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Alhaji Garba Abubakar, the Registrar-General, Corporate Affairs Commission (CAC), says the Companies and Allied Matters Act, 2020 (CAMA 2020) will reduce the burden of starting and running small businesses in Nigeria.
Abubakar made this known in an interview with the News Agency of Nigeria (NAN) on Monday in Abuja.
He said that the provisions of the new CAMA would stimulate economic growth, attract investment and promote the Ease of Doing Business campaign of the Federal Government, especially for Micro Small and Medium Enterprises (MSMEs).
According to him, CAMA 2020 provides for individuals to register their businesses with the CAC without going through a lawyer or other stipulated professionals.
He said that under the new act, it was possible for one person to form and incorporate a private company, unlike before when sole membership of a company was impossible.
“For most small entrepreneurs, they do not even have the capital to start the business and some have to borrow the money to even pay the registration fee.
“If you made it mandatory for them to go through professionals before they register, that is actually adding to the cost; it is unnecessary burden.
“Those that can afford it can pay lawyers and accountants, and those that cannot, should be able to do their registration by themselves.
“Under the new law, one person can register a company, unlike before when you need a minimum of two persons as directors and shareholders.
“An individual can register a company and he will be the sole shareholder and the sole director, and that company will have all the powers of company.
“In the past, only a business name was allowed to be registered by an individual but now a company can be registered by an individual,” he said.
Abubakar said that another significant benefit for small businesses under CAMA 2020 was the increase in the threshold for qualification as a small company.
“Under the old CAMA, a small company is one with a yearly turnover not exceeding N2million and a net asset value not exceeding N1million; otherwise it is recognised as a large company.’’
He however said that CAMA 2020 had substantially increased the threshold to an annual turnover of not more than N120 million, and net asset value of not more than N60 million.
“The implication of the increase is that much more businesses may now take advantage of the regulatory and financial privileges enjoyed by small companies.
“The mandatory requirement for a secretary is now optional, the requirement for filling audited financial statement and appointment of auditor are also optional for small companies.
“Under the new law, we now have Limited Partnership and Limited Liability Partnership as new legal entities, and this has actually opened windows for entrepreneurs.
“They have a choice to register companies as business name, have Limited Partnership and Limited Liability Partnership, and that actually support the ease of doing business initiative,” he said.
The Registrar- General said CAMA now recognised the authentication of documents by the electronic signature of a director, secretary, or other authorised officials of the company.
He said that the act also endorsed the electronic transfer of shares and private companies might also hold their general meetings electronically, however, this must be permitted by the articles of the company.
He said that personal notice and a notice of meetings might also be sent by e-mail, and business operations conducted remotely, and electronically endorsed documents would be fully recognised by the Corporate Affairs Commission (CAC).
“These provisions are geared toward easing business processes and eliminating challenges associated with strict application of the old CAMA,” he said.
NAN recalls that President Muhammadu Buhari, on Aug. 7, signed into law the CAMA 2020, which repeals and replaces the Companies and Allied Matters Act, 1990.(NAN)