the Act.
I have actually registered a private company and a business name through the E-portal not without challenges. This will reduce the time and stress of incorporation.
At least two (2) persons can come together to form a limited liability partnership. This is new and it’s great for those that want to register a business as partners. The caveat is that one of the partners must be resident in Nigeria.
Conflicts of Names
If you see any business using a name that is similar to yours you do not need to approach a court. Approach CAC and the company will be mandated to do a change of name.
Common seal of the company
It is no longer compulsory to have a company seal. It’s painful I have one in the house that I cannot remember the last time I used it.
Electronic signature
This is probably the best innovation to the new Act. I remember the stress we went through when we registered our first company. We were shuttling between Lagos and Warri because of signature and the entire process dragged for too long. Now electronic signature is enough.
Statement of compliance
Statement of compliance does not need the signature of lawyer anymore. Was of affirmation of compliance is enough. I remember paying a notary to sign for me anytime I needed a lawyer.
Increased Share Capital
Where a company increased its share capital, it shall, within 15 days after the passing of the resolution authorising the increase, give to the Commission notice of the increase and the Commission shall record the increase.
Company Secretary
Appointment of Company Secretary now optional- Going forward, the appointment of company secretary for private company is optional. According to Section 330 (1) of the new CAMA, the appointment is only mandatory for public companies.
Appointment of Auditors
SMEs exempted from appointing auditors – Small companies or any company with a single shareholder are no longer mandated to appoint auditors at the AGM to audit their financial records.
There is so much still contained in the new Act. This part I have shared is what is quite relevant to every small business owner.
I am always available to plan your marketing campaigns, write and manage your websites, blogs and social medial pages to drive the needed traffic.
Why it matters: Nigeria is largely dominated by Medium and Small-Scale Enterprises (MSMEs). Making registration easier for them brings in more businesses into the formal space. This also enhances tax revenue for the government.
The Companies and Allied Matters Act (CAMA) was promulgated in 1990 to regulate the formation and management of companies in Nigeria.
A bonus news ones you register your business now you will be given TIN (Tax Identification Number) immediately this solves the problem you would have to battle with Federal Inland Revenue Service (FIRS).
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