Akinrinde Akinloluwa

COURSE: COMPANY LAW ASSIGNMENT QUESTION: STATUS, FUNCTIONS AND RELEVANCE OF THE CORPORATE AFFAIRS COMMISSION IN NIGERIA.

The Corporate Affairs Commission was established following the promulgation of the Companies and Allied Matters Decree (CAMD) of 1990 as amended, by section 1 of the Companies and Allied Matters Act, Cap C.20, Laws of the Federation of Nigeria, 2004 (CAMA). It is an autonomous body charged with the responsibility to regulate the formation and management of companies in Nigeria. It carry out its functions through accredited members of Association of National Accountants of Nigeria, Institute of Chartered Accountants in Nigeria, Institute of Chartered Secretaries and Administrators of Nigeria and the Nigerian Bar Association. It is headed by a Registrar-General. Note that prior to the enactment of CAMA, these activities were carried on under the Companies Act 1968. According to section 1 of the Companies and Allied Matters Act (hereinafter referred to as the Act), the Corporate Affairs Commission (hereinafter referred to as the Commission) is a corporate body with perpetual succession and a common seal, capable of suing and being sued in its corporate name and capable of acquiring, holding or disposing of any movable property for the purpose of carrying out its functions. Corporate Body: The Commission is authorised by law to act as one individual and is regarded as having a separate existence from the people who manage its affairs. Perpetual Succession: Unlike human beings who die and cease to exist at a point in time, the Commission lives in perpetuity except terminated or repealed by another law. The power to hold land: Landholding or legal possession or ownership of land is regulated by the Land Use Act. For any organisation to be legally entitled to land, government

authorities must be satisfied that the organisation is duly registered with the appropriate government agencies to ensure that government is not dealing with an illegal body. Have Common Seal: The seal here signifies a stamp of authority. It is used as a means of authentication or attestation. It is used as a symbol to confirm a pact. Sue and be sued in its corporate name: The Commission has the status of a legal personality or entity which can sue or be sued in its corporate name. The Governing Board of the Commission consists of the following: i) The Chairman who is appointed by the President of the Federal Republic of Nigeria on the recommendation of the Minister; ii) A representative of the Legal Profession; iii) A representative of the Accounting Profession iv) A representative of the Nigerian Chamber of Commerce, Industries Mines and Agriculture. v) A representative of Securities and Exchange Commission; vi) A representative of the Manufacturers Association of Nigeria; vii) A representative of the Federal Ministry of Commerce viii) A representative of the Federal Ministry of Industries; ix) A representative of the Federal Ministry of Justice; and x) The Registrar-General is the Chief Executive of the Commission and is saddled with the responsibility of its day-to-day management. He must be a legal practitioner so qualified for not less than 10 years and who has not less than eight years experience in company law practice or administration. He is also the registrar of business names.

It is important to know that only legal practitioners, chartered accountants and chartered secretaries who are professionals are authorised and accredited to transact business with the Commission in respect of part A of the Act. In respect of registration of business names and incorporated trustees in part B and C, any other person including you and other nonprofessionals can be accredited to transact business with the Commission. Transacting business here means registering and incorporating companies on behalf of other people, preparing and filling of annual returns, conducting searches, etc. The Act further stipulates that the headquarters of the Commission shall be situate in Abuja, which is the Federal Capital Territory and there shall be established an office of the Commission in all thirty-six states of the Federation in Nigeria.

FUNCTIONS The functions of the Commission according to section 7 of the Act shall be amongst other things to administer all the content which the Act prescribes to the latter which may in include the regulation and supervision of the formation, incorporation, registration, management, and winding-up of companies under or pursuant of this Act. In addition to the above, the Commission shall also establish and maintain a company's registry and offices in all the States of the Federation suitably and adequately equipped to discharge its functions under this Act or any other law in respect of which it is charged with responsibility. The purpose of this is to have a documentation and to put on record all the processes of the incorporation of a company. The Commission is also whelmed with the onus of arranging or conducting investigations where it is necessary into the affairs of any company where the interest of the shareholders

and the public so demand. Additionally, to perform such other functions as may be specified by any law or enactment. Also to undertake such other activities as are necessary or expedient for giving full effect to the provisions of this Act. Furthermore, subsection 2 provides that "Nothing in this section shall affect the powers, duties or jurisdiction of the Securities and Exchange Commission under the Securities and Exchange Commission Act." In order to prohibit unauthorized persons from pervading the system, the Commission gives official approval to persons who legitimately seek information in the Registry either for themselves or as professionals on behalf of others. For the purpose of elucidation, it is only Legal Practitioners, Chartered Accountants and Chartered Secretaries who are accredited with the Commission to register a company under Part A of the Act. The requirements for accreditation for a legal practitioner are as follows: a) Obtain an accreditation form for free at the Commission. b) Fill and submit with the following documents: i. ii. iii. iv.
v.

Two recent passport sized photographs photocopy of NYSC discharge certificate photocopy of call to bar certificate copy of receipt of practicing fee for that year N2,500 for individuals and N5,000 for corporate organization.

Likewise, the role of the Corporate Affairs Commission under the Decree includes

regulation and supervision of the formation, incorporation, management and winding-up of companies in Nigeria. The Commission ensures that those who desire to form a company adhere strictly to the provisions and requirements specified in the Companies and Allied Matters Decree of 1990. It ensures, for example, that the name of the company is one that is acceptable under the law and that the Memorandum and Articles of Association are properly prepared. In the process, the Commission ensures that only companies whose objectives, constitution and programmes are acceptable under the law are registered. The Commission is responsible for registration of the business names of unincorporated companies. It is also responsible for the registration of incorporated trustees, debentures, mortgages and charges created by a company. The Corporate Affairs Commission undertakes the incorporation of both private and public companies once it is satisfied that the conditions for incorporation have been complied with and the required documents submitted. The Commission supervises the management of companies. Incorporated companies are required to submit certain reports or decisions to the Commission for registration. Among these are: (i) Changes in the Memorandum and Articles Of Association; (ii) Allotment of Shares; (iii) Statutory meetings, annual general meeting and extra-ordinary meetings; (iv) Appointment of Directors, Auditors and Secretaries; and (v) Annual Financial Returns.

With these documents available in the registry of the Corporate Affairs Commission, any member of the public may have access to information on the affairs of an incorporated company. When a company is to be liquidated, the Commission must be so informed and those appointed to windup the affairs of the company must notify the CAC of their appointment for registration. The Commission generally supervises the winding-up procedure. In addition, it may apply to court for directions in respect of any matter concerning its duties, powers, and functions under the Act and, on any such application, the court may give such directions and make such further order as it thinks fit. Categorically, it can be said that the services offered by the Commission include the following Regulation and supervision of the formation, incorporation, registration and management of Companies, Business Names and Incorporated Trustees Registration of changes, amendments and alterations in particulars of Companies, Business Names and Incorporated Trustees Repository for statutory records of Companies, Business Names and Incorporated Trustees including annual reports of exempted foreign companies and annual returns of Companies, Business Names and Incorporated Trustees Searches Issuance of certified true copies of certificates and extracts of filed documents Enforcement of compliance of Companies, Business Names and Incorporated Trustees with the provisions of CAMA

 Conducting investigations into the affairs of Companies, Business Names or Incorporated Trustees Registration of changes in share capital, mortgages, debentures, charges, etc. Registration of appointment/discharge of Receiver/Manager Registration of appointment of Liquidator Regulation and supervision of the striking off and winding up of Companies, removal of Business names from register and dissolution of Incorporated Trustees Express incorporation of Company Accreditation of Lawyers, Chartered Accountants and Chartered Secretaries as direct users of the services of the Commission Incorporation of Private or Public Companies. This involves: (i) Availability of an acceptable name. A name is acceptable provided such a name is not identical with an existing name; it does not contain "Chamber of Commerce"; it is not misleading and does not violate existing business regulations. (ii) Printing of the Memorandum and Articles of Association. (iii) Completion of Statutory Forms which are: (a) CAC I - Declaration signed by a solicitor that the requirements of the Companies and Allied Matters Decree of 1990 have been complied with; (b) CAC 2 - This shows the allotment of the shares of the company to members; (c) CAC 6 - Indicates the registered office of the company; (d) CAC 7 - This contains the particulars of all the Directors including names, nationality, addresses, occupation and dates of birth; (e) CAC 7A -Contains the particulars of the Secretary of the company;

(f) Payment of Stamp Duty RELEVANCE The Companies Ordinance 1912 was the first companies statute in Nigeria. It was first applied to the colony of Lagos and later, in 1917, to the rest of the country. The Companies Ordinance 1912 provided for the first time in Nigeria, a procedure for incorporating a company by registration. The objects and reasons for the Ordinance were stated as follows: ``to provide for the formation of limited companies within the colony and protectorate It is hoped thereby to foster the principles of cooperative trading and effort in the country. After the end of world war in 1918, another companies ordinance came into force by 1922. This ordinance was first applied to the colony of Lagos and later extended to the rest of the country. In 1963, the 1922 ordinance was designated Companies Act and it continued to regulate companies until its repeal in 1968 by the Companies Act 1968. The Companies Decree No: 51 of 1968 were promulgated during the military regime. It was re-designated in 1980 as the Companies Act. Before the promulgation of the Act, there had been an urgent need for a modern companies legislation because the Companies Act, 1922 had become, for the most part, inadequate to cope with growth of the economic activities in a developing country like Nigeria. The Companies and Allied Matters Act, 2004 has made some revolutionary and landmark provisions not only for companies, but also for the registration of business names and for the incorporation of trustees. This was done in order to take care of emerging global trend in the conduct of business transactions. The Act is divided into four parts, namely, part A deals with registration of companies, part B deals with the registration of business names, part C deals with the registration of incorporated trustees and part D - citation and commencement.

With reference to companies, the declared objective and the Nigerian Law Reform Commission was to evolve a comprehensive body of legal principles and rules governing companies and suitable for the circumstances of the country. In pursuance of this objective, a broad approach was adopted. Not only the statutory provisions but also the common law principles and the doctrines of equity applicable to company law in Nigeria were examined and, wherever desirable, enacted, and often with necessary amendments. As indicated above, the Act is a product of careful consideration and extensive consultation. It represents the general views and consensus of users of company law in Nigeria. Note that prior to the establishment of the Corporate Affairs Commission, the administration and regulation of companies in Nigeria was steered by the Registrar of Companies in the Corporate Affairs Division of the Ministry of Trade. In fact, its organization and staffing were the joint responsibility of the Ministry of Trade and the Ministry of Justice. It should be noted that despite the fact that the Company Registry, was a revenue generating government agency, it was however, fraught with inadequacies and shortcomings as it was starved of funds and other necessary facilities. It was in this light that the Nigerian Law Reform Commission embarked on a law reform programme in1987.Upon several deliberations, the Commission came up with the view of having an autonomous body for the regulatory body to perform its functions adequately. The Law Reform Commission borrowed the practice prevalent in other countries like England and India and recommended the establishment of the Corporate Affairs Commission.

The establishment of a Corporate Affairs Commission to administer the Companies and Allied Matter Act is one of the most urgently important innovations of the Act. Among the ingenuity brought about by the creation of the Commission may be noted. a. More logical arrangement of the subject matter of the incorporation of companies b. Encouraging greater seriousness and commitment in the formation and registration of companies by requiring a minimum authorised share capital and minimum subscription. c. Provisions for greater accountability by directors. d. Improvement in the forms and contents of financial statement, classification of companies into small, and others for the purpose of greater financial disclosure, incorporation of accounting standards and provision for greater and more relevant disclosure in the Directors Report.
The enforcement of compliance arrangement in the Corporate Affairs Commission plays a significant role in ensuring the practice of corporate governance and service improvement. The Corporate Affairs Commission in Nigeria, in order to reaffirm its regulatory (enforcement of compliance) role, recently gave a directive for all Limited Liability Companies in Nigeria to comply with the provisions of Section 293 of the Act, by appointing Company Secretaries to handle the administrative affairs of the company. The directive is a notice from the office of the Registrar, for all concerned companies to comply. The move for all intents and purposes seems to be part of the efforts by the Corporate Affairs Commission to check the challenges of compliance in regulating businesses in Nigeria. Non adherence by a company to lay down rules and procedures for its operations leads to queries while non-satisfactory response to the queries will qualify a company for an

appropriate disciplinary measure which may range from suspension to de-registering/striking off as the case may be. The practice is that where a company refuses to answer the said queries, it will be reminded in writing. If it (the company) fails again, the Commission will publish in National dailies with a view to attracting compliance of the company with the rules set by the Commission. If the company doesnt comply, the commission will strike the company off. The company stands re-enlisted if it obtains a court order but failure to do that will result in gazette of the said disciplinary measure which rules out possibility of reenlistment. In addition, the power of investigation of the affairs of companies given to the Commission under the Act is the most useful and effective in the overall management and promoting good corporate governance practice in our registered companies. Investigation of the affairs of the companies is potent and quite useful in protecting investors and preventing impropriety in the management of corporate enterprise. Under section 157 of the Companies Act 1968, the Minister of Trade had power to order investigations. This power which is now exercisable by the Commission is much improved under the Act.The Commission`s action (de-listing or de-shelving) corporate citizens that do not comply with the Commission`s requirements such as statement of affairs based on which annual returns are paid has been partly responsible for the rating that the Commission has been receiving especially from international organizations such as the International Organization for Standardization (ISO). As noted, State offices are expected to bring the services of the commission close to the grassroots as well provide platforms for effective supervision of companies and membership organisations at that level. The following are among the services offered at the state zonal

offices with the aim of bringing the services of the Commission closer to the people andthey include: o Business name registration; o Sale of all statutory forms and publications of the Commission;

o Processing of statutory filing under the Act and subsequent transfer to theHeadquarters for further necessary actions; o Handling the preliminary process of accreditation of professionals like lawyers,chartered accountants and chartered secretaries. o Verification and assessment of applications for company incorporation after which they are sent to the Headquarters for final approval and registration; o Responding to enquires and complaints in respect of the services of the Commission; Conclusively, the importance of the Corporate Affairs Commission in the countrys economy cannot be over emphasized. In Nigeria, every company except those granted exemption by the Federal Government must be registered before doing business. This is the determination, commitment and mission of the Commission. The Commission has also introduced special desks in all the commissions state offices to encourage and facilitate the registration of small businesses. Small scale industries the world over contribute to the economy of many countries. China with her GDP and large size of economy records and encourages enormous participation by small scale firms Having one's business registered confers some credibility on it, given that it then acquires an identity. In many important business activities or relationship you may want to get involved

in, details of your business registration will be required. You do not have to wait for such occasions before getting your business into the register of companies you may miss an important opportunity just for that negligent act of non-registration.

REFERENCES
1. 1. J Olakunle Orojo, Company Law and Practice in Nigeira Lexis Nexis Butterworths, 5th Ed. 2. M.N. Umenweke and A.R. Aladegbaiye, Powers and Duties of the Corporate Affairs
Commission as a Regulatory Body in Nigeria Vol. 2 (2011), Nnamdi Azikiwe University Journal of International Law and Jurisprudence

3. The Nigerian Law School Course Handbook on Company Law & Practice ,

2005/2006.
4. Owolabi, N.B & Badmus, M.A. (Eds). (2003). Nigerian Business & Co- Operative

Law. Lagos: Printarts Limited.

5. Companies and Allied Matters Act, 2004.