The Premise – After
28 long and hard years of its existence, the Companies and Allied Matters Act
of 1990 is finally going to be overhauled in favour of a new Act which would be
cited similarly. The repeal and re-enactment planned by the National Assembly by
virtue of the Bill for An Act to Repeal the Companies and Allied Matters Act
1990 (Cap C20, LFN 2004) is long overdue considering the fact that the Act had
been severely left behind by the times and had become a hindrance to modern and
efficient corporate governance practices as well as general economic

The Expectation – There
is an expectation that the re-enacted law would address several issues which
have been problematic for companies and for the Corporate Affairs Commission in
the past and this has prompted many to look carefully at the Bill that has been
pass by the National Assembly.

Bottom-line – A few
notable changes and additions to the law are as follows:

The Governing Board
of the Commission
– the issue of the leadership of the Corporate
Affairs Commission has been properly defined in the bill; expressly referring
to the leaders of the Commission as the “Governing Board” and not as “Members”
as was the case before. Furthermore, in the appointment of a representative of
the accountancy profession to the leadership of the Commission, the Institute
of Chartered Accountants would no longer be the sole organisation whose members
would be considered as other professional bodies in the accounting profession
would have a shot at a seat at the table.

A representative of
the Institute of Chartered Secretaries would now form part of the leadership as
well as a representative from the Federal Ministry of Industry Trade and
Investment. These additions are key corporate governance practices which ensure
the diversity of any Board to aid creative problem solving and well rounded
decision and policy making. The functions of the “Governing Board” are also
clearly spelled out in the Bill and the chief of these is policy making for the
Commission. This most definitely would ensure that the Commission has a clear
focus and goal at all times.

Requirement for Pre-action Notice – this is a crucial change as it would drastically alter the procedure
for filing lawsuits against the Corporate Affairs Commission.
The Bill requires
that before a suit can be commenced against the Commission, a pre-action notice
must be issued and served on it. This protection has been afforded several
other federal government agencies and it is good to see that said protection
has been expanded to the Commission.

The Right to Form a CompanyAnother key
change is the fact that 1 person may now incorporate a private company so long
as the provisions of the Act in respect of same are complied with as opposed to
the previous position where there had to be at least two persons. This would
make for ease of commencement of a business.

Company Limited by Guaranteethe
requirement for the consent of the Attorney General to the incorporation of a
company limited by guarantee has been dispensed with under the Bill. This is a
very welcome development as the cumbersome nature of obtaining the Attorney
general’s consent has always been a massive stumbling block to the
incorporation of companies limited by guarantee which are essential to social

Disclosure of
Capacity by Shareholder
– the issue of shareholder transparency
which has long been a concern has been dealt with by the Bill. Every
shareholder would be required to disclose to the company within 7 days of
becoming a member, the capacity in which he holds the shares and if he holds
them as a beneficial owner. There is also obligation placed on the company to
disclose this information to the Commission.

Place of Meeting – a very
progressive change to the law is that private companies are now free to hold
general meetings electronically provided that such meetings are conducted in
accordance with regulations to be made by the Commission from time to time.

Oyewole Gboyega
Source –