Senate Passes Historic Business Reform Bill
The 8th Senate led by Dr Abubakar Bukola Saraki on Tuesday passed a Bill to repeal and re-enact Companies and Allied Matters Act. The Bill comes 28 years after the passage of the original Companies and Allied Matters Act and will make Nigeria the best country in Africa to do business.
Ease of doing business plays a crucial role in the economic growth of any country. The processes, rules, and regulations set up by the government or government agencies can either help promote a business-friendly environment or hold businesses back from their entrepreneurial ambitions.
Nigeria ranks 145 out of 190 countries in the World Bank’s Ease of Doing Business ranking, which rates countries for the ease at which one can open, conduct and close down businesses.
This landmark reform by the Senate will provide significant benefits to companies by reducing red tape and making it easier to comply with regulatory obligations. Most of the changes are aimed at encouraging investments that will allow small businesses and startups thrive, lower costs and ease regulatory burdens.
Changes included in the Bill will mean that many of the over 75,000 private companies limited by shares which are established in Nigeria every year will be able to incorporate more easily, resulting in savings in professional fees and substantial improvements to the ease of doing business in Nigeria by comparison to our competitors.
The Bill will to spur more young people to start new enterprises. Among the changes which benefit those aspiring to start a company is the ability of a single person to incorporate a company. Allowing new young and innovative start-ups the opportunity to operate as separate legal entities without the risk of loss of their personal assets.
In addition, small companies will no longer be required to have a company secretary or hold Annual General Meetings. The requirement for statutory declaration of compliance has also been removed.
Minimum share capital required for companies to be registered has been reduced to encourage more investments in small companies and individuals will no longer need a lawyer to register a company. To further facilitate registration and compliance the E-Registration and filing system has been enhanced.
The introduction of LLP as a new business vehicle will act as a step towards converting the informal, undocumented sector into a formal and regulated regime. The incorporation process is less stringent and formal as compared to a limited liability company.
New regulations have been introduced to revive ailing companies. A company can now reach compromises on its debts and for businesses which are nearly insolvent a new process for administration has been introduced which will enable such businesses to keep running under the supervision of an Administrator for a period of 12 months.