President Muhammadu Buhari as part of efforts to promote ease of doing business in Nigeria has assented to the Business Facilitation ( Miscellaneous Provision ) bill. In the long title of the bill, the Act aims for ease of doing business and ensuring transparency, efficiency and productivity in Nigeria. The Act also amended some business-related laws for the benefit of business owners in Nigeria.
This act marks a milestone in the delivery of an enabling environment for Micro, Small and Medium-Sized Enterprises (MSMEs) and Start-ups in Nigeria.
With the passage of the Act, it is envisaged that with proper implementation, Nigeria should experience an increase in the number of MSMEs and boost investor presence and participation in the Nigerian business ecosystem. The implementation of the Act will also relieve businesses and start-ups of some of the bottlenecks experienced before now particularly in dealing with the relevant Ministries, Departments and Agencies (MDAs). This article highlights some provisions of the Act.
An Analysis of the Noteworthy Provisions of Business Facilitation ( Miscellaneous Provision) Act
- Transparency in Business Application to Ministries, Departments and Agencies (MDAs) (Section 3 of the Act)
- All MDAs must now publish the requirements of applications, applicable fees for all applications and timeline on their official websites and where there is a conflict between the published list of application requirements and the unpublished list, the published list will prevail.
- Approval of any Application must be communicated within time to applicants. Where Ministry, Department or Agency fails to communicate the Approval to an applicant, the application will be deemed approved. If an application is rejected, the Ministry must state the reason for the rejection.
- If the Ministries, Departments and Agencies fail to act on an application within the time stipulated without a lawful reason. Failure shall constitute misconduct and such Ministry, Department or Agency will be subjected to a disciplinary proceeding at the instance of the applicant.
Amendment to some sections in the Companies and Allied Matters Act
The following are some key amendments to the Companies and Allied Matters Act 2020 by the Business Facilitation Act (The Act).
- Automated Application: The Act mandates the Corporate Affairs Commission to automate all applications. Before the passage of the Act, some applications are manually made to the Corporate Affairs Commission, this is no longer acceptable.
- Share Capital: The Act provides that the Board of Directors can via a resolution increase the share capital of a company. Before the enactment of the Act, only the members of the Company at the General Meeting can do so. Now either the Board or Company members at the General Meeting can increase a company’s share capital.
- Pre-emptive Right: This is the right of existing shareholders in a corporation to purchase newly issued stock before it is offered to others. The Act provides that pre-emptive rights shall only be applicable in private companies. Before the Act, section 142 of CAMA provides for shareholders’ pre-emptive rights for both private and public companies.
- Return of allotment: Return of allotment is a statement submitted to the CAC Registrar which contains the names and addresses of shareholders and the number of shares allotted to each shareholder. The timeframe for making a return of allotment used to be a month as provided by section 154 of CAMA. The Act now provides that this application should be made within 15 days of such allotment(s).
- Virtual Meetings: The Act allows private and public companies to hold virtual general meetings. Before the enactment of the Act, by the provision of section 240 of CAMA only private companies were allowed to hold virtual general meetings.
- Notice of Meetings: The Act provides that notice of meetings can now be given electronically to any member of a company. Before the Act by section 244 of CAMA, a notice of meeting must be given to a member either personally or by post or delivered to the member’s registered address.
- Voting at Meetings: Electronic Voting is now a recognized means of voting at general meetings. Before the Act, section 248 of CAMA provides that at general meetings, voting must be by either show of hands or a poll where demanded.
- Independent Directors: The Act provides that the number of Independent Directors in a public company must be one-third of the total number of its directors. Before now, section 275 of CAMA provides that the independent Directors of a public company must be at least 3.
The Business Facilitation Act is a significant milestone for MSMEs and start-ups in Nigeria. The Act restricts the regulatory bottlenecks faced by companies and businesses in Nigeria because the Act provides for responsible and responsive MDAs on application procedures and swift approvals or no approval of applications. If implemented, Nigerian and non-Nigerian-owned businesses will say goodbye to the days of endless waiting for the acceptance of business applications. The implementation of the Act also promises to boost Nigeria’s revenue.