The importance of an effective regulatory body in a growing economy cannot be overemphasized. Hence the need for the Corporate Affairs Commission to function as such is a sine-qua-non to the provision of good legal principles that must be adhered to and effectively enforced in corporate governance. This research work, therefore covers the historical development of the Company and Allied Matter Act, its roles/functions and how it enforces the provisions of the Act. It also proffers suggestions to some challenges been faced by the Corporate Affairs Commission and re-commendations that would make them more potent as a regulatory authority.
The Corporate Affairs Commission hereinafter referred to as “the Commission” or CAC for short, is one of the major regulatory bodies of companies in
Nigeria. The body is a creation that came into being by virtue of the Companies and Allied Matters Act (hereinafter referred to as CAMA) Cap 50, Laws of the
Federation of Nigeria, now Cap C20 of the Laws of the Federation, 2004.
Principally, the Commission is one of the innovations of CAMA that gives the
Commission the responsibility of incorporation of companies, registration of Business Names, Incorporation of Trustee of certain committees, bodies, associations and other regulations. CAMA also introduced Corporate audit Committee, insider trading, codified the duties of directors, the fundamental principles emanated in the rules of Fossal Foss V Harbottle, the rule in Royal British Bank V Turguard.
Before the advent of CAC, the Companies Act of 1968 was the Act that regulated the activities of companies in Nigeria. The present CAMA was borne out of draft documents prepared by the Nigerian Law Reform Commission in an effort to reform and improve on the Companies Act of 1968, which could no longer address the various challenges associated with the regulation and supervision of Companies in Nigeria.
In the pre-oil boom era of the Nigerian Economy (1970-1979), the then company legislation was severally criticized. “…One of the major criticism of the Act is that, it is little more than the putting together of some Sections of the repealed Companies Act Cap 37 and some Sections of the U.K Companies Act 1948, instead of taking the bold step of codifying both the statutory and case law on companies…” The preparation of such a code would have provided the opportunity for reviewing and modifying some of the more inconvenient common law rules.
In its Report on the reform of Nigeria Company Law 1988, the Nigerian Law Reform Commission commentary on the above inadequacy and some others observed that “with paucity of Nigerian cases on Company Law and the present heavy cost of obtaining English Law reports and textbooks, that difficulty in finding the law in this country can be well imagined…”
As a result of these numerous problems in our company laws as hitherto mentioned, the Nigerian Law Reform Commission was set up among other reasons “to evolve a comprehensive body of Legal Principles and Rules governing Companies and suitable for the circumstances of the country. These rules was to facilitate business activities in the country and protect the interest of the investors, the public and of the nation as a whole”
After extensive consideration and submissions of papers by various stakeholders, the Commission came out with a draft copy which was forwarded to the then Attorney General of the Federation and Ministry of Justice, who set up a
Consultative Assembly which further deliberated on the draft between 1988-1989 and submitted a reviewed copy to the AG and Minister of Justice who made further alterations before it was promulgated into law as the Company and Allied Matters
Decrees 1990 (No 1 of 1990) now referred to as the Companies and Allied Matter
Act, Cap 59 Laws of the Federation of Nigeria. The Act came into effect on 1st of January, LFN, 2004. It is this Act that now created the CAC and made it the Apex regulator of corporate Affairs in Nigeria.
Prior to the promulgation of CAMA 2004, the hitherto Companies Act of 1968 was under the control of Federal Ministry of Trade, through its Corporate Affairs Division. Then it had a central Companies Registry in Lagos which was later moved to Abuja in 1988. It was in charge of incorporation of Companies, filling of annual returns and other statutory documents required to be submitted to the Registry. The Registrar of Companies was in charge of the Company Registry. The Company Registry was saddled with plethora of problems, viz:-
- It was not self accounting, its budget depended on the budget of the Federal Ministry of Trade.
- The Registrar was a staff of the Ministry i.e a lawyer who was deployed from the
Federal Ministry of Justice.
- It was grossly under funded inspite of the huge money being made by the Company Registry from incorporation of Companies, Business Name
Registration, filing of Annual Returns and other statutory documents.
- The accommodation for staff was unsuitable and staff welfare was at its lowest ebb that affected their productivity.
- The normal civil service bureaucracy affected the administration to effectively and effectually carry out their functions.
Based on the above problems, several options were considered by the Nigerian Law Reform Commission such as “leaving the Registry as it is at present, constituting a Board in the Ministry to supervise its work, forming a guarantee company like the Stock Exchange to run the Registry, and establishing a statutory body to take over its functions”.
The last option was preferred. This option gave birth to the Corporate Affairs Commission to take over the functions of the Company Registry, with the enormous task of making rules to facilitate business activities in the interest of investors, the public and the nation that would allow for the much desired conducive atmosphere that could lead to the much desired economic development of the country.
1.2 STATEMENT OF THE RESEARCH PROBLEM
Inspite of the laudable intention for the creation of the Commission and wide powers under CAMA, there are still some challenges been encountered by the
Commission that have called to question its role as a regulatory organ under CAMA. It is such challenges that necessitated this research. The challenges include:-
- The non stipulation of the qualification of inspectors to investigate companies, a lacuna that may have affected the quality of report due to the incorporative, inexperience lack of skill and knowledge of some persons, that this effected the administration of companies.
- The inability of the Commission to fully enforce its policies of compliance with certain provision of CAMA e.g payment of annual returns and the necessity for all companies to have company secretary and the abuse of incorporated trustee by members of public.
- The provisions of CAMA especially on the requirement of shareholders/members to enable the company ignite investigation are questionable as to the intention of such requirement in the light of the aim of investigation in a company.
- The impact of normal civil service bureaucracy on the ability of the CAC to efficiently and effectively carry out its functions.
1.3 AIMS AND OBJECTIVES OF STUDY
The objective of this research is to appraise the functions and roles of the Commission as a regulatory body under the Nigerian Company Law since the coming into being of the Companies and Allied Matters Act given its extensive powers of control and supervision over Nigerian Companies, to find out whether it is effectively carrying out its statutory functions with the inherent enforcement mechanism and how it has come to bear on the general corporate governance of companies. Further, the likely problems inhibiting the Commission from effectively discharging its statutory functions and recommendation to enable it achieve its functions.
1.4 SCOPE AND LIMITATION
This research work concerns itself with the independent regulatory organization that regulates the activities of the companies and other allied bodies in Nigeria.
Attempt would be made pointing out the purpose of company legislation in Nigeria, the historic development of company law in our country and its relevance. The composition and administration technique of the body will be examined, the various functions and power of the Commission, portraying it as an independent agency, the challenges of the Commission and recommendation for the Commission to be efficient would be examined.
1.5 LITERATURE REVIEW
Based on the topic of research, an appraisal of Corporate Affairs Commission as a regulating body under Nigeria Company law, the primary law for company regulation in Nigeria is Companies and Allied Matters Act Cap C20 Laws of the Federation of Nigeria 2004 which is the basic law for this research. Some views of workers are considered based on divergent opinions.
These powers to companies registered in implausible to companies registered in Nigeria and foreign companies. Thus, a foreign company is allowed to participate in trade or business in Nigeria after incorporation. It behooves the Commission to involve it powers as stated in Section 5 of CAMA to invoke the penalty for non registration before doing business, which makes an officer of a company or it‟s agents who knowingly and willingly authorizes or permits the default to register in Nigeria shall be liaise on convention to a fine of N2,500 for jointly with the company. However, according to Bhadmus, inspite of the fact that a company is not registered in Nigeria, it does not inhibit such a company from suing to protect its rights and be sued where liable without registration in Nigeria, the above position according to the learned authority has legal basis in statutory and judicial authority.
Inspite of the position of our laws on the issue of locus standi, it is however our view that it is misplaced to insist on registration before doing business in Nigeria, whereas, the same law allows such companies have capacity to sue or be sued in Nigeria in the absence of registration. The current position of our laws on the regulation of foreign companies capacity to sue would encourage most foreign companies to do business in their respective countries to consummate such business without registration and if there are challenges subsequently they will use an attorney or agent to do business in
Nigeria without having to maintain physical presence in Nigeria. One other vary important issue of regulation of companies is in the area of corporate Governance in the regulation of Take Over bid of companies. It is important to state that the issue of corporate governance is the sole means through which the Commission can act as checks and balances on how a company may be taken over by another. Some are of the view that the provision of CAMA on Take over bid and its regulations therewith frustrate the functioning of the capital market. According to Sofowora, the ideas of requiring groups intending to make a take over bid to apply to Corporate Affairs Commission,
According to the learned scholar the above limits the scope available for take over thus impairing the functioning of the market for corporate control.
The regulation of companies will not be possible without, the Corporate Affairs Commission. However, the provision of Chairman and Secretary of the Commission are not clear and gives room for divergent in views. According to C.S. Ola8 Section 5(2) of CAMA does not make the position of Chairman clear and evident especially provisions dealing with his powers beyond supervisory roles of chairing meetings. Further, no express provision is made of the office of Secretary, as is the case with quorum, there is no provision on the quorum of the members of the Commission. This to a large extent encourages the recourse to the Interpretation Act, Ola belongs to the school of thought that for the issue of quorum of the members of the Commission, the Interpretation Act especially provision Section 27 (1) & (2) must be resorted to instead of the Companies and Allied Matters Act.
Inspite of all the positions held by writers and scholars, it is hoped that this research work will attempt to put the various positions in the proper perspective and with a view to take a stand and thereby contributing to the discourse to how the Corporate Affairs Commission has faired in the regulation of companies within the confines of the Nigeria Company Law.
 Orojo, Nigeria Company Law and Practice (1994) (2nd Ed, Vol 1. 1993), PG 11.
 Vol. I Pg 2 Report on Ghana Company Law.
 Nigerian Law Reform Commission’s Working Papers on the Reform of Nigerian Company Law, Vol 1, pg 3 and 12.
 Nigerian Law Reform Commission Working Papers on the Nigerian Company Law. Vol 1-12
 Bhadmus on Corporate Law practice (2009) Chenglo ltd, Enugu Nigeria.
 S.60(b) of CAMA 2004.
 Modern Nigerian Company Law, 2nd Ed. 2002, Soft Associates, Lagos 8 University press Plc, Ibadan, 2001