status, functions and relevance of the corporate affairs commission
DESCRIPTION
Company LawTRANSCRIPT
Akinrinde Akinloluwa
COURSE: COMPANY LAW
ASSIGNMENT QUESTION: STATUS, FUNCTIONS AND RELEVANCE OF THE
CORPORATE AFFAIRS COMMISSION IN NIGERIA.
The Corporate Affairs Commission was established following the promulgation of the
Companies and Allied Matters Decree (CAMD) of 1990 as amended, by section 1 of the
Companies and Allied Matters Act, Cap C.20, Laws of the Federation of Nigeria, 2004
(CAMA).
It is an autonomous body charged with the responsibility to regulate the formation and
management of companies in Nigeria. It carry out its functions through accredited members
of Association of National Accountants of Nigeria, Institute of Chartered Accountants in
Nigeria, Institute of Chartered Secretaries and Administrators of Nigeria and the Nigerian
Bar Association. It is headed by a Registrar-General.
Note that prior to the enactment of CAMA, these activities were carried on under the
Companies Act 1968.
According to section 1 of the Companies and Allied Matters Act (hereinafter referred to as
the Act), the Corporate Affairs Commission (hereinafter referred to as the Commission) is a
corporate body with perpetual succession and a common seal, capable of suing and being
sued in its corporate name and capable of acquiring, holding or disposing of any movable
property for the purpose of carrying out its functions.
Corporate Body: The Commission is authorised by law to act as one individual and is
regarded as having a separate existence from the people who manage its affairs. Perpetual
Succession: Unlike human beings who die and cease to exist at a point in time, the
Commission lives in perpetuity except terminated or repealed by another law.
The power to hold land: Landholding or legal possession or ownership of land is regulated
by the Land Use Act. For any organisation to be legally entitled to land, government
authorities must be satisfied that the organisation is duly registered with the appropriate
government agencies to ensure that government is not dealing with an illegal body.
Have Common Seal: The seal here signifies a stamp of authority. It is used as a means of
authentication or attestation. It is used as a symbol to confirm a pact.
Sue and be sued in its corporate name: The Commission has the status of a legal
personality or entity which can sue or be sued in its corporate name.
The Governing Board of the Commission consists of the following:
i) The Chairman who is appointed by the President of the Federal Republic of
Nigeria on the recommendation of the Minister;
ii) A representative of the Legal Profession;
iii) A representative of the Accounting Profession
iv) A representative of the Nigerian Chamber of Commerce, Industries Mines and
Agriculture.
v) A representative of Securities and Exchange Commission;
vi) A representative of the Manufacturers Association of Nigeria;
vii) A representative of the Federal Ministry of Commerce
viii) A representative of the Federal Ministry of Industries;
ix) A representative of the Federal Ministry of Justice; and
x) The Registrar-General is the Chief Executive of the Commission and is saddled with the
responsibility of its day-to-day management. He must be a legal practitioner so qualified for
not less than 10 years and who has not less than eight years experience in company law
practice or administration. He is also the registrar of business names.
It is important to know that only legal practitioners, chartered accountants and chartered
secretaries who are professionals are authorised and accredited to transact business with the
Commission in respect of part A of the Act. In respect of registration of business names and
incorporated trustees in part B and C, any other person including you and other non-
professionals can be accredited to transact business with the Commission. Transacting
business here means registering and incorporating companies on behalf of other people,
preparing and filling of annual returns, conducting searches, etc.
The Act further stipulates that the headquarters of the Commission shall be situate in Abuja,
which is the Federal Capital Territory and there shall be established an office of the
Commission in all thirty-six states of the Federation in Nigeria.
FUNCTIONS
The functions of the Commission according to section 7 of the Act shall be amongst other
things to administer all the content which the Act prescribes to the latter which may in
include the regulation and supervision of the formation, incorporation, registration,
management, and winding-up of companies under or pursuant of this Act.
In addition to the above, the Commission shall also establish and maintain a company's
registry and offices in all the States of the Federation suitably and adequately equipped to
discharge its functions under this Act or any other law in respect of which it is charged with
responsibility. The purpose of this is to have a documentation and to put on record all the
processes of the incorporation of a company.
The Commission is also whelmed with the onus of arranging or conducting investigations
where it is necessary into the affairs of any company where the interest of the shareholders
and the public so demand. Additionally, to perform such other functions as may be specified
by any law or enactment. Also to undertake such other activities as are necessary or
expedient for giving full effect to the provisions of this Act.
Furthermore, subsection 2 provides that "Nothing in this section shall affect the powers,
duties or jurisdiction of the Securities and Exchange Commission under the Securities and
Exchange Commission Act."
In order to prohibit unauthorized persons from pervading the system, the Commission gives
official approval to persons who legitimately seek information in the Registry either for
themselves or as professionals on behalf of others. For the purpose of elucidation, it is only
Legal Practitioners, Chartered Accountants and Chartered Secretaries who are accredited
with the Commission to register a company under Part A of the Act. The requirements for
accreditation for a legal practitioner are as follows:
a) Obtain an accreditation form for free at the Commission.
b) Fill and submit with the following documents:
i. Two recent passport sized photographs
ii. photocopy of NYSC discharge certificate
iii. photocopy of call to bar certificate
iv. copy of receipt of practicing fee for that year
v. N2,500 for individuals and N5,000 for corporate organization.
Likewise, the role of the Corporate Affairs Commission under the Decree includes
regulation and supervision of the formation, incorporation, management and
winding-up of companies in Nigeria. The Commission ensures that those who
desire to form a company adhere strictly to the provisions and requirements
specified in the Companies and Allied Matters Decree of 1990. It ensures, for
example, that the name of the company is one that is acceptable under the law and
that the Memorandum and Articles of Association are properly prepared. In the
process, the Commission ensures that only companies whose objectives,
constitution and programmes are acceptable under the law are registered.
The Commission is responsible for registration of the business names of unincorporated
companies. It is also responsible for the registration of incorporated trustees, debentures,
mortgages and charges created by a company.
The Corporate Affairs Commission undertakes the incorporation of both private and public
companies once it is satisfied that the conditions for incorporation have been complied with
and the required documents submitted.
The Commission supervises the management of companies. Incorporated companies are
required to submit certain reports or decisions to the Commission for registration. Among
these are:
(i) Changes in the Memorandum and Articles Of Association;
(ii) Allotment of Shares;
(iii) Statutory meetings, annual general meeting and extra-ordinary meetings;
(iv) Appointment of Directors, Auditors and Secretaries; and
(v) Annual Financial Returns.
With these documents available in the registry of the Corporate Affairs Commission, any
member of the public may have access to information on the affairs of an incorporated
company.
When a company is to be liquidated, the Commission must be so informed and those
appointed to windup the affairs of the company must notify the CAC of their appointment for
registration. The Commission generally supervises the winding-up procedure.
In addition, it may apply to court for directions in respect of any matter concerning its duties,
powers, and functions under the Act and, on any such application, the court may give such
directions and make such further order as it thinks fit.
Categorically, it can be said that the services offered by the Commission include the
following –
• Regulation and supervision of the formation, incorporation, registration and management of
Companies, Business Names and Incorporated Trustees
• Registration of changes, amendments and alterations in particulars of Companies, Business
Names and Incorporated Trustees
• Repository for statutory records of Companies, Business Names and Incorporated Trustees
including annual reports of exempted foreign companies and annual returns of Companies,
Business Names and Incorporated Trustees
• Searches
• Issuance of certified true copies of certificates and extracts of filed documents
• Enforcement of compliance of Companies, Business Names and Incorporated Trustees with
the provisions of CAMA
• Conducting investigations into the affairs of Companies, Business Names or Incorporated
Trustees
• Registration of changes in share capital, mortgages, debentures, charges, etc.
• Registration of appointment/discharge of Receiver/Manager
• Registration of appointment of Liquidator
• Regulation and supervision of the striking off and winding up of Companies, removal of
Business names from register and dissolution of Incorporated Trustees
• Express incorporation of Company
• Accreditation of Lawyers, Chartered Accountants and Chartered Secretaries as direct users
of the services of the Commission
Incorporation of Private or Public Companies. This involves:
(i) Availability of an acceptable name. A name is acceptable provided such a name is not
identical with an existing name; it does not contain "Chamber of Commerce"; it is not
misleading and does not violate existing business regulations.
(ii) Printing of the Memorandum and Articles of Association.
(iii) Completion of Statutory Forms which are:
(a) CAC I - Declaration signed by a solicitor that the requirements of the Companies and
Allied Matters Decree of 1990 have been complied with;
(b) CAC 2 - This shows the allotment of the shares of the company to members;
(c) CAC 6 - Indicates the registered office of the company;
(d) CAC 7 - This contains the particulars of all the Directors including names, nationality,
addresses, occupation and dates of birth;
(e) CAC 7A -Contains the particulars of the Secretary of the company;
(f) Payment of Stamp Duty
RELEVANCE
The Companies Ordinance 1912 was the first companies’ statute in Nigeria. It was first
applied to the colony of Lagos and later, in 1917, to the rest of the country. The Companies
Ordinance 1912 provided for the first time in Nigeria, a procedure for incorporating a
company by registration. The objects and reasons for the Ordinance were stated as follows:
``to provide for the formation of limited companies within the colony and protectorate It is
hoped thereby to foster the principles of cooperative trading and effort in the country.’’
After the end of world war in 1918, another companies ordinance came into force by 1922.
This ordinance was first applied to the colony of Lagos and later extended to the rest of the
country. In 1963, the 1922 ordinance was designated Companies Act and it continued to
regulate companies until its repeal in 1968 by the Companies Act 1968.
The Companies Decree No: 51 of 1968 were promulgated during the military regime. It was
re-designated in 1980 as the Companies Act. Before the promulgation of the Act, there had
been an urgent need for a modern companies’ legislation because the Companies Act, 1922
had become, for the most part, inadequate to cope with growth of the economic activities in a
developing country like Nigeria.
The Companies and Allied Matters Act, 2004 has made some revolutionary and landmark
provisions not only for companies, but also for the registration of business names and for the
incorporation of trustees. This was done in order to take care of emerging global trend in the
conduct of business transactions. The Act is divided into four parts, namely, part A deals
with registration of companies, part B deals with the registration of business names, part C
deals with the registration of incorporated trustees and part D - citation and commencement.
With reference to companies, the declared objective and the Nigerian Law Reform
Commission was to evolve a comprehensive body of legal principles and rules governing
companies and suitable for the circumstances of the country.
In pursuance of this objective, a broad approach was adopted. Not only the statutory
provisions but also the common law principles and the doctrines of equity applicable to
company law in Nigeria were examined and, wherever desirable, enacted, and often with
necessary amendments. As indicated above, the Act is a product of careful consideration and
extensive consultation. It represents the general views and consensus of users of company
law in Nigeria.
Note that prior to the establishment of the Corporate Affairs Commission, the administration
and regulation of companies in Nigeria was steered by the Registrar of Companies in the
Corporate Affairs Division of the Ministry of Trade. In fact, its organization and staffing
were the joint responsibility of the Ministry of Trade and the Ministry of Justice. It should be
noted that despite the fact that the Company Registry, was a revenue generating government
agency, it was however, fraught with inadequacies and shortcomings as it was starved of
funds and other necessary facilities. It was in this light that the Nigerian Law Reform
Commission embarked on a law reform programme in1987.Upon several deliberations, the
Commission came up with the view of having an autonomous body for the regulatory body
to perform its functions adequately. The Law Reform Commission borrowed the practice
prevalent in other countries like England and India and recommended the establishment of
the Corporate Affairs Commission.
The establishment of a Corporate Affairs Commission to administer the Companies and
Allied Matter Act is one of the most urgently important innovations of the Act. Among
the ingenuity brought about by the creation of the Commission may be noted.
a. More logical arrangement of the subject matter of the incorporation of companies
b. Encouraging greater seriousness and commitment in the formation and registration of
companies by requiring a minimum authorised share capital and minimum subscription.
c. Provisions for greater accountability by directors.
d. Improvement in the forms and contents of financial statement, classification of
companies into small, and others for the purpose of greater financial disclosure,
incorporation of accounting standards and provision for greater and more relevant
disclosure in the Directors’ Report.
The enforcement of compliance arrangement in the Corporate Affairs Commission plays a
significant role in ensuring the practice of corporate governance and service improvement.
The Corporate Affairs Commission in Nigeria, in order to reaffirm its regulatory
(enforcement of compliance) role, recently gave a directive for all Limited Liability
Companies in Nigeria to comply with the provisions of Section 293 of the Act, by appointing
Company Secretaries to handle the administrative affairs of the company. The directive is a
notice from the office of the Registrar, for all concerned companies to comply. The move for
all intents and purposes seems to be part of the efforts by the Corporate Affairs Commission
to check the challenges of compliance in regulating businesses in Nigeria.
Non adherence by a company to lay down rules and procedures for its operations leads to
queries while non-satisfactory response to the queries will qualify a company for an
appropriate disciplinary measure which may range from suspension to de-registering/striking
off as the case may be. The practice is that where a company refuses to answer the said
queries, it will be reminded in writing. If it (the company) fails again, the Commission will
publish in National dailies with a view to attracting compliance of the company with the
rules set by the Commission. If the company doesn’t comply, the commission will strike the
company off. The company stands re-enlisted if it obtains a court order but failure to do that
will result in gazette of the said disciplinary measure which rules out possibility of re-
enlistment. In addition, the power of investigation of the affairs of companies given to the
Commission under the Act is the most useful and effective in the overall management and
promoting good corporate governance practice in our registered companies.
Investigation of the affairs of the companies is potent and quite useful in protecting investors
and preventing impropriety in the management of corporate enterprise. Under section 157 of
the Companies Act 1968, the Minister of Trade had power to order investigations. This
power which is now exercisable by the Commission is much improved under the Act.The
Commission`s action (de-listing or de-shelving) corporate citizens that do not comply with
the Commission`s requirements such as statement of affairs based on which annual returns
are paid has been partly responsible for the rating that the Commission has been receiving
especially from international organizations such as the International Organization for
Standardization (ISO).
As noted, State offices are expected to bring the services of the commission close to the
grassroots as well provide platforms for effective supervision of companies and membership
organisations at that level. The following are among the services offered at the state zonal
offices with the aim of bringing the services of the Commission closer to the people andthey
include:
o Business name registration;
o Sale of all statutory forms and publications of the Commission;
o Processing of statutory filing under the Act and subsequent transfer to
theHeadquarters for further necessary actions;
o Handling the preliminary process of accreditation of professionals like
lawyers,chartered accountants and chartered secretaries.
o Verification and assessment of applications for company incorporation after which
they are sent to the Headquarters for final approval and registration;
o Responding to enquires and complaints in respect of the services of the Commission;
Conclusively, the importance of the Corporate Affairs Commission in the country’s economy
cannot be over emphasized. In Nigeria, every company except those granted exemption by
the Federal Government must be registered before doing business. This is the determination,
commitment and mission of the Commission.
The Commission has also introduced special desks in all the commission’s state offices to
encourage and facilitate the registration of small businesses. Small scale industries the world
over contribute to the economy of many countries. China with her GDP and large size of
economy records and encourages enormous participation by small scale firms
Having one's business registered confers some credibility on it, given that it then acquires an
identity. In many important business activities or relationship you may want to get involved
in, details of your business registration will be required. You do not have to wait for such
occasions before getting your business into the register of companies –you may miss an
important opportunity just for that negligent act of non-registration.
REFERENCES
1. 1. J Olakunle Orojo, Company Law and Practice in Nigeira Lexis Nexis Butterworths, 5th
Ed.
2. M.N. Umenweke and A.R. Aladegbaiye, ‘Powers and Duties of the Corporate Affairs
Commission as a Regulatory Body in Nigeria’ Vol. 2 (2011), Nnamdi Azikiwe University Journal
of International Law and Jurisprudence
3. The Nigerian Law School Course Handbook on Company Law & Practice,
2005/2006.
4. Owolabi, N.B & Badmus, M.A. (Eds). (2003). Nigerian Business & Co- Operative
Law. Lagos: Printarts Limited.
5. Companies and Allied Matters Act, 2004.