President Muhammadu Buhari, on 13 February 2023, signed the Business Facilitation (Miscellaneous Provisions) Bill 2022, otherwise known as the Omnibus Bill into law. The Business Facilitation Act 2023 amends relevant legislation to promote the ease of doing business in Nigeria and institutionalize all the reforms to ease implementation.
One of the major amendments is as regards the provisions of the Companies and Allied Matters Act (“CAMA”) 2020. This short paper highlights some of the key amendments made to CAMA 2020 under Part 1, paragraphs 1-21 of the Business Facilitation Act (“BFA”).
- Alteration of Share Capital –Section 127(1) of CAMA is now amended by paragraph 3 to provide that a company can also increase its issued share capital by a resolution of the Board of Directors. However, it is subject to conditions that may be imposed by the Articles or the company in general meetings. Previously, this could only be done by the company in general meetings.
- Pre-emptive Rights– Section 142(1) of CAMA is now amended by paragraph 4 to provide that the right of an existing shareholder to be allotted newly issued shares now applies to a private company alone. Previously, it applied to all types of companies. A pre-emptive right or a right of first refusal is a right of existing shareholders in a corporation to purchase newly issued shares before it is offered to others. The right is meant to protect current shareholders from dilution in value or control. To mandate a public company to have the right of first refusal contradicts the essential principles of publicly traded company which is the issuance of shares to the public. Additionally, the time limit for the existing shareholders to accept the offer is 21 days. Previously, the applicable period was a reasonable time under Section 142(2)(c) of CAMA, 2020.
- Authority to Allot Shares – Paragraph 5 of the BFA has amended Section 149 by substituting subsection (3) for subsection (1) and deleting the previous subsection (3). The implication of the amendment is that the members in general meeting of a private or public company reserve the power to allot shares. However, such power is exercisable by the board of directors where express authority has been vested on them by the company in general meeting or by the company’s articles. Previously, the power of the company to delegate allotment of shares to the directors was only applicable to a private company.
- Return of Allotment– Section 154(1) of CAMA is now amended by Part 1, paragraph 6 of BFA to provide that the time limit for a company limited by shares to make a return of allotment to CAC is now 15 days. Previously, the timeframe was one month.
- Share Certification– Section 171(7) by the amendment in paragraph 7 now provides for share certificates in physical or electronic form.