The SA Company Act and Nigerian Startup Act
These 2 laws are not related, but provide a quick view of different approaches to ease business processes. The SA Companies Act – Amendments were first proposed in 2018, then revisited and issued as a draft in 2021, the latest version appeared recently. Although not many changes were made, the new version is primarily aimed at strengthening anti-money laundering regulation in order to prevent SA being labelled an easy country for money laundering and funding of terrorism (put on the grey list). The new amendments to the Act deal with excessive bonuses, require the identification of the real owners of a company and call on large companies to provide far more transparency of ownership and financial structure.
On the other hand, the Nigerian technology and innovation space in general, and its startup ecosystem in particular, has been gaining momentum and recording impressive growth in recent times. For instance, Nigerian startups attracted $1.37bn of Africa’s $4bn funding in 2021 and reports show that Nigeria has the highest volume of startups in Africa. Unfortunately, Nigerian startups have a high failure rate with a whopping 61% failure rate recorded from 2010-2018; these failures have been attributed to various factors including aggressive government policies, regulatory bottlenecks, over-saturation of startups in select locations, talent dearth, high cost of doing business, funding challenges, etc.
The Act applies to all companies incorporated under the Companies and Allied Matters Act and granted the startup label and organizations and establishments, whose activities affect the creation, support, and incubation of labelled startups in Nigeria. The Act which came into effect on 19 Oct seeks to provide:
- a legal and institutional framework for the development of startups in Nigeria;
- an enabling environment for the establishment, development, and operation of startups in Nigeria;
- for the development and growth of technology-related talent; and
- position Nigeria’s startup ecosystem as the leading digital technology centre in Africa.
The National Council for Digital Innovation and Entrepreneurship was set up with the National Information Technology Development Agency (NITDA) serving as the Secretariat to the Council. The role of the National Council includes formulating and providing general policy guidelines for the realisation of the objectives of the Act, giving overall direction for the harmonisation of laws and regulations that affect startups and ensuring the monitoring and evaluation of the regulatory framework to encourage the development of startups in Nigeria
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