The Companies and Allied Matters Act 2020 could potentially improve the ease of doing business for MSMEs from a legal perspective. This will reduce regulatory impediments which hitherto have stifled investments in Nigeria. Some of the key provisions of CAMA 2020 the Act in this regard are highlighted below:
EXPANDING AVAILABLE CHOICE OF BUSINESS ORGANIZATIONS
CAMA 2020 has expanded the vista for MSMEs; such enterprises they can register as Limited Liability Partnerships (LLPs), Limited Partnerships (LPs), or be incorporated as a Small Company (in line with the definition under Section 394 (3) of CAMA 2020 . LLPs are vested with corporate personality. LPs do not have corporate personality, but such arrangements are permissible.
Other notable provisions for MSMEs, as small companies (as defined under CAMA 2020) are as follows:
They are not required to appoint auditors or file audited statements along with annual returns, They are not required to appoint a Company Secretary, Their objects are unrestricted unless restricted by the Articles of the Company, They need not hold statutory and annual general meetings in Nigeria. Their meetings can be conducted virtually.
FOREIGN PARTICIPATION IN THE MSME ECOSYSTEM
By section 394 (3)(d) of CAMAthe Act, foreigners are not permitted to have equity in small companies. This suggests that the Act seeks to encourage registration of indigenous enterprises. Where athe foreigner wishes to carry on business as an LLP, it must be incorporated as a separate entity in Nigeria. CAMA 2020The Act however, does not preclude foreigners from entering into partnership with Nigerians.
MSMEs are incentivized by Section 222 of the Act with respect to fees payable for the registration of charges which shall not exceed 0.35% of the charge’s value. The company can validate the issuance/allotment of improperly issued shares. Where the company refuses to do so, the affected party may apply to court for relief. This is geared at protecting investors’ funds.
CAMA 2020 the Act retains the rules against minority oppression. In addition, a shareholder can institute personal action and recover damages from the company. Innovative arrangement options such as Administration and Insolvency Procedure; Company Voluntary Arrangements have been introducedare recognized which aim at resuscitating failing companies. The new Act
CAMA 2020 invariably reflects the advancements and realities of modern business operations.
ABOUT THE AUTHOR
Ezeoha MarkAnthony is a law graduate of Nnamdi Azikiwe University, and a graduate intern at the Oando Nig PLC. He is a refined legal scholar and writer. He writes from Lagos, Nigeria.
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