May 22, 2018
On 15 May 2018, the Senate passed the Companies and Allied Matters Act (Repeal and Re-enactment) Bill 2018 (The Bill). The Bill seeks to revise the Nigerian company law to reflect modern commercial realities as well as reduce compliance costs for businesses in Nigeria. The Bill now awaits passage by the House of Representatives and the assent of the President before it becomes law.
The Bill will repeal the Companies and Allied Matters Act (CAMA) 1990 and enact the CAMA 2018. Amongst other provisions, the Bill seeks to introduce the following:
The concept of single member companies – the Bill proposes that one person should be able to form a private company and also proposes single directorship for small companies;
The passage of the Bill is commendable as it seeks to improve the ease of starting and running a business in Nigeria by removing certain legislative bottlenecks. In addition, the introduction of the Limited Liability Partnership as a legal entity would potentially enable such entities combine the organisational flexibility and the tax status of a partnership with limited liability for its members.
However, it is unclear how some provisions of the Bill will apply in the light of other existing laws such as tax laws. For instance, the exemption of certain companies from audit appears contrary to the requirement.