Introduction
The Business Facilitation (Miscellaneous Provision) Bill 2022 (also known as the “Omnibus Bill”) was signed into law on the 10th of February 2023, by the President of the Federal Republic of Nigeria, Muhammadu Buhari, GCFR (the “President”).
The Business Facilitation (Miscellaneous Provisions) Act of 2023 (“The Act” or “BFA”) is a legislative intervention by the Presidential Enabling Business Environment Council (PEBEC). It contains provisions aimed at promoting a more conducive business environment by streamlining business regulations,amending 21 existing laws (to reduce bureaucratic red tape) and creating a more conducive climate for investment and commerce.
The Act codifies the Executive Order 001(E01) on transparency and efficiency in public service delivery (the administration’s first executive order) aimed at strengthening the ease of doing business across the country.
This article reviews the key provisions, as well as the amendments, made and introduced by the BFA and how it relates to the Companies and Allied Matters Act 2020 (the “CAMA 2020”) and the Trade Marks Act.
Background and Scope
The existence of the Act is a culmination of over four years work collaboration between public and private sector stakeholders, including the Attorney General of the Federation(and the Federal Ministry of Justice), the Nigerian Bar Association Section on Business Law (through the participation of over 40 Nigerian law firms and consulting firms), the Nigerian Economic Summit Group (NESG), and the National Assembly Business Environment Roundtable (NASSBER).
The BFA adopts global best practices that are tailored to suit the Nigerian context. It guarantees efficiency and transparency in the operations of the Ministries, Agencies, and Departments (“MDAs”) of the federal government, and it enhances the efficiency of the public service.
As previously stated, the Act amends provisions in 21 existing laws, as follows: the CAMA 2020; Customs and Excise Management Act; the Nigerian Export Promotion Council Act; the Export Prohibition Act; the Financial Reporting Council Act; The Foreign Exchange (Monitoring and Miscellaneous Provisions) Act; the Immigration Act; the Industrial Inspectorate Act; the Industrial Training Fund Act; the Investment and Securities Act; the National Housing Fund Act; the National Office for Technology Acquisition and Promotion Act; The National Planning Commission Act; the Nigerian Customs Service Board Act; the Nigerian Investment Promotion Commission Act; the Nigerian Oil and Gas Industry Content Development Act; the Nigerian Ports Authority Act; Patents and Design Act; Pensions Reform Act; and Standards Organization of Nigeria; Trademarks Act.
Key Highlights of the Act
a. Codification of Presidential Executive Order 001 (E01)
The Act makes it mandatory for MDAs to publish a complete and up-to-date list of requirements to obtain its services. These services include permits, licenses, waivers, tax, related processes, filings, approvals, registrations, and certifications, in accordance with its function. In addition, it codifies default approvals. The Act further provides that where an MDA fails to communicate the outcome of an application within the stipulated timeframe provided, such application will be deemed approved.
As an extra measure, the Act mandates the automation of all application processes, from start to finish, at Corporate Affairs Commission (CAC).
Finally, MDAs are mandated to have and publish a Service Level Agreement (SLA) on their websites which must complied with within the stipulated timelines provided therein.
b. Key Amendments in the CAMA 2020
• Increase in Share Capital: By section 127 of the CAMA 2020, an increase in share capital can only be done by the company in a general meeting. However, the BFA hasamended this provision to the effect that a resolution of the board of directors alone would suffice to increase the share capital of a company.
• Pre-emptive Rights of Shareholders: The BFA amends s.142 CAMA 2020 to restrict the enforcement of pre-emptive rights to private companies. Also, the BFA sets a specific timeline of a maximum of 21 days within which the offer of shares must be accepted by existing shareholders or deem declined.
• Return on Allotment: Section 154 of CAMA 2020 has been amended to adjust the timeframe for the return on allotment from 1 month to 15 days.
• Electronic Share Certificates: Section 171 of CAMA 2020 has been amended to include subsection 7 which now recognizes that a share certificate may be electronic.
• Virtual General Meetings: The provision of Section 240 the CAMA 2020 has been amended to allow all types of companies to conduct virtual meetings. The previous provision of the CAMA 2020 restricted the right to conduct virtual meetings to only private companies.
• Electronic Voting at Annual General Meetings: The provision of Section 248 of the CAMA 2020 was amended to include electronic voting as a valid way of voting at general meetings. Previously, the only valid means of voting was by show-of hands or a poll.
• Minimum Number of Independent Directors for Public Companies: The BFA revised Section 275 of the CAMA 2020 to the effect that the minimum number of independent directors of a public company would no longer be three (3) but one-third of the Board. This implies that any person who nominates candidates for the Board should nominate at least one third of the number of persons to be Independent directors as opposed to the previous requirement of three persons.
• Multiple Directorships: The BFA amended sub-section 3 of Section 307 of the CAMA (which provides for multiple Directorships) by introducing an entirely new sub-section 3 of Section 307, of the CAMA. To this end, the BFA emphasizes that a person can be a director in only five public companies – and any person who before the commencement of the Act was already a director in more than five public companies is required to resign as a director of all, but five, of the companies before the next annual general meeting of the companies, following two years from the commencement of the Act.
• Form and Content of individual financial statements: The BFA amended subsection 1 of Section 378 of the CAMA to provide that financial statements of a company should comply with the requirements of the accounting standards prescribed in the statements of accounting standards issued by the Financial Reporting Council of Nigeria.
• Qualification of a Small Company: Section 394 (2) of the CAMA provided conditions for a company to qualify as a small company. The BFA has now revised subsection (2) of Section 394 of the CAMA to reflect that a company qualifies as a small company (in relation to a subsequent financial year), if the conditions qualifying it as a small company are met in that year and the preceding financial year.
• Definition of Inability to Pay Debt: Section 572(a) of CAMA 2020 in defining a company that is unable to pay its debt, provides that such company must have a due debt to a person of a sum exceeding ₦200,000. However, the provision has been amended by the BFA to replace the ₦200,000 requirement with ‘a sum to be determined by a regulation issued by the Commission’.
• Fraudulent Preference in Insolvency: Section 658 of CAMA 2020 does not provide a specific timeframe, ending with the onset of the insolvency, in which to determine when preference has been given to a person connected to the company (otherwise than by reason of being its employee). This provision has now been amended by the BFA to reflect that in determining such preference, the relevant time would be a period of two years ending with the onset of the insolvency.
Conclusion
The provisions of the BFA and its amendments to existing laws in Nigeria to aid the ease of doing business is a commendable and welcomed development. It is believed that the provisions as it relates to the operations of MDAs would create a more seamless and transparent business atmosphere in the Nigerian business market.
Although the directives to MDAs are yet to be entirely complied with and adopted since the commencement of the Act, the future of doing business with MDAs, especially the CAC, appears promising and positively anticipated.
REVIEW OF THE BUSINESS FACILITATION ACT OF 2023 7.3.2023