Corporate Affairs Commission (CAC) has secured the approval of the Minister of Industry, Trade and Investment, Adeniyi Adebayo to extend to 31 December 2021, the deadline for existing companies to fully issue any unallotted share capital.
It will be recalled that Regulation 13 of the Companies Regulations, 2021 had fixed an initial deadline of 30 June 2020 for all companies in Nigeria to comply with this requirement.
The CAC also noted that any unissued share capital after 31 December 2022 will be derecognised from a company’s share capital until such shares are re-issued or reduced.
The Trade and Investment Minister had on 31 December 2020 approved the Companies Regulations 2021 pursuant to Section 4 of the Companies and Allied Matters Act (CAMA) 2020.
The CR 2021, which was published by the Corporate Affairs Commission, replaces the Companies Regulations, 2012 issued pursuant to the repealed CAMA, 1990.
The Regulations includes provisions that are aimed at leveraging technology to automate certain CAC’s administrative processes, clarifying certain compliance requirements of the CAMA 2020, and providing comprehensive governance and procedural framework, in line with global regulatory best practices.
Some significant changes highlighted in the Regulations are: ‘Authentication of Documents’ (CR 2021) provides for the automation of CAC’s pre-and post-incorporation procedures in line with the Federal Government’s mandate of improving the ease of doing business in Nigeria.
These procedures include electronic authentication of documents submitted through the Commission’s web portal, delivery of electronic certified true copies of documents in lieu of physical documents and online real-time update of changes to information already submitted to the Commission, among others.
Under the Minimum Issued Capital Paragraph 13 of the Regulations mandates, all existing companies are advised to issue all unissued shares in their capital before June 30, 2021.
The Registrar General of the CAC, Garba Abubakar in a recent stakeholder session organised by the Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN) on the implementation of the Companies Regulations 2021, clarified that Paragraph 13 gives effect to the provisions of Sections 124 and 868 of CAMA 2020 which redefined share capital as “issued share capital”.
Consequently, the concept of “unissued share capital” which derived from the repealed CAMA 1990 and allowed a company to have issued share capital that is less than its authorised shared capital, has effectively been obviated by CAMA 2020.
Further, Paragraph 13 of the CR 2021 imposes a daily default penalty on a company and every officer of the company that fails to meet the June 30, 2021 deadline as follows: ₦250 for small companies, ₦500 for private companies limited by shares other than small companies, and ₦1,000 for public companies.
It is however debatable how the implementation of the daily default penalty will apply to companies that fail to meet the deadline given that the Act did not prescribe any penalty for non-compliance. Nonetheless, the Registrar General of the CAC noted that companies that are unable to meet the June 30, 2021, deadline may apply for up to a maximum of 2 years extension. It is expected that the Commission will issue an official public notice in this regard soon.