CODE’s Position: Nigeria’s 2020 Companies and Allied Matters Act (CAMA)

The best laws – with the most altruistic intentions – can often be jeopardized and misanthropic in application…

The Companies and Allied Matters Act “CAMA”, 2020, is a landmark piece of legislation instrumental to Nigeria’s business and economic landscape, including its Ease-of-Doing-Business which has been a mantra of the President Buhari-led administration. By repealing and replacing the 1990 CAMA, the new 2020 CAMA seeks to promote reforms of the exacting legal and regulatory framework as well as administrative bottlenecks which, for 30 years, have made doing business in Nigeria cumbersome – and the economy less attractive to foreign portfolio and direct investments. Inadvertently, these have tremendous negative effects on job and wealth creation, and the overall sustainable welfare of Nigerians. 

In addition to the aforementioned, the new CAMA makes remarkable alterations and provisions with respect to (private) company secretary, auditor, annual general meeting, sole shareholder and director, limited liability partnerships, incorporation of companies limited by guarantee, electronic signature and transfer of share, common seal, disclosure of substantial interest in shares and “beneficial ownership” which was previously limited to public companies and inhibited the fight against corruption, especially in the extractive sector, amongst other landmark provisions. These introductions have been well received and applauded by many Nigerians and foreigners as they are in line with best global practices. 

However, the 2020 CAMA has also generated significant brouhaha with regards to its Part F (previously Part C) that inter alia provides and regulates the incorporation and operations of Incorporated Trustees: Non-Governmental Organizations “NGOs” — civil society organisations, associations, churches, and so forth, in Nigeria — and this has led to commensurate dissension among leaders and practitioners in the space. 

As a foremost anti-corruption NGO, this intervention embodies Connected Development’s (CODE) position on the 2020 CAMA.

Recall that in 2019, an attempt to gag civil society organisations and further shrink the civic space through an Orwellian NGO Bill titled: “A Bill for an Act to Provide for the Establishment of the Non-Governmental Organisations Regulatory Commission for the Supervision, Coordination and Monitoring of Non-Governmental Organisations, Civil Society Organisations Etc, in Nigeria and for Related Matters – received overwhelming public outcry that led to the suspension of enactment proceedings.

Consequently, in the wake of the enactment and assent of the 2020 CAMA, there were various publications on how the Federal Government smuggled provisions of the previously rejected NGO Bill into the new CAMA. A circumspective and comparative analysis of both legislations will reveal this to be untrue.

Nonetheless, in the 2020 CAMA, there are two (2) controversial sections that are of concern to Incorporated Trustees: Sections 839 and 842 which summarily provide for the suspension of trustees, appointment of interim managers and transfer of credit in a dormant bank account of an NGO to another NGO with similar objects.

Section 839: empowers the Corporate Affairs Commission (CAC) to Suspend Trustees of a NGO and Appoint Interim Managers – upon a reasonable belief of the occurrence of any of the 6 underlisted conditions: misconduct/mismanagement, need to protect the association’s property, need to redirect the association’s property towards its objects, public interest or fraudulent running of the association’s affairs.

Remark: The CAC cannot unilaterally suspend trustees of a NGO and appoint interim managers. They must through a Petition, seek and obtain an ORDER from a Federal High Court. The onus of proving that the NGO has flouted any of the aforementioned grounds or conditions lies with the petitioner: CAC or one-fifth (20%) of the members of the association. Also, the CAC cannot bring any petition to the Court unless the Minister of Trade has approved. Lastly, in the event a court makes an order to suspend defaulting trustees, such suspension of trustees shall not exceed 12 months.

Section 842: Transfer of credit of a NGO in a dormant account of a bank to another charitable association.

Remark: the duty is on the relevant bank to notify the CAC that a particular account(s) belonging to a NGO has been dormant. Afterwards, the CAC notifies the NGO to give a “satisfactory” account of activities. Where the NGO does not respond or provide a satisfactory account within 15 days, the CAC would ONLY direct the Transfer of the said credit after the CONSENT of the MINISTER of Trade has been sought and obtained.

The general wariness towards the above provisions are neither unreasonable nor far-fetched and are exacerbated by gross lack of trust and confidence in government (caused/compounded by government anti-citizen actions) and perhaps, misinterpretation of the law. However, as  non-partisan, non-profit organisations that seek to hold the government to account, we should also strive to be transparent, accountable and law-abiding.

Furthermore, as stated above, even the best laws are often jeopardized in enforcement through unscrupulous state machineries that operate around the fringes of the law, thereby robbing it of its earnest altruistic intentions. We need not search far as the Freedom of Information Act enacted in public interest to enhance citizens’ access to public records has been fraught with alleged non-applicability, litigations, conflicting court of appeal decisions and gross non-compliance.

It is within the legislative competence of the National Assembly to enact laws for good governance and interest of Nigerians. It is also within the adjudicative competence of the Court to void sections of any law that are repugnant, contrary to public interest, democratic tenets and unconstitutional.

To conclude, we believe that adequate safeguards and checks are provided to prevent and/or limit abuse of power and due process. However, in Nigeria where public institutions are weak and susceptible to the intoxicating tendencies of power, vigilance would continue to be the watchword as we would not hesitate to take out social and legal actions to safeguard the freedom and tenacity of the civic space. It is imperative that the government rebuilds public trust by making its affairs more open and participatory.

Connected Development is an initiative that is passionate about empowering marginalised communities.

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