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Issues with post-incorporation compliance under CAMA 2020

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Tel: (+234) 802 320 0801, (+234) 807 576 5799

Email: enquiry@mocaccountants.com

Office Address: 5, Ishola Bello Close, Iyalla Off Street, Alausa, Ikeja, Lagos, Nigeria

Introduction

Post-incorporation matters relate to the procedures and actions that companies must take after registration. Once your business is registered, it is registered and legally binding. However, there are still compliance issues to consider if you are a startup or a company operating in Nigeria. The post-incorporation concept has become a major development in company law, providing a simpler and more efficient way of creating and managing companies. This paradigm shift represents a departure from traditional mergers, where companies legally merge at a specific time under a legal framework. After the induction period, there is an opportunity to develop and change the company structure and to enter the company. It is better to focus on changing market and investor conditions Insights In addition, the post-merger period can improve corporate governance by promoting transparency and accountability. By enabling regular updates to the company’s governance framework, it can ensure that the company’s internal rules and procedures are in line with best practices and legal requirements. This can avoid conflicts of interest, strengthen the confidence of investors and improve the company as a whole. the Companies and Companies Act, 2020 (“CAMA 2020” “the Act”).

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Accepted and published on August 7, 2020. The Act, which repeals the Act 1990, indicates fundamental changes in the business environment in Nigeria. The Civil Affairs Commission (“CAC”) has also issued the Companies Rules, 2021 (“the Rules”) as a framework for the implementation of CAMA 2020. A business entity is established and given certain rights and obligations by law. Starting a business is an important step because there is a legal framework within which the business can operate.

Definition of post-incorporation

Post-incorporation matters refer to matters or activities companies should pay attention to after incorporation. Upon incorporation, your company is duly registered and has legal force. However, there are still a few compliance issues you have to take cognizance of either as a newly incorporated company or as a company actively doing business in Nigeria.

The requirements and procedures for incorporation vary from jurisdiction to jurisdiction, but the general purpose remains the same. When a business is registered, it becomes a separate legal entity from its owners. This means that the business can enter into contracts, sue and be sued for property and incur debts in its name. This separation of ownership and liability is a major benefit of incorporation because it protects the personal assets of the business owners from the debts and liabilities of the business.

 Post-incorporation questions companies need to know under CAMA2020

Companies should be aware of many issues after incorporation.

Completing annual statements

Companies must meet this condition when they are incorporated. As a business, you make your annual returns on time. If you do not do this, the CAC Registrar of Companies may remove your company name from the list of registered companies.

Publication of the name

After incorporation, you must place your name and registration number outside any office or place where your company operates. Also, you should use legible characters and make them stand out.

Section 729 of CAMA provides,

“Every company, after incorporation, shall— (a) paint or affix, and keep painted or affixed, its name and registration number on the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily legible ; (b) have its name engraved in legible characters on its seal, where the company has a seal; and (c) have its name and registration number mentioned in legible characters in all business letters of the company and in all notices, advertisements, and other official publications of the company, and in all bills of exchange, promissory notes, endorsements, cheques, and orders for money or goods purporting to be signed by or on behalf of the company, and in all bills or parcels, invoices, receipts, and letters of credit of the company.”

Data

If registered, each company must register any changes with the Corporate Affairs Commission. For example, when you change directors, office address, fees, increase or decrease the share capital, etc. All must be registered with the Commission.

Maintain statutory books

This largely depends on the status of your business. Private and public companies need statutory books. For example, both require meeting minutes, while a membership index is required for public companies. This is an example. In addition, private companies must maintain a register of members and directors. In addition, it is important to note the records – secretaries and records of shareholders. It is important to note that in addition to ensuring compliance with all pre- and post-incorporation matters, it is equally essential to ensure maximum compliance with post-incorporation matters. To avoid any issues with the administrators, it is recommended that you consult your lawyers, even if we have listed some of those points above.

The issues with post-incorporation compliance under CAMA 2020

Before delving into specific issues, it’s crucial to understand the key provisions of the Companies and Allied Matters Act 2020 (CAMA 2020). This Act outlines the legal framework governing companies in Nigeria, including their formation, operations, and winding up. The following is A step-by-step guide on how to comply with post-incorporation compliance issues under CAMA 2020.

Annual Returns

According to Section 417 – Filing of Annual Returns by Companies

This section states the requirement for companies to file annual returns with the Corporate Affairs Commission (CAC).

“Every company, other than a small company, shall, once at least in every year, deliver to the Commission an annual return in the form, containing the matters, and made up to the date as prescribed in sections 417 to 424 of this Act.”

Section 423 – Consequences of Failure to File Annual Returns

Failure to comply with this requirement attracts penalties.

“If a company required to deliver an annual return to the Commission fails to do so within the time allowed for such delivery under section 417, the company and every director of the company shall be liable to a fine as prescribed by the Commission for every day during which the default continues.”

Appointment and Resignation of Directors

Section 276 – Removal of Directors

This section mandates notification to the CAC when a director is appointed, removed, or resigned.

“A company may by ordinary resolution remove a director before the expiration of his period of office, notwithstanding anything in its articles or in any agreement between it and him.”

Section 292 – Notification of Change of Directors

“Where a company changes a director or secretary, the company shall notify the Commission within 14 days of the change.”

Filing of Resolutions and Changes

Section 236 – Registration of Special Resolutions

This section requires companies to notify the CAC of special resolutions passed during shareholders’ meetings.

“A printed copy of every resolution or agreement to which this section applies shall, within 15 days after the passing or making thereof, be forwarded to the Commission and recorded by it.”

Appointment of a Company Secretary

Section 330 – Appointment of Secretary for Private Companies

This section gives private companies the option not to appoint a company secretary, though public companies are still required to appoint one.

“A private company is not required to have a secretary but may appoint one if it so wishes.”

Section 333 – Appointment of Secretary for Public Companies

“Every public company shall have a secretary.”

Disclosure of Beneficial Ownership

Section 119 – Disclosure of Persons with Significant Control

This section requires companies to disclose the details of persons with significant control (i.e., beneficial owners) in the company.

“A person with significant control over a company shall, within seven days of becoming such a person, indicate to the company in writing the particulars of such control.”

Section 120 – Register of Persons with Significant Control

The company must maintain a register of such persons.

“Every company shall keep a register of persons with significant control in which it shall enter the particulars of any person with significant control, as referred to in section 119.”

 Filing of Charges

Section 222 – Registration of Charges

This section specifies the requirement for registering any charge created by a company with the CAC.

“Subject to the provisions of this Part of this Act, every charge created by a company shall, so far as any security on the company’s property or undertaking is thereby conferred, be void against the liquidator and any creditor of the company unless the prescribed particulars of the charge, together with the instrument (if any) by which the charge is created or evidenced, are delivered to or received by the Commission for registration in the manner required by this Act or any enactment repealed by this Act within 90 days after the date of its creation.”

Penalties for Late Compliance

Section 432 – Penalty for Non-compliance with Filing Requirements

This section lays out the penalties for companies that fail to comply with CAMA’s filing requirements.

“Where a company required to deliver a document to the Commission fails to do so, the company and every director or officer of the company who is in default is liable to a daily default fine of N500 for each day during which the default continues.”

Minimum Share Capital Requirements

Section 27 – Minimum Share Capital

CAMA 2020 introduces minimum share capital requirements for companies.

“The minimum issued share capital of a company shall not be less than ₦100,000 in the case of a private company and ₦2,000,000 in the case of a public company.”

Electronic Filing and Documents

Section 860 – Electronic Filing

This section provides for the use of electronic means to file documents with the CAC.

“Any document required or authorized to be filed, delivered, or issued by or to the Commission under this Act may be filed, delivered, or issued electronically by the provisions of this Act or as the Commission may direct.”

pile of printing papers

Process for the registration of post-incorporation compliance under the CAMA Act, 2020

After consolidation under the Companies and Activities Act (CAMA) 2020, there are many important sectors in Nigeria and efforts are being made to ensure respect and respect for businesses. Depending on the constitution and legal requirements, this process includes several steps from initial registration to reporting and ongoing management. Here is a summary of the process:

Basic Registration Guidelines When businesses register under CAMA, the 2020 Act requires them to complete several key steps to comply:

Obtain permits and licenses. It has to be done. Certain licenses and permits from regulatory agencies may be involved.

Taxpayer Identification Number (TIN): To obtain a TIN for tax purposes, register with the Federal Internal Revenue Service (FIRS).

Registration with other social security agencies and Nigeria Social Security Fund (NSITF): If employees work in a company, register for social security benefits.

People’s Pension Commission (PENCOM): Registration of pension insurance payments by the Law on Pension Reform of May

Maintain and record the company’s activities: maintain the necessary evidence for the registration of members, the registration of board members and the registration of expenses. This data must be accurate and updated regularly.

Record information in minutes and meeting documents Purpose: To maintain the company’s internal operating documents and comply with CAMA 2020.

Board decisions: Record important decisions made by the board and shareholders.

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Reporting and submission of obligations

Reporting and submission of obligations to comply with legal obligations:

Annual report and submission: submit an annual report to the CDC after the end of the financial year. This includes financial announcements, contact information for board members and changes in company structure.

Contents: Annual report including audited financial statements, CAMA 2020 compliance statement and related updates. Board members and shareholders in the company

Financial management and preparation: preparation of financial information by International Financial Reporting Standards (IFRS) and other relevant standards.

Audit: a review of audit reports by a certified auditor before submission to the CAC.

Conclusion

It is important to keep company information up-to-date. Annual update, review and update: Periodic review of company information, including company information, files and legal records to reflect the changes. Notify CAC activities or structure of changes. Be sure to notify the CAC of any property changes, such as a change in company name, share capital, or business transaction. The major reforms are aimed at strengthening corporate governance and the conduct of business in Nigeria. Although the Act has made progress in reforming the business landscape, it has also identified some challenges related to post-merger compliance. One of the biggest challenges facing businesses is the complexity and complexity of regulatory compliance requirements. This law places many obligations on companies, including financial reporting, record keeping and legal actions. These requirements can be burdensome for small and medium-sized enterprises (SMEs), which often do not have the necessary resources. Dedicated compliance functions. In addition, the terms of this Act may be ambiguous and subject to different interpretations. This can lead to uncertainty and confusion among businesses, making it difficult to ensure compliance. The lack of clear instructions and guidance increases the risk of penalties and sanctions.

Contact Us

Tel: (+234) 802 320 0801, (+234) 807 576 5799

Email:enquiry@mocaccountants.com

Office Address: 5, Ishola Bello Close, Iyalla Off Street, Alausa, Ikeja, Lagos, Nigeria

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