Business Management, Entrepreneurship, SME businesses

Companies And Allied Matters Act – Amendments in the 2018 Bill




  • The Companies and Allied Matters Act (CAMA) is the Law that largely governs the incorporation, operations, business procedures, and the cassation/winding up of business entities in Nigeria, whether sole proprietorships, private companies, public companies or Not for Profit Organizations.
  • On the 15th of May, 2018, the National Assembly at its plenary session passed a Bill for an Act to repeal the Companies and Allied Matters Act and re-enact the Act. The Bill currently awaits presidential assent.
  • CAMA was promulgated in 1990 and the recent review was long overdue, in the light of the changing face of the Nigerian economy, an upsurge in Information Technology and the need to increase Nigeria’s ranking in the World Bank’s Ease of Doing Business (WBDB) Index.
  • This “infochat” highlights the key changes to CAMA and examines a few of them to see how it facilitates easier procedures and mechanisms of doing business in Nigeria especially for Small companies and Small and Medium Enterprises (SMEs).


S/N Key Impact on SMEs Explanatory Notes
1 Pro-Business and SME-friendly Registration Procedures – Sole Proprietorships, Partnerships and Small companies will no longer require a consultant to register a business.


Business registration can now be completed between 48 hours and two weeks, subject to complete submission of required documents and information.

The Bill takes into consideration the adoption of the online procedures for pre Incorporation and Incorporation procedures as already effected by the Corporate Affairs Commission (CAC), the regulatory body saddled with the responsibility of overseeing the activities of business entities in accordance with the provisions of CAMA.

2 Simplified Ownership and Management structure of Private Companies – Based on the revised Bill, a single individual can be the sole shareholder and/or a sole director in a private company. This is consistent with the company laws in the United Kingdom and Singapore.


Single individuals can now operate as a separate legal entity with the protection of their personal assets (as against the sole proprietorship or partnership business structures).

Small companies are also now allowed to have one Director.

The single shareholder can now solely approve business decisions that previously required the approval of at least ¾ of the members’ votes (special resolution).

This will speed up the decision making process for small companies. However, this possibly raises the issue of Corporate Governance (Accountability and Risk management), which is equally important for small companies, especially when dealing with institutional partners, vendors and potential investors.

3 Annual General Meeting (AGM) and Company Secretary – Small Companies are no longer mandated to hold AGMs and the appointment of Company Secretaries by private Companies is also now optional. These changes further reduce the regulatory burden on small businesses. This also raises the issue of Corporate Governance (Accountability and Risk management), which is equally important for small companies, especially when dealing with institutional partners, vendors and potential investors.
4 Restriction on Directorships in Public Companies – The bill proscribes anyone from being a Director of more than five (5) Public Companies.


This is to ensure that directors of Public Companies have the capacity to be effective.
5 The introduction of the Limited Liability Partnerships (LLPs) – The Bill has now introduced the concept of LLPs, which are entities, that combines the tax status and operational flexibility of a partnership business structure with the limited liability feature of a limited company.


This structure was only applicable in Lagos before it was suspended. This structure should enhance business partnerships and collaborations.


The advantage of this structure, when properly implemented, is that it shields the partners from Companies Income Tax as they are only exposed to the Personal Income Tax – which is generally believed to have a lower effective tax rate.

6 Reduction in Minimum Issued Share Capital – This opportunity for the reduction in minimum share capital is to encourage more investments and to encourage small businesses to utilize the formalized legal business structures.


7 Exemption from (Financial Statement) Audit – The Bill exempts small companies from the compulsory annual financial statement audit requirements.


Small companies are:

1.       Businesses that are yet to commence operations after registration or incorporation.

2.       Businesses with an annual turnover (revenue) of not more than N10 million, AND balance sheet total of not more than N5 million.


Therefore, it will now be optional for small businesses to appoint auditors, as soon as the Bill is passed into law.

In practice, the tax agencies only accept financial statements that have been verified by a certified auditor for the purpose of tax assessment.


This revision to CAMA might then require a change in the tax laws and guidelines to accommodate the use of self-prepared management accounts for the purpose of tax filings.


There is a tendency that the tax agencies might result to more rigorous tax reviews and audits of small companies in order to get necessary assurance on the reasonableness of the management accounts that will be submitted by the small companies.

8 Revised Fees and Penalties – The fees and penalties prescribed in the Bill reflects the current value of the fees and penalties stated in the Act as at 1990 when the Act was promulgated.


9 Introduction of a new Insolvency Process – Businesses are able to formally reach agreements on existing debts and such businesses that are almost insolvent can now utilize the new process for insolvency administration, which enables such businesses to operate under an appointed “administrator” for a period of 12 calendar months.
10 Cessation of Business – The bill empowers the Commission to strike off the names of companies, which have not been in operations or has not filed its annual returns for 5 consecutive years by publishing such names in three Newspapers. Although the CAC had previously mentioned this as a possible punitive action it can take against non-complying companies, the Bill now specifically provides for this punitive step of the CAC.

This may look like an easy way out to formally notify the CAC of the cessation of a small company’s business operations as opposed to going through a voluntary winding up process. However while a winding up process ends in a final dissolution of the company, a striking off does not have the same effect. The liability of the Directors of such a company continues and the court retains its power to wind up the company.

This provision also does not address the issues of unsettled obligations to regulatory authorities where the commission strikes off a company’s name for lack of operations and non –compliance.





One thought on “Companies And Allied Matters Act – Amendments in the 2018 Bill

  1. The Company and Allied Matters Act having been promulgated in 1990, has long been overdue for a change taking into consideration the changes in business between then and now.
    I hope it gets presidential assent soon.

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