This article highlights key modifications and what they mean for your company, focusing on ensuring adherence to the new requirements.
Navigating Key Compliance Obligations Under the Companies and Allied Matters Act (CAMA), 2020
The Companies and Allied Matters Act, 2020 (CAMA 2020) has brought significant changes to the regulatory compliance landscape for corporate entities in Nigeria.
Notices of General Meetings for Public Companies
- Public companies must now also serve notices of all general meetings to the Corporate Affairs Commission (CAC).
- Notices can be served via email in addition to traditional methods.
- Failure to give notice to the CAC renders the meeting invalid unless the failure was an accidental omission.
Separation of Board Chair and CEO Positions
- CAMA 2020 codifies the global best practice of separating the roles of Board Chairperson and Chief Executive Officer (CEO) to ensure a balance of power and effective oversight within the company.
- If the Board Chairperson is also the CEO, appoint a non-executive director as the Board Chairperson to comply with this requirement.
Register of Directors’ Residential Addresses
- CAMA 2020 mandates that every company must maintain a register of directors’ residential addresses, stating the usual residential address of each director.
- Failure to maintain this register can result in penalties for both the company and its officers, as specified by the CAC.
Appointment of Independent Directors for Public Companies
- Public companies must have at least three independent directors on their boards. An independent director is defined as someone who, among other criteria, has not been an employee of the company, has not had significant financial transactions with the company, and does not own more than 30% of the company's shares.
- While specific penalties for non-compliance are not outlined, public companies should make every effort to comply with this mandatory requirement.
Notification by Persons with Significant Control (PSC) and Substantial Shareholders
- PSCs with 5% interest or more must notify the company within 7 days of becoming aware.
- The company must notify CAC within one month of receiving the PSC notice.
- Additional notification is required if the shareholder holds 5% interest in a public company, with both parties having 14 days to notify CAC.
Minimum Share Capital
- Companies must issue all unissued shares by December 31, 2021.
- Unissued share capital after this date will not be recognized until issued or reduced.
- Companies with share capital below the minimum statutory requirements (N100,000 for private and N2,000,000 for public companies) must increase and allot up to the minimum.
Disclosure of Managers' Remuneration
- Remuneration disclosure of senior management is now part of the Annual General Meeting (AGM) business.
Filing of Annual Returns
- All companies, except single shareholder companies, must file annual returns with audited accounts within 42 days post-AGM.
Accounting Reference Period:
- Companies must file notices of any changes to their accounting reference period or financial year-end.
Certification of Financial Statements by CEO/CFO
- Financial statements must be certified by the CEO or CFO, confirming their accuracy, and internal controls, and disclosing significant deficiencies or fraud.
Filing of Statement of Accounts and Solvency by LLPs/LPs
- LLPs and LPs must prepare and file a Statement of Account and Solvency within six months of their financial year-end.
Audit Accounts by LLPs/LPs
- LLPs and LPs are required to prepare audited accounts within six months of their financial year-end.
Filing of Annual Returns for Incorporated Trustees
- Incorporated Trustees must file bi-annual returns by July 15 and January 15, and annual returns with audited financial statements by December 31.
Filing of Financial Statements by Business Names
- Business names must file annual returns with financial statements by June 30 each year.
CAMA 2020 has brought extensive changes to Nigeria’s business environment, necessitating companies to review and update their compliance practices. Adherence to these obligations is crucial for legal compliance and efficient business operations.
By ensuring compliance with these new requirements, businesses can align with international standards and foster a more transparent and accountable corporate environment.
