On February 14, 2023, the Business Facilitation (Miscellaneous Provision) Act, 2022 obtained presidential assent. The 2023 Business Facilitation Act was enacted to promote the ease of doing business in Nigeria and eliminate bottlenecks.

The Act has made notable contributions towards ensuring transparency in the process of conducting business in various sectors and encourages collaboration between the Ministries, Departments, and Agencies (MDAs) in their operations.

Against the backdrop of the purpose for which the Act was enacted in the first place, this write-up will examine the notable amendments made by the Business Facilitation Act to the Companies and Allied Matter Act 2020 (”CAMA”) and the impact of these amendments.

Notable Changes to CAMA by the 2023 Business Facilitation Act

Below are the notable provisions made to the CAMA by the Business Facilitation Act:

1. Expansion of exemptions to law precluding unregistered foreign companies from carrying on business in Nigeria

Section 78(3) of CAMA was amended to expand the situation where foreign companies may be legally exempt from registering in Nigeria while carrying on business within the country to include exemptions granted by an Act of the National Assembly in effect. The amendment to section 78 creates a wide scope of applicability of the exemption of foreign countries from registration. While this may encourage foreign participation in the Nigerian economy it may reduce the power of CAMA to effectively govern the activities of foreign companies in Nigeria.

2. Increase of share capital

Section 127(1) of CAMA as amended has expanded the instances where a company may increase its share capital to include a resolution passed by the Board of Directors (subject to the Articles of Association of the company in a general meeting).

In the unamended iteration of the CAMA Act, a company could only increase its share capital in a general meeting. This amendment would enable the Board of Directors to increase the share capital of a company where it is expedient to do so bearing in mind their fiduciary obligations to the Company.

3. Powers of directors to allot shares

The amendment to Section 149 (1) of the CAMA clarifies that the power of the directors of a company (whether public or private) to allot shares, can only be exercised by the directors of such a company if the power of the directors to so allot is vested in them by the shareholders in a general meeting or by the Articles of Association of the Company.

4. Validity of electronic share certificates

Section 171 was amended to recognize the validity of certificates in electronic form. Considering that this is the digital age where the purchase of shares and consequent issuance of share certificates need not be hampered by distance or location, this amendment is a timely development. However, with the advent of technology comes the need for added means of authentication. Electronic share certificates will require a means of authentication to ensure that nefarious individuals do not pass off fake certificates as the real thing.

5. Validity of virtual meetings

Section 240(2) of the Act was amended to recognise the validity of general meetings of private and public companies held via electronic means. This poses a question as to the impact of the amendment on Section 240(1) of CAMA which stipulates that all statutory and annual general meetings of companies (excluding single shareholders and small companies) shall be held in Nigeria. These two sections appear at odds. The question is whether the meeting can be held virtually from whatever country the attendee is in, or must one attend the meeting from Nigeria even when attending virtually?

6. Independent directors of public companies

Section 275(1) now stipulates that one-third of the board of directors of public companies must be independent and that any person who nominates candidates for the board, who would comprise a majority of the members of the board shall nominate at least one-third number of persons who would be independent directors. Before the amendment, public companies were only mandated to have three independent directors.

7. Directorship of more than five companies

Section 307(3) as amended stipulates that a person who is a director of more than five companies must resign from all other companies in the excess of five by the next annual general meeting of the Companies which holds two years after the commencement of the Act.

8. Requirements for financial statements

Section 378 as amended stipulates that the financial statements of a company must comply with the accounting standards prescribed in the statements of accounting standards issued by the Financial Reporting Council of Nigeria.

Will the 2023 Business Facilitation Act Enhance Ease of Doing Business?

The 2023 Business Facilitation Act is undoubtedly a step in the right direction as it reflects modern technological realities, encourages better observance of good corporate governance practices, and provides clarity concerning the application of the provisions of CAMA to public and private companies.

However, the achievement of its purpose remains to be determined. Enforcement of the various amendments through regulatory monitoring and the establishment of the necessary infrastructure will be the driving force in ensuring that ease of doing business in Nigeria is achieved.