Nigeria Adopts new company law and proposes new taxes
President Buhari has signed the Companies and Allied Matters Bill, 2020, which amends the existing Companies Act of 1990, and is intended to ease of doing business in the country. The changes include: – reducing filing fees and other reforms to make it easier and cheaper for SMEs to register and reform their businesses in Nigeria; allow corporate promoters of companies to establish private companies with a single member/shareholder, and creating limited liability partnerships and limited partnerships to give investors and business people alternative forms of carrying out their business in an efficient and flexible way; innovation of processes and procedures to ease the operations of companies, such as introducing Statements of Compliance; replacing “authorized share capital” with minimum share capital to reduce costs of incorporating companies; and providing for electronic filing, electronic share transfers, e-meetings as well as remote general meetings for private companies in response to the disruptions to close contact physical meetings due to the COVID-19 pandemic; require the disclosure of persons with significant control of companies in a register of beneficial owners to enhance corporate accountability and transparency; and enhance the minority shareholder protection and engagement; introducing enhanced business rescue reforms for insolvent companies; and permitting the merger of Incorporated trustees for associations that share similar aims and objectives.
The new law has drawn strong criticism. For example, critics are concerned that the Corporate Affairs Commission (CAC) can now arbitrarily remove & replace the “owners” or leaders of not-for-profit bodies (including religious establishments). Also in the old Act, small fees were clearly prescribed for certain things, for example, the Act set down fines for each day of default. The new Act has removed all those meagre fines & gives CAC power to make regulations prescribing fees. Online vendors which operate under a business name other than their registered names, now risking conviction in court if they do not register their trading names with CAC.
Meanwhile, the Nigerian Treasury has unveiled new taxes to help with the economic recovery post-COVID, including a tax on image creation. Commentators are trying to discover what this tax is addressing.
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