INTRODUCTION

The ease of doing business has continued to be a challenge in Nigeria; from bureaucratic
impediments to infrastructural deficiencies, governments at the Federal, State and Local levels have
struggled mostly with respect to proper legislations to phase out some of the deficiencies which
impede the ease with which businesses are undertaken in Nigeria.1
The new Companies and Allied Matters Act (CAMA) 2020 2, has simplified the procedure for
incorporating private and small businesses in Nigeria by introducing certain provisions targeted at
aiding the ease of doing business in Nigeria, particularly as they affect the establishment and running
of small and medium scale businesses and start-ups, including the establishment of foreign-owned
businesses in the country. In a bid to achieve its aim of easing the establishment and conduct of
businesses in Nigeria, certain provisions and exemptions have therefore been enacted in favor of
small and private companies amongst other relevant provisions.3
The Companies and Allied Matters Act (CAMA) 2020, therefore provides a robust framework for
reforming identified onerous legal regulatory and administrative bottlenecks which, for three
decades, have made doing business in Nigeria substantially difficult (particularly for Micro, Small
and Medium Enterprises (MSMEs)) and impeded investments into Nigeria. 4 These provisions are
expected to in turn boost the confidence of investors and encourage foreign participation in the
Nigerian business sector.5
This paper seeks to examine the extent to which the Companies and Allied Matters Act (CAMA)
2020 has achieved the Ease of Doing Business policy in Nigeria thereby highlighting notable
provisions therein, which create a business-friendly regime for Nigerians and foreigners alike.

1
Ehijeabon Oserogho, ‘Business Facilitation Act (Ease of Doing Business Law)’ (2023)
<https://www.linkedin.com/pulse/business-facilitation-act-ease-doing-law-ehijeagbon-oserogho> accessed 12 February
2024.
2
Companies and Allied Matters Act, 2020.
3
A.B. Kasunmu, ‘A Summary of Charges Under the New Companies and Allied Matters Act, (CAMA), 2020’ (2021)
<https://www.kasunmuschambers.com.ng/a-summary-of-changes-under-the-new-companies-and-allied-matters-act-
cama-2020/> accessed 11 February 2024.
4
Banwo & Ighodalo, ‘Companies and Allied Matters Act 2020: Reforming Provisions That Impact the Nigerian
Business Community’(2020) <https://banwo-ighodalo.com/resources/companies-and-allied-matters-act-2020-reforming-
provisions-that-impact-the-nigerian-business-community> accessed 11 February 2024.
5
(n2)

1
EASE OF DOING BUSINESS POLICY IN NIGERIA

Ease of doing business is a World Bank Project launched in 2002. 6 This project looks at domestic
small and medium-size companies and measures the regulations which apply to them through their
life cycle. The World Bank measures these regulations based on the Ease of Doing Business index
and publishes its aggregate figure. The Ease of Doing Business index measures the regulations that
improve business activity and those which constrain the ease of doing business in different
countries. It presents quantitative indicators on business regulations and the protection of property
rights that can be compared across 190 economies. It provides quantitative indicators on regulation
for starting a business, dealing with construction permits, getting electricity, registering property,
getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts
and resolving insolvency.7 It also measures regulation on employing workers and contracting with
the government, which are not included in the ease of doing business score and ranking.

By gathering and analyzing comprehensive quantitative data to compare business regulation

environments across economies and over time, it encourages economies to compete towards more
efficient regulation; offers measurable standards for reform; and serves as a resource for academics,
journalists, private sector researchers and others interested in the business climate of each economy. 8

For almost three decades, companies and businesses in Nigeria were primarily regulated by the
repealed Companies and Allied Matters Act (CAMA) of 1990 9(the Repealed Law). This law was
fraught with a lot of challenging and largely impeding provisions which were no longer tenable for
the smooth conduct of businesses in the light of fast-paced global realities.
The Nigerian Corporate and Commercial world however witnessed a tremendous change on the 7 th
of August, 2020, when President Muhammadu Buhari gave executive assent to the Companies and
Allied Matters Act (CAMA) 2020.10 This has now become the primary legislation for corporate
practice in Nigeria which has repealed the 30year old Companies and Allied Matters Act (CAMA)
of 1990.
As expected, the enactment of the Companies and Allied Matters Act (CAMA) 2020 has garnered
(stirred up) a lot of reactions and expectations that it will modernize Nigeria’s corporate law and
practice and promote the ease of doing business in Nigeria. Nigeria is currently ranked 131 out of
190 countries in the World Bank’s Ease of Doing Business 2020 Index, climbing 15 places from its
6
World Bank (2013)
7
World Bank (2017)
8
J Ndukwe Okoh and Allison Patricia, ‘Good Governance and ease of Doing Business in Nigeria: Problems and
Prospects’ International Journal of Academic Management Science Research (IJAMSR) (2021) 5(1) 89
<http://eprints.gouni.edu.ng/3444/1/Go%20uni%20Ndukwe%20and%20Allison%20ijeais%20jan
%202021%20%202.pdf> accessed 12 February 2024.
9
Companies and Allied Matters Act, 1990.
10
Depthfield Solicitors, “Innovative Provisions of the New CAMA 2020 and their Significant Impacts to Micro, Small
and Medium Enterprises (MSME) As It Relates to the Ease of Doing Business in Nigeria’ (2020)
<https://depthfieldsolicitors.com/innovative-provisions-of-the-new-cama-2020-and-their-significant-impacts-to-micro-
small-and-medium-enterprises-msme-as-it-relates-to-the-ease-of-doing-business-in-nigeria/> accessed 12 February 2024.

2
previous position of 146. It is expected however that the introduction of the Companies and Allied
Matters Act (CAMA) 2020, will improve Nigeria’s standing in the ease of doing business index.11
The objective of the reformed CAMA 2020 Act is to promote legislation for regulatory quality and
efficiency which would enable efficient Ease of Doing Business (EoDB) for Nigerian businesses in
general, and Medium and Small Scale Enterprise (MSMEs) in particular. MSMEs are the engine of
growth for most developing nations. As can be expected, without reforms for enabling business
environments to sync with global business evolution, most businesses may shut down due to
economic and environmental shocks. It follows logically that without reforms in a rapidly changing
global market, most firms-MSMEs especially may not survive beyond the unanticipated COVID-19
pandemic.
Specifically, the reformed CAMA 2020 Act among other things, made the starting and running of
business more seamless and less expensive by operationalizing electronic platforms that integrate the
tax authority and the Corporate Affairs Commission (CAC). Considering that Nigeria is largely
dominated by Medium and Small-Scale Enterprises (MSMEs), making business registration or
company incorporation easier will bring in more businesses into the formal space. This also will
enhance tax revenue for the government. The Act has 870 sections and divided into 7 parts as
against 612 sections in the repealed Act of 1990. 167 sections were completely new, while 91
sections were modified.12

THE EXTENT TO WHICH THE COMPANIES AND ALLIED MATTERS ACT (CAMA)
2020 HAS ACHIEVED THE EASE OF DOING BUSINESS POLICY IN NIGERIA
The friendlier an economy is for business operations, the more attractive it is for investments, which
are a vital catalyst for economic growth and development. It is argued that the easier and more
flexible it is to establish and run a business in an economy, the more encouraging it becomes for
investors to invest thereby developing the economy; a viable business environment thus promotes
competition and encourages innovation and expansion13.
The 2019 World Bank Ease of Doing Business annual report aptly noted that an economy cannot
thrive without a healthy private sector. When local businesses flourish, they create jobs and generate
income that can be spent and invested domestically. Any rational government which cares about the
economic well-being and advancement of its constituency pays special attention to laws and
regulations affecting local Small and Medium size Enterprises (SMEs). Effective business regulation

11
Dentons Acas Law, ‘CAMA 2020: Deepening the Ease of Doing Business in Nigeria with a New Look CAC’ (2020) <
https://www.dentonsacaslaw.com/en/insights/alerts/2020/august/10/cama-2020-deepening-the-ease-of-doing-business-
in-nigeria> accessed 12 February 2024.
12
Ogenyi, M. (n.d.). Company and Allied Matters Act (CAMA) 2020: Enhancing a better business environment for
MSMEs in Nigeria Under AfCFTA | CSEA AFRICA - CENTRE FOR THE STUDY OF THE ECONOMIES OF
AFRICA. <https://cseaafrica.org/allied-matters-act-cama-2020-enhancing-a-better-business-environment-for-msmes-in-
nigeria-under->
13
World Bank (2013)

3
therefore affords micro and small firms the opportunity to grow, innovate and, when applicable,
move from the informal to the formal sector of an economy.14
On the 7th of August, 2020, President Muhammadu Buhari assented to the Companies and Allied
Matters Act (CAMA) 2020, which repealed and replaced the Companies and Allied Matters Act,
199015(the “Repealed Act”), with key amendments targeted at removing the bottlenecks embedded
in the old Act with respect to Ease of Doing Business in Nigeria. This revised Act is therefore
intended to make Nigeria’s business environment as competitive as its counterparts around the
world.
The Companies and Allied Matters Act (CAMA) 2020 has introduced novel provisions, concepts
and practices geared towards achieving Ease of Doing Business in Nigeria thus;

1. Establishment of a Governing Board:

Section 2(1) of the Companies and Allied Matters Act (CAMA) 2020, established a
Governing Board for the Corporate Affairs Commission (CAC) responsible for performing
the functions of the CAC. This was not the case under the repealed CAMA 1990, which only
provided for members of the CAC but not a duly established governing board with clearly
stated functions. The functions of the Governing Board as provided in Section 4 of CAMA
2020 include reviewing and providing general policy guidelines for performing the functions
of the CAC in accordance with international commercial best practices, exercising general
oversight on the administration of the CAC, reviewing and approving the strategic plans of
the CAC, considering management reports and advising the Minister charged with
responsibility for trade on the reports.
The requirement for the Governing Board to review and provide policy guidelines in
accordance with international commercial best practices is a welcomed provision, which will
go a long way in institutionalizing international commercial and corporate best practices in
Nigerian corporate law and practice. In addition, the oversight functions conferred on the
Governing Board over the affairs of the CAC will hopefully lead to an effective and efficient
Commission. It is expected that by reviewing the strategic plans of the CAC and considering
its management reports, the Governing Board will ensure that the CAC delivers on its
inherent responsibility of contributing to the quest to improve the ease of doing business in
Nigeria in order to facilitate the sustainable development and growth of the Nigerian
economy.16

2. Membership of the Governing Board:

14
(n8)
15
Cap C20 Laws of the Federation of Nigeria 2004.
16
(n10)

4
 Section 2(2) of the Companies and Allied Matters Act (CAMA) 2020, provides for the
membership of the Governing Board. Although the membership of the Governing Board of
the CAC as provided in CAMA 2020 largely corresponds with the membership of the CAC
as set out in CAMA 1990, CAMA 2020 expanded the composition of the Governing Board.
In addition to the composition contained in CAMA 1990 (that is, Chairman, the Registrar-
General of the CAC and one representative of each of the business community, legal
profession, accountancy profession, Manufacturers Association of Nigeria, Securities and
Exchange Commission, Federal Ministry of Industry, Trade and Investment and Federal
Ministry of Justice), the Governing Board will also have the benefit of the experiences and
expertise of one representative each of the Institute of Chartered Secretaries and
Administrators of Nigeria, Nigerian Association of Small and Medium Enterprises and
Federal Ministry of Finance. This incorporation of individuals representing critical segments
of the Nigerian economy and corporate practice will no doubt improve deliberations of the
Governing Board as well as policy guidelines introduced by the Governing Board.
Particularly, the requirement for the appointment of a representative of the Nigerian
Association of Small and Medium Enterprises must be commended given the importance of
micro, small and medium enterprises to the development of the Nigerian economy.
While the establishment of the Governing Board and its expanded composition is
commendable, it is important to note that the retention of the Minister’s powers to, with the
approval of the President, remove any member of the Governing Board “if the Minister is of
the opinion that it is not in the interest of the Commission for the member to continue in
office”17 without stating any objective criteria, may negatively impact the independence of
the Governing Board in the discharge of its functions.18

3. The Introduction of Limited Liability Partnerships

The CAMA 2020 ushered in a laudable reform by introducing the concept of Limited
Liability Partnerships (LLPs). S.746–794 of the CAMA 2020 laid down a regulatory
framework for the operations of Limited Liability Partnerships in Nigeria. 19 A Limited
Liability Partnership is one in which a partner is not liable for a negligent act committed by
another partner or by an employee not under the partner’s supervision. 20 The essence of these
provisions is simply to incorporate the limited liability concept of companies into partnership
arrangements, thereby creating partnerships that have the nature of a company with separate
legal personality and perpetual succession. The limitation of the liability of members in a
partnership arrangement can therefore now be adopted by individuals or corporations who
wish to establish business relationships without being personally liable under the partnership

17
Section 3(2) of the CAMA, 2020 and Section 3(2) of CAMA 1990.
18
(n10)
19
It is pertinent to note that Lagos State was the pioneer state to enact a legislation introducing LLPs in Nigeria through
the Partnership Law of Lagos State, 2009.
20
Black’s law Dictionary 9th edition.

5
 arrangement. The partners in a Limited Liability Partnership enjoy the protection of the law
to the extent that:
i. The LLP is a body corporate that has perpetual succession and can acquire, own, hold
or dispose property and can sue and be sued in its own name;21
ii. The partners are agents of the partnership and not of other partners;22
iii. The obligations and liabilities of the LLP are solely that of the LLP and as such the
liability of partners are restricted to their individual contributions to the partnership;
just like the liability of shareholders of a limited liability company23
iv. A partner in a LLP is liable for his own wrongful acts and omissions and fraudulent
activities.24

The Companies and Allied Matters Act, 2020, also makes it possible for Foreign Limited Liability
Partnerships to be incorporated in Nigeria as a separate legal entity.25
It is essential for upcoming and existing entrepreneurs as well as Micro, Small and Medium
Enterprises (MSMEs) to utilize the numerous benefits of registering a Limited Liability Partnership
for convenience and ease of doing business as opposed to registering the ‘traditional’ partnership or
business name. The peculiar characteristics of LLPs are undoubtedly very beneficial to many
Nigerian entrepreneurs that are desirous of starting up their own business especially with very little
capital and in the uncertain Nigerian business environment prone to recession, fluctuations alongside
other adverse challenges. They enjoy distinct legal personality from its members, limited liability, a
less cumbersome incorporation process, tax advantages as partners are liable to pay Personal Income
Tax and not Company Income Tax, etc.26
4. Introduction of Single Member/Shareholder Private Companies
Compared to the mandatory minimum requirement of two shareholders in a company under the
CAMA 1990, an individual is now permitted under the law to incorporate a private company and
become the sole shareholder of the company under Section 18(2) of the CAMA 2020. This means
that the minimum number of persons that can own a private company has been reduced to one and
the implication of this is that individuals who wish to own businesses that can be run as legal entities
with perpetual succession and which is to be separate and distinct from its owner can now do so
without having to compulsorily register a business name as this was the only option under the
CAMA 1990. This provision also implies that individuals can own their own companies to the
exclusion of others if they so wish. 27

21
Sections 746 and 756 of the CAMA 2020.
22
Section 765 of the CAMA 2020.
23
Section 766 (3) & (4) of the CAMA 2020.
24
Sections 767 and 769 of the CAMA 2020.
25
Section 788 of the CAMA 2020
26
(n9)
27
Ibid

6
A single member private company may also exploit other benefits introduced under the new regime
of CAMA 2020 which include:
i) Minimum issued Share Capital: Section 27 of the CAMA 2020 replaced the old requirement of
minimum authorized share capital with minimum issued share capital. Consequently, the
promoter(s) of a company need not pay for shares that the company does not require all in the name
of minimum authorized share capital.
ii) A single member company need not appoint a company secretary: Section 330(1) of CAMA 2020
makes it possible for small companies to operate without a company secretary; appointment of a
company secretary is only mandatory for public companies. Under the Repealed Act, it was
compulsory for every company to have a company secretary.
iii) A single member company is no longer mandated to appoint auditors at the AGM to audit their
financial records.28
All these stated developments in the CAMA 2020 enables the sole shareholder of the company to
run the company with reduced cost and to maximize the value and other managerial operations of the
company thus enhancing the ease of doing business in Nigeria. Thus by minimizing the number of
members or shareholders required for the formation of a company, S.18 (1) and (2) of the CAMA
2020 allowed for the formation of a company with anywhere between two or more persons and even
one person in the case of a private company . The provision of subsection (2) was however not
provided for under the CAMA 1990, and as such limited the scope to a specific number of persons 29.
However, the novel introduction is more accommodating in so far as all requirements for registration
are met. Reiterating the words of Lord Macnaghten in the case of Salomon v. A Salomon & Co Ltd
which stated that “it does not matter whether the power to control a company is within only the
hands of one person, as long as the shares are fully paid up”30

28
Section 402 of the CAMA 2020.
29
Companies and Allied Matters Act, 1990
30
Salomon v. A Salomon & Co Ltd (1897) AC 22

7
5. Restriction on Multiple Directorship in Public companies

S.307(1) of the CAMA 2020 frowns at a person being a director in more than five (5) public
companies at a time. Directors proposed for appointment in public companies are now required to
disclose any other positions held as Directors in other public companies at the meeting in which they
are proposed for an appointment.31

6. Procurement of Common Seal Not Mandatory

Formerly, all companies were mandated to have their common seal, the use of which was to be
regulated by their Articles of Association. Companies had to validate or authenticate documents that
emanated from them by affixing the company’s seal on the documents. However, by the provision of
S.98 of the CAMA 2020, it has become optional and no longer mandatory for a company to have a
common seal. By S.102 (2) and (3), a company can now execute a document it describes or
expresses as a deed without necessarily affixing its common seal on the document. The signature of
either a director and secretary, at least two directors or a director in the presence of at least one
witness who will attest to the signature now suffices. Such documents will have the same effect as
though they were executed under the common seal of the company. 32 Essentially, a document
emanating from a company need not carry the common seal of the company to be deemed authentic.
This provision has simplified the procedure for authentication of company documents as companies
no longer have to worry about affixing the seal on a document for it to be accepted as validly
authorized by the company and legally binding in law.

7. E-Innovations
Companies can now integrate modern technology innovations into their daily operations as
long as they comply with the company's memorandum and articles of organisation,
according to a number of CAMA 2020 regulations. A document or action requiring the
signature of a director, secretary, or other authorised officer of the company may be signed
electronically under S.101 of the act.33 This provision implies that documents need no longer
be physically signed by authorized officers of a company but can be signed electronically
from any part of the world by authorized officers who may not be physically present do so
thus enhancing the ease of doing business in Nigeria. 34 To further ease of doing business,
S.240 (2) allows private firms to convene their general meetings online, provided that the
meetings are conducted in line with the company's articles. Furthermore, a corporation is no
31
Blackwood & Stone LP, ‘Highlights of the New Companies and Allied Matters Act 2020’ (2020)
<http://blackwoodstone.com/highlights-of-the-new-companies-and-allied-matters-act-2020/> accessed 12 February
2024.
32
(n3)
33
Companies and Allied Matters Act, 2020
34
Ibid

8
longer limited to serving notices via electronic mail to any of its members; instead, it can
now do it electronically, according to S.244(b). This expands the use of electronic tools for
businesses, including the internet, social media, and fax machines. 35 S.248(1) recognizes
electronic voting compliments the provision for holding of meetings virtually. At the
company's general meetings, votes can now be done electronically. This is expected to
facilitate participation from any location at minimal costs. 36 As such, private companies do
not need to hold their general meetings physically or in-person and at a specific location
which must be in Nigeria. By the provisions of S.31 (1) of the CAMA 2020, individuals or
organizations who wish to incorporate a company can now apply to reserve names of their
proposed companies electronically. Although this provision is just being made expressly
under the CAMA 2020, the practice of e-reservation of names has been established by the
Commission some years ago based on the recommendation of the Presidential Enabling
Business Environment Council (PEBEC) in furtherance of its objective on the ease of doing
business in Nigeria.37
8. Execution of Statement of Compliance
Prior to the reenactment of the new act, signing of a statement of compliance was permitted to
be done by a legal practitioner and attested to before a notary public, however, section 40 (1)
provides that such can now be done the applicant or their promoter and the declaration to such
compliance may now be forfeited38. With the act introducing that a Statement of Compliance
no longer requires the attestation of a Legal practitioner as a compulsory requirement, the
promoters/owner(s) of the company can take and give an undertaking that all registration
requirements have been met and signed off by themselves.
9. Protection of minority investors

The notion of majority rule is unquestionably a democratic corporate regulation aimed at

preserving balance among shareholders with respect to their differing levels of ownership.
The majority shareholder, however, is severely favoured by this approach, leaving minority
shareholders to be seen but not heard.39 Being one of the many ideals which the ease of doing
business policy aims to achieve, S.343 (c) and (g) specifically provides for exceptions where
35
N. J. Garrick, F. Ajayi and O. Agbakoba, ‘Nigeria: A Review Of The Impacts Of The Business Facilitation Act 2023
On CAMA 2020: Furthering The Ease Of Doing Business In Nigeria’
<https://www.mondaq.com/nigeria/directors-and-officers/1296664/a-review-of-the-impacts-of-the-business-facilitation-
act-2023-on-cama-2020-furthering-the-ease-of-doing-business-in-nigeria> accessed 9 February 2024
36
Nigerian Investment Promotion Commission, ‘How New CAMA 2020 will Enhance SME’s Ease of Doing Business’
(2020) < https://www.nipc.gov.ng/2020/08/10/how-new-cama-2020-will-enhance-smes-ease-of-doing-business/>
accessed 11 February 2024.
37
(n3)
38
Companies and Allied Matters Act, 2020
39
U. T. Ndukwe ‘Protection of Minority Under Nigerian Company Law’
<https://www.oakwoodlegalng.com/assets/files/minority-protection.pdf > accessed 9 February 2024

9
and when the court may make a declaration or injunction restraining the company or any of
its officers in order to protect the rights of its shareholders from being infringed upon or in the
interest of justice. The court in the case of Dys Trocca Valessia Ltd & Ors v. Sanyaolu &
Ors40, buttresses this by outlining instances when it may be deemed that the affairs of a
company are being conducted in an oppressive manner or in a manner affecting the rights of
any of its members be it minority or otherwise.

i. When those in a dominant position in a company act over a period of time in a

manner that is unfair, burdensome , harsh, wrongful and lacking in probity to
the minority;
ii. When the conduct of the company excludes participation in the management
of the company or jeopardizes the value of shareholding.

10. Alternative Provision for Consent

Under S.26 (7 -10), the consent of the attorney general of the federation constitutes a pre-
requisite necessary for the registration of a company limited by guarantee, however where
such consent is not granted within 30 days of receipt of all information required, the act
provides for an alternative means of approval where the promoters of the company will be
required to advertise in three national dailies and invite objections within twenty eight (28)
days and where there are no objections to that effect, the Corporate Affairs Commission is
empowered to approve the company’s application and carry on its registration41.

11. Merger of Incorporated Trustees

By the provisions of S.849 under Part F of the CAMA 2020 which deals with provisions relating to
Incorporated Trustees, two or more associations with similar aims and objectives are now free to
merge to achieve their combined aims and objectives. This will facilitate the emergence of bigger
and stronger associations that can deliver on their combined objectives to achieve growth and
maximize output, rather than having numerous smaller and weaker associations that struggle to meet
their objectives.42

12. Separation of the roles of Chairman and Chief Executive Officer (CEO)
By the provisions of S.265 (6) of the CAMA 2020, an individual is now prohibited from jointly
holding the positions of Chief Executive Officer (CEO) and Chairman of a public company at a

40
Dys Trocca Valessia Ltd & Ors v. Sanyaolu & Ors (2016) LPELR-40423(CA)
41
Companies and Allied Matters Act, 2020
42
Ibid

10
given time. This provision is in line with international standards of corporate governance best
practices and is obtainable in developed countries like the United Kingdom, to prevent the potential
conflict of interest that may arise when an individual holds this same position. By separating these
roles, the provision seeks to distinguish the board authority of the Chairman from the management
authority of the Chief Executive Officer(CEO) thereby allowing them pursue their respective duties
without concern that one role may influence the other.43
13. Introduction of a minimum requirement of three Independent Directors
By the provisions of S.275 (1) of the CAMA 2020, public companies are now required to have a
minimum of three independent Directors on the board. The importance and relevance of having a
sufficient number of independent Directors on the board of public companies cannot be
overemphasized. This is because of the critical and significant role they play in improving the
corporate credibility and governance standards of the company through the balance of knowledge,
experience, and expertise that they provide to the board. This in turn will improve the quality of
decision making of the boards of public companies and will result in the long-term sustainability of
the company.44

14. Replacement of Authorized Share Capital with Minimum Share Capital

The provisions of S.27 of the CAMA 2020 has replaced the mandatory requirement of authorized
share capital under the CAMA 1990, with the requirement of minimum share capital for companies.
Formerly, companies were required to have an authorized share capital of not less than a specified
amount, out of which 25% must be issued out to the shareholders of the company at the time of
registration. This provision has now been replaced with the requirement for companies to have an
initial issued share capital for registration which shall be a minimum of ₦100,000 for private
companies and ₦2,000,000 for public companies. Under the CAMA 1990, the minimum authorized
share capital was ₦10,000 for private companies and ₦500,000 for public companies.45

15. Insolvency Framework

The CAMA 2020 also introduces a framework for rescuing a company in distress and threat of
insolvency; accordingly, the CAMA 2020 made provisions with respect to Company Voluntary
Arrangements (S.434 – S.442), Administration (S.443 –S.549) and Netting (S.718 – S.721), all in a
bid to foster and enhance the ease of doing business in Nigeria. 46The introduction of Netting is one
of the most remarkable provisions of the CAMA 2020 significantly, the introduction of netting is
one of the most remarkable additions made by CAMA 2020 with respect to financial contracts. The
use of netting to help assess and reduce financial obligations was unknown under the repealed
43
(n3)
44
Ibid
45
(n3)
46
(n9)

11
CAMA 2004. Thus, this new addition is a leap for Nigeria’s corporate governance as it is in line
with international best practices. By the provisions of the CAMA 2020, netting agreement can now
be concluded and enforced against an insolvent party, guarantor or any person providing security.47

16. Reduction of Filing Fees for Registration of Charges

Prior to the repeal of CAMA, 2004, the fee for filing and registration of charges as applicable to both
private and public companies were 10,000 on every 1,000,000 (1%) and 20,000 on every 1,000,000
(2%) respectively. This has now been amended to 0.35% of the value of the charge. This amount
may however be varied by the Minister of Finance. The CAC is also mandated to state in the register
of charges any notice restricting or prohibiting the company from creating additional charge ranking
with the charge already created. This addition will ensure that corporate search and due diligence
reveal any such restriction and act accordingly.48

17. Audit Obligations

Every company is generally mandated to appoint auditor or auditors to audit their financial records
and statements in respect of a financial year during the annual general meeting of such companies.
Under the CAMA 2020, this is no longer the case as small companies or companies that have not
carried on business since incorporation (excluding insurance companies and banks), are now
exempted from such obligations.49 Audit obligation therefore, is no longer required for MSMEs and
companies that had not carried out business since incorporation (excluding Banks and insurance
companies) are now exempted from audit obligation: This will positively impact the profit margins
for small companies because audit fee and bureaucratic challenges involved has been removed

CONCLUSION
In conclusion, the importance of a strong and effective institutional and regulatory framework for the
introduction, implementation and enforcement of business policies in Nigeria cannot be
overemphasized. It has been recognized that a strengthened institutional framework is essential for
the actualization of sustainable development. 50 Goal 16 of the United Nations Sustainable
Development Goals expressly captures the need to “build effective, accountable and inclusive
institutions at all levels”. Given the importance of strong and effective institutions in the quest for
sustainable development, the modifications introduced by the Companies and Allied Matters Act
(CAMA) 2020, must therefore be commended.

47
(n27)
48
Ibid
49
(n27)
50
Institutional Framework for Sustainable Development.

12
The amendments in the CAMA 2020 have to a large extent achieved Ease of Doing Business
(EODB) in Nigeria as the modified provisions give hope for a positive impact on the Nigerian
corporate landscape and promises an improvement on Nigeria’s standing in the Ease of Doing
Business index thereby leading to increased investments for the Nigerian economy.
The CAMA 2020 (as amended) is therefore a welcomed development to the Nigerian corporate
scene. Entrepreneurs and MSMEs are thus encouraged to exploit the diverse merits that abound in
the New CAMA 2020; more particularly to start-ups which drive every economy to expand their
business frontiers in making businesses more profitable in order to attract sustainable investments
for industry practitioners. It is recommended however that the shortcomings of the Act, including
without limitation, the powers of the Minister to with the approval of the President remove a
member of the Governing Board without the need to give objective criteria for such removal, be
checked, so as not negatively impact the independence of the Governing Board in the discharge of
its functions.
The revisions introduced in the CAMA 2020 Act could potentially bolster Nigeria's Ease of Doing
Business (EODB) index. The Act has incorporated innovative approaches to adapt to technological
advancements in the corporate realm. However, the effective implementation of CAMA 2020 by the
Corporate Affairs Commission (CAC) is crucial for aligning the country's business environment
with global standards. Hence, there's an expectation that the efficient enforcement of the new CAMA
will alleviate business challenges, foster productivity, and advance the Ease of Doing Business in
Nigeria. By incorporating innovative approaches to adapt to technological advancements, the
CAMA 2020 Act has the potential to streamline business processes and reduce bureaucratic hurdles.
This, in turn, can attract more foreign direct investment and encourage local entrepreneurship.
However, for these benefits to materialize, it is imperative that the Corporate Affairs Commission
ensures the effective implementation of the new Act. With robust enforcement and strict adherence
to global standards, Nigeria can create a business-friendly environment that promotes growth and
economic development.

13
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