CAMA 2020 - Giant Step towards standardizing Nigeria’s Corporate Law and Insolvency Practice
President Muhammadu Buhari recently assented to the new Companies and Allied Matters Act 2020, bringing into effect widely-lauded changes in the Nigerian business environment. Recently, BD Legal’s Onyinyechi Ukegbu sat with Olanipekun Orewale, partner, Æl
Continued from last week
Qualification to act as insolvency practitioner was introduced into the Act as a result of the need to regulate insolvency practitioners such that only competent professionals with requisite specialism in insolvency, in the light of these fundamental provisions, can act as insolvency practitioners in Nigeria. Other jurisdictions also have provisions for the specific qualifications of insolvency practitioners as well as the agency or board or organization responsible for certifying such insolvency practitioners.
It is not the first time that a professional association would be recognized under the Act. Afterall, Nigeria Bar Association was recognized under the LPA. Under CAMA, BRIPAN was specifically identified because it is the only professional body in Nigeria which sees to the education, training and certification of insolvency practitioners, and it is also a member of INSOL International, a worldwide federation of associations of accountants and lawyers who specialize in business turnaround and insolvency.
Before becoming a member of BRIPAN, an applicant has to undergo a compulsory insolvency training in stages, and like any other professional body in Nigeria, BRIPAN charges a fee for the training, and induction of members. Thereafter, the inducted members pay the annual membership dues. This procedure for membership has been in force for a long time, prior to the passing of CAMA 2020.
Section 851 of CAMA also requires a person challenging any fees by the CAC to
appear before a CAC panel made up of the oegistrar deneral of the CAC, five (5) officers of the CAC, and someone from the Ministry of Trade and fnvestment. Some say this is tantamount to making the CAC a prosecutor and a judge in its own case. ao you agree?
Section 851 of CAMA sets up an Administrative Proceedings Committee for the CAC, with the specific functions to:
• provide the opportunity of being heard for persons alleged to have contravened the provisions of the CAMA or its regulations;
• resolve disputes or grievances arising from the operations of CAMA or its regulations; and
• impose administrative penalties for contravention of the provisions of CAMA or its regulation, in the settlement of matters before it.
Section 851 was included for administrative convenience, and anyone dissatisfied with the decisions of the Administrative Committee may appeal to the Federal
High Court. I do not agree that where the Administrative Committee presides over any challenge of fees imposed by the CAC, ipso facto, it would be tantamount to making the CAC a prosecutor and a judge in its own case. There is nothing sacrosanct in these provisions relating to the composition of the membership of the Committee. Other statutes in Nigeria have similar provisions. For example, the Investment and Securities Act (ISA) have similar provisions on the membership of its Administrative Proceedings Committee. In the case of Securities & Exchange Commission v. Osindero Oni & Lasebikan (2008) JELR 46696CA, the Court of Appeal held that the mere fact that the Administrative Proceedings Committee set up pursuant to the provisions of ISA comprising of the members of the Securities and Exchange Commission presided over an allegation of violation of the breach of the provisions of ISA would not amount to the breach of the fundamental right of the Respondent.
The fundamental objective of the provision is to create an internal administrative procedure for the resolution, in timely manner, of any complaints arising from the challenge to the statutory fees and the operation of the provisions of CAMA.
What are the most beneficial changes in CAMA for the Nigerian business environment?
The changes in CAMA were made for the purpose of benefiting the Nigeria business environment and to improve the ease of doing business in Nigeria. For example, the introduction of business rescue regime, will ensure that distressed companies and their creditors consider business rescue first, before taking steps that may lead to the winding up of the company, which would affect certain stakeholders, like shareholders and employees of the distressed companies.
Any final thoughts?
The CAMA 2020 is a giant step towards standardizing Nigeria’s corporate law and insolvency practice with international best practices. I firmly believe that the provisions of CAMA 2020 promote the interests of all stakeholders in the Nigeria economic/business arena and will act as a catalyst for foreign investment.
Notwithstanding the robust insolvency provisions in the Act, I am of the considered opinion that there is need to have a standout Act on insolvency as it were in other jurisdictions. Happily, BRIPAN through its distinguished professional members had drafted and presented a stand-out Bill on Insolvency before the National Assembly which is yet to be passed into law. The need to pass the bill into law becomes necessary to cover all the fields which this Act have not covered. Noting also that majority of the insolvency has cross border elements and issues coupled with the fact that Nigeria has no statutory provisions on cross border insolvency, it is therefore imperative for Nigeria to ratify the UNCITRAL Model on cross border insolvency, subject to local adaptation, to promote unrestricted access to foreign courts, recognition of foreign insolvency practitioners and proceedings, cooperation and coordination of proceedings among courts and enforcement of judgments and orders.