What the newly signed CAMA bill means for doing business in Nigeria

Nigeria recently made a significant stride towards improving its business landscape with the signing of the Companies and Allied Matters Act (CAMA) bill into law by President Muhammadu Buhari. The CAMA bill, which replaces the outdated Companies and Allied Matters Act of 1990, is set to revolutionize the way businesses operate in the country. On a recent CNBC Africa interview, Tinuade Awe, Executive Director of the Regulation Division of the Nigerian Stock Exchange, and Taiwo Oyedele, Partner and West African Tax Leader at PwC, shed light on the implications of this new law. The key theme of the discussion was the impact of the CAMA bill on business operations and the financial markets in Nigeria. Here are three key points highlighted in the interview: 1. Improving Ease of Doing Business: The CAMA bill introduces several provisions aimed at enhancing the ease of doing business in Nigeria. One significant change is the reduction in the number of shareholders and directors required to set up a company. Previously, companies needed at least two shareholders and two directors, but now, a single individual can establish a company. Additionally, the bill allows for virtual general meetings for private companies, streamlining the decision-making process. These changes are particularly beneficial for the 41.5 million small, micro, and medium-scale enterprises in Nigeria, which contribute significantly to the country's GDP. 2. Enhancing Corporate Governance: The CAMA bill emphasizes better governance practices for companies, especially public entities. It includes provisions for disclosing majority shareholders and publishing financial statements on company websites. The bill also limits the number of directors in public companies to promote transparency and accountability. These measures aim to strengthen corporate governance standards and build investor confidence in the Nigerian business environment. 3. Boosting Financial Markets: One of the key highlights of the CAMA bill is the inclusion of netting provisions that are crucial for the development of a derivatives market in Nigeria. Netting provisions ensure the smooth settlement of trades and reduce counterparty risks in derivative transactions. By implementing these provisions, Nigeria aligns itself with global best practices in financial markets and paves the way for the establishment of a robust derivatives market. The interviewees emphasized the importance of effective implementation to harness the full potential of the CAMA bill and drive positive outcomes for businesses and investors alike. In conclusion, the CAMA bill represents a significant milestone in Nigeria's efforts to create a conducive environment for business growth and financial market development. By addressing key challenges, enhancing governance standards, and fostering innovation, the bill sets the stage for a new era of economic prosperity and investment opportunities in the country.