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INTRODUCTION

The primary law governing companies, businesses and entities in Nigeria is the Companies and Allied Matters Act (CAMA) . Recently, the President of the Federal Republic of Nigeria, President Muhammadu Buhari, assented to the Companies and Allied Matters Bill passed by the National Assembly, thereby repealing the Companies and Allied Matters Act, 1990 .

The new Act, the Companies and Allied Matters Act, 2020 (hereinafter referred to as “CAMA 2020 or the Act” introduced several innovative provisions/changes into the Nigerian corporate and commercial system. The Act also embraced technological trends to increase productivity and ease of doing business in Nigeria.

Essentially, the changes introduced by the Act dealt with inadequacies of the repealed CAMA which had existed for 3 decades, as the Act made a serious overhaul of the Nigerian company system. Some of the salient innovations introduced by CAMA 2020 are discussed hereunder;

HIGHLIGHTS OF SALIENT PROVISIONS IN CAMA 2020

1. Single Member/Shareholder/Director for private companies CAMA 2020 introduced single member/shareholder for private companies (Section 18(2) CAMA 2020). Thus, the minimum number of persons that can set-up a private company has been reduced to one (1) as opposed to the former minimum requirement of two (2) people. By this reduction, business owners who trades as sole proprietors (or who intends to trade as such) can now have the added benefits of limited liability and access to credit by registering a private company without the need to bring in a new person.

2. “Minimum Issued Share Capital has replaced Authorized Share Capital” There is no longer a concept of “authorized share capital”, instead, companies are only required to ensure that they maintain the “minimum issued share capital” (Section 27(2) (a) CAMA 2020). On amount of the minimum issued share capital, requires that if a company has a share capital, the memorandum of association shall state the amount of the minimum issued share capital which shall not be less than N100, 000.00 in the case of a private company and N2, 000,000.00, in the case of a public company, with which the company proposes to be registered, and the division thereof into shares of a fixed amount. Also, when a company issues new shares, the Act required that a quarter of such issued share capital (25%) is paid up (Section 128 (1) CAMA 2020).

3. Statement of Compliance to be signed by the Applicant or his Agent By Section 40 (1) CAMA 2020, the Statement of Compliance that the requirements of CAMA 2020 as to registration has been complied with can be signed by the Applicant or his Agent. This serves as an alternative to the requirement of “Declaration of Compliance”, which must be signed by a lawyer or attested to before a notary public.

4. Use of Common Seal not mandatory The use of Common Seal is no longer mandatory for companies and where a company has a common seal, the design and use of that seal shall be regulated by the company’s articles (Section 98 CAMA 2020)

5. Technological innovations

In order to reflect the realities of conducting business in this digital age, CAMA 2020 introduced some technological innovations which include the following:

a) An electronic signature is deemed to satisfy the requirement for signing under Section 101 CAMA, 2020.

b) Electronic share transfer forms will be accepted by all companies (Section175(1) of CAMA 2020)

c) With the exception of small companies and companies having a single shareholder, all statutory and annual general meetings shall be held in Nigeria. (Section 240(1) of CAMA 2020)

d) Private companies may conduct its meetings virtually so long as it is conducted in accordance with the Articles of Association of the company. Section 240(2) of CAMA 2020)

e) In addition to the notice of meetings to be given personally or by post, notice may also be given by electronic mail to any member who has provided the company with an electronic mail address (Section 244 (3) of CAMA 2020)

f) Each public company shall keep its audited accounts displayed on its website (Section 374(6) of CAMA 2020)

g) Any document required to be annexed to the annual return may be delivered to the Corporate Affairs Commission (“CAC”) either in hard or soft copy (Section 422 (3)) of CAMA 2020)

h) Company records can be maintained in electronic format (Section 731 (2))

i) Certified true copies of electronically filed documents to be admissible in evidence as same will have equal validity as the original documents (Section 860(1)(2) of CAMA 2020)

6. Recognition of new entities New entities such as limited partnerships (Part C, sections 746 – 794) and limited liability partnerships (Part D, sections 795 – 810) have been introduced as registrable forms of partnership.

7. Giving of financial assistance by companies The Act has modified the definition of financial assistance; and by such modification, financial assistance by a company occurs where the act by the company reduces its net assets by up to 50% or completely erodes the net assets. Although, the rule on financial assistance is applicable to both private and public companies but the Act gave much latitude to private companies as regards giving financial assistance. (Section 183 of CAMA 2020). Also, the rule now has more exceptions than previously obtained such as any assistance arising from a scheme sanctioned by the order of the court.

8. Appointment of Secretary for small companies CAMA 2020 makes provisions for the exemption from appointment of company secretary for small private companies under Section 330(1) CAMA 2020.

9. Provisions on Minority Protection and Corporate Governance

i. Section 265(6) CAMA 2020 allows for enhancement of minority protection through the restriction of a director from simultaneously holding the office of Chairman and Chief Executive Officer of a public company.

ii. Furthermore, there are now restrictions on multiple directorships of public companies as no person can be a director in more than 5 public companies. Thus, any person who is currently a director in more than 5 public companies is required to resign as a director of all but 5 of the companies within two years from the date of the Act. (Section 307(1) & Section 283 (c) CAMA 2020)

iii. Similarly, companies are now required to have at least 3 independent directors and specific criteria must be met before a director will qualify as an independent director (Section 275 CAMA 2020)

10. Reduction of Filing Fees for Registration of Charges The total fees payable to the CAC for filing has been reduced to 0.35% of the value of the charge, Section 222 (12) CAMA 2020. This means that the cost of registering security interests at the CAC has been reduced by 65% for private companies and 82.5% for public companies

11. Small companies redefined under CAMA 2020 Section 394(3) CAMA 2020 provides that a small company shall be described or fixed as a private company by the Commission from time to time, whose turnover is not more than N120,000,000 (One Hundred and Twenty Million Naira) and whose net assets value is not more than N60,000,000 (Sixty Million Naira). Thus, the thresholds for defining small companies have been changed to enable more companies qualify as small companies and therefore enjoy the benefits conferred on small companies under the law.

12. Share buyback Companies may now buy back their shares from existing shareholders (pro rata) subject to certain conditions. However, the company’s Articles of Association must permit the share buyback and it will have to be approved by a special resolution (Section 184 of the CAMA 2020).

13. Disclosure of capacity as shareholder Disclosure of significant control over an entity is now required for companies or limited liability partnerships (as such, disclosures is no longer restricted to Public companies). Thus, any person with significant control over a company shall, within seven days of becoming such a person, indicate to the company in writing the particulars of such control (Section 119 CAMA 2020) and must notify the Corporate Affairs Commission. Also, the Commission is mandated to maintain a register of persons with significant control upon notification by the Company .

14. Exemption procedure for foreign Companies Foreign companies can now file an application for exemption directly to the Minister of Trade (Section 80 CAMA 2020).

15. Exemption from the appointment of auditors The law now allows for exemption of small companies or any company having a single shareholder from appointment of auditors at the Annual General Meeting to audit their financial records (Section 402(1)(b) CAMA 2020)

16. Introduction of Company rescue processes Winding up will no longer be the only option available for dealing with insolvent companies as there are extensive provisions for rescuing a company in distress to prevent it from being insolvent and to keep it alive such innovations include; Voluntary arrangements, Administration and Netting etc. (Section 434-442 CAMA 2020).

17. Insolvency test threshold has been increased (Inability to pay debt)

The test for insolvency i.e. inability to pay debts as they fall due, has been increased from N2, 000 (Two Thousand Naira) to N200, 000, (Two Hundred Thousand Naira) in other to reflect present day realities (Section 572 (a) CAMA 2020)

18. Requirements for insolvency practitioners The Act has made extensive provisions on the requirements for a person who intends to be insolvency practitioners. The Act stipulated the needed academic qualifications and the number of post qualification experience required. The academic qualification is that such a person must have a degree in law, accountancy or such other relevant discipline with a minimum of five years post qualification experience in matters relating to insolvency. Also, a certification issued by Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN), or membership of any other professional body recognized by the Commission is also needed. (Section 705(1)) of CAMA 2020)

19. Framework for implementing merger

i. CAMA 2020 contains a framework for implementing mergers or other forms of arrangement or reconstruction between two or more companies (section 711). Thus, once the transaction is approved by at least 75% in value of the shares held by shareholders present and voting at the relevant court-ordered meeting and thereafter sanctioned by the court, the merger becomes binding on the companies even before the court sanction is filed at the CAC. The court sanction must, however, be filed at the CAC within 7 days. The Act does not require the Court to refer the scheme to the Securities and Exchange Commission (SEC) to consider the fairness of the scheme. It is also possible to structure a scheme of arrangement or compromise under Section 715 of the CAMA 2020 but schemes under Section. 715 can be referred by the Court to the SEC to determine the fairness of the scheme and it does not become effective until the court order sanctioning the scheme has been filed at the CAC.

ii. Furthermore, merger of Incorporated Trustees has been introduced as two or more associations with similar aims and objects under such terms and conditions as may be prescribed by the CAC can be merged (Section 849 CAMA 2020).

20. Interim managers

Section 839(1) CAMA 2020 allows the Commission to by order suspend the trustees of an association and appoint an interim manager or managers to manage the affairs of an association.

21 Bi-Annual Statement of Affairs

Section 845(1) CAMA 2020 provides that the trustees of an association shall submit to the Commission a bi-annual statement of affairs of the association, as the Commission shall specify in its regulations.

22 Netting

Sections 718-721 CAMA 2020 contain provisions on netting . Netting is an essential element of many qualified financial contracts such as derivatives, swaps and hedging transactions.

23 Treasury Shares

Treasury shares are now formally recognized and defined as the Act prescribes what a company can do with such shares after they are acquired (Section 868 CAMA 2020). In the repealed CAMA issued shares of the company that it acquired from its shareholders, was referred to in its schedule but there were no provisions regulating it. Now, the CAMA 2020 permits Companies to sell their treasury shares or transfer them into an employee share scheme.

CONCLUSION

The above analysis highlights the salient innovations introduced by CAMA 2020 as the Act made a serious overhaul of the earlier CAMA. Essentially, the Act created a new category of legal identity for Nigerian businesses, empowered one person to open and run a company, removed all the unnecessary regulatory provisions for small companies, promotes the use of technology in the registration of businesses with a view to making Nigeria’s business environment as competitive as its counterparts around the world. Undoubtedly, the CAMA 2020 will significantly enhance the ease of doing business in Nigeria.

AN OVERVIEW OF THE FINANCE ACT

The Finance Act 2020 established a crisis intervention fund and the unclaimed funds trust fund regarding funds in dormant bank accounts which was set up for national crisis related expenditure.

The Act provides for the establishment of the fund from the consolidated revenue fund and special accounts in sums of N500 Billion or any other sum as may be approved by the National Assembly. The Finance Act was passed by the National Assembly and signed into law by the President on the 31st December, 2020 with certain key amendments and took effect from the 1st January, 2021. In essence the Finance Act came into effect on the 1st April 2020. The Act further introduced over 80 amendments to the existing tax laws in Nigeria.

The Promulgation of the Finance Act came as a result of the ongoing COVID -19 pandemic hence trust funds were setup in response with the aim at addressing all crisis related expenditure. It is on that basis that the Act came into existence seeking to cushion the effects the Pandemic had on the economy although measures were taken to cushion the impact of the economic challenges triggered by the COVID-19 Pandemic.

The Amendments were also aimed at addressing ambiguities and providing clarity to certain provisions in the laws and to further provide certain tax incentives to companies. There are various amendments to the bill and we shall be talking about them in brief. Some of the legislations amended by the Finance Act are the:

1. Companies Income Tax Act (CITA)

2. Capital Gains Tax Act (CGTA)

3. Personal Income Tax Act (PITA)

4. Value Added Tax Act (VATA)

5. Nigerian Export Processing Zone Act (NEPZA)

6. Oil and Gas Export Free Zone Act

7. Federal Inland Revenue Service (Establishment) Act

8. Custom and Excise Duties Act, etc.

We shall consider some of these amendments.

Companies Income Tax Act (CITA)

By virtue of Section 11 (2) of the CITA, the term “Primary agricultural production” meant a company’s primary agricultural production but excluded production at intermediate or derivative levels. The amendment introduced tax exemption on bank loans granted for the purpose of “primary agricultural production.” Sections 13(2) (e), 14, 16(12), 23(1), 23(1) (c), 25, 27(k), 33, 39, 53, 55, 63, 68, 77(2) and 105 are apposite on this issue. For insurance companies, the previous position in the Finance Act 2019 regarding tax on premiums received by insurance companies is now clarified in the 2020 Act which has introduced a new base for determining tax on premiums and incomes.

Furthermore based on the timeframe for the payment of a reduced minimum tax, affected companies can now file amended returns for the period already passed. The amendment also introduces penalties and interest for deliberate filing of incorrect tax returns.

Capital Gains Tax Act (CGTA)

By virtue of Section 2 of the CGTA, a new filing period has been introduced by the Finance Act 2020. Before now, the due date for the filing of CGT returns was aligned to the provisions of the CITA.

However, by the amended section now stipulates that CGT returns are now required to be filed not later than 30 June & 31 December of the year the chargeable asset(s) was disposed. Other sections in the CGTA amended by the Finance Act 2020 are sections 24 (f), and 36 (2), (3), and (4). Briefly, these sections provide for charging tax on the compensation paid to a tax subject over their loss of office where the compensation is above N 10,000,000 (Ten Million Naira only) and the time for remitting of the CGT is now tied to the provisions of the Pay-As-You-Earn (PAYE).

Personal Income Tax Act (PITA)

By virtue of Sections 6 of PITA, persons who are not resident in Nigeria, and executors or trustees of estates who provide professional services are subject to tax in Nigeria insofar they possess or maintain significant economic presence in Nigeria. The Minister of Finance is yet to provide a guide on what amounts to significant economic presence.

<>h4Value Added Tax Act (VATA)

Section 2 of the amended Act provides for the inclusion of incorporeal right as taxable supply of service. Furthermore, the Act has also clarified the issue of time of supply of service in relation to when VAT is due and payable. Further amendments were made to Sections 10 and 46 of the Act. Also, a foreigner who resides outside Nigeria but who provides taxable supply of service must comply with the law on VAT.

Nigerian Export Processing Zone Act (NEPZA) Sections 18 (1) of both the Nigerian Export Processing Zone Act and Oil and Gas Export Free Zone Act provides that companies within the free trade zones should file their returns based on the newly amended Section 55 of CITA. The penalties for non-compliance has also been stipulated in this section.

Stamp Duty Act (SDA)

The FIRS is now empowered by virtue of the amended Section 2 of the SDA to administer the SDA and for the purpose of generating revenue for NIPOST. Further amendments to this Act include the applicability of stamp duty on the electronic receipt and transfer of funds which has been replaced by the Electronic Money Transfer Levy, and also contains a distribution formula in the amended section, to wit, 15% to the Federal Government and 85% to the State Government.

Oil and Gas Export Free Zone Act

By virtue of Section 55 of the amended CITA, companies registered and operating within the prescribed zone are now to file their income tax returns and are liable to suffer the penalties for default prescribed therein.

Federal Inland Revenue Service (Establishment) Act By virtue of Sections 8 (1), 23, 25, 26, 28, 30 of the amended FIRS Act, the functions of the FIRS was expanded to include revenue collection from foreign governments and persons. Also, dedicated accounts for settlement of tax funds were created to improve tax administration in Nigeria. Furthermore, the use of technology for tax administration purposes has been given legislative backing by the Finance Act 2020 thus helping to reduce tax administrative burdens. The FIRS Act has also been amended to provide for exchange of information between financial institutions and the FIRS.

Custom and Excise Duties Act

By virtue of Section 21 of the amended Customs and Excise Duties Act, there is now an excise tax exemption on imported goods whose raw materials are not sourced in Nigeria. However, the goods slated in the fifth schedule of the Customs and Excise Tariff, e.t.c. (Consolidation) Act are now subject to excise duties just as locally manufactured goods. The Second Schedule of the Act was also amended to exempt import duty on engines of airlines in Nigeria. The Amended First Schedule of the Act provides that import duties payable on motor vehicles are as well as duty on tractors is now 5% and 10% respectively. On the other hand, levy on motor vehicles for the transport of persons is now 5% while the import duty on motor vehicles for the transport of good is now 10%. In other words, the amendment has gone a long way in reducing tax burden on the airlines business.

Companies and Allied Matters Act (CAMA) amendments The new Section 432 of CAMA provides for a new approach to the law on unclaimed dividends in Nigeria. Unclaimed dividends of with a life of twelve years or more are now to be added to the company’s profit for onward distribution to shareholders. However, for unclaimed dividends of companies listed on the Nigerian Stock Exchange, if they remain unclaimed for a period of six years, they would be transferred to the Unclaimed Funds Trust Fund of the Federal Government and same is to be used by the Government in financing its budget.

Industrial Development (Income Tax Relief) Act (IDITRA) The amended Sections 1 and 25 of the Act now includes small or medium sized companies and the definition of same is clearly stated under CITA. The amendment clarifies which agricultural companies are eligible for tax holiday incentive.

Crisis Intervention Fund and Unclaimed Funds Trust Fund Act amendments

The Finance Act 2020 established a Crisis Intervention Act and Unclaimed Funds Act. The amendment also provides for the establishment of the Fund distinct from the Consolidated Revenue Fund. The Crisis Intervention Fund has a take-off fund of N 500,000,000,000 (Five Hundred Billion Naira) or such other sum as may be approved by the National Assembly from time to time. The fund is set-up to cater for moments of national crisis related expenditure or exigencies. The Debt Management office would manage the Trust Fund which is indeed, as the Act stipulates, a trust for the shareholders or account holders whose funds have or shall be paid into the Fund.

Conclusion

It appears that the Finance Act 2020 will have long lasting effects on companies by way of enhancing compliance regarding tax obligations. However, it also introduces hitherto non-existent incentives to entities covered by its provisions as well.

Notes Akinbiyi Abudu, Audrey Obidike & Adesope Okoh, Highlights of Finance Act, 2020, 5 Feb 2021. Ernst & Young. Boms Resources Consulting, Finance Act, 2020, Nigeria; An Overview, January 7, 2021.

The Corporate Affairs Commission on 16th April, 2021, published a public notice to all Existing Companies, Esteemed Customers and the General Public. The information contained therein is that the Minister of Industry, Trade and Investment has approved an amendment to Regulation 13 of the Companies Regulations, 2021 allowing an extension to the period for complying with the requirements of issued share capital under Section 124 of the Companies and Allied Matters Act 2020 (CAMA) by Existing Companies with unissued share capital up to 31st December 2022.

The said Regulation 13, of the Companies Regulation, 2021, (that provided for the Minimum Issued Share Capital of Existing Companies-now amended) previously provides as follows:

1. Where, at the commencement of the Act, a company has unissued shares in its capital, the company shall not later than 30th June, 2021 fully issue such shares.

2. Notice of issue delivered to the Commission for registration shall be exempted from payment of filing fees.

3. Where a company to which this regulation applies fails to comply with this regulation, the company and every officer of the company shall be liable to a daily default penalty as prescribed by the Commission.

While the second and third leg of the said Regulation 13 still stands, Existing Companies with unissued share capital are advised to take advantage of the extended period to comply with the requirements of issued share capital under the Section.

All Existing Companies are further advised that in line with the definition of “share capital” in Section 868 of the Companies and Allied Matters Act, 2020 as “the issued share capital of a company at any given time”, any share capital of a Company that shall remain unissued after 31st December 2022 shall not be recognized as forming part of the share capital of the Company until the share capital of the Company is fully issued or reduced accordingly.

The General Public, all Existing Companies and Esteemed Customers were further advised to note that any application filed in compliance with Section 124, CAMA after the extended date shall attract the applicable penalty prescribed under the Section and the Companies Regulations 2021.

The AMCON Amendment Bill seeks to give clarity on the provisions in the Act and to enhance AMCON’s debt recovery capabilities thereby improving supporting regimes for enforcement. The Bill is seeking to amend the Act by creating sinking funds required to meet its debt securities.

AMCON was created for the purpose of efficiently resolving the Non-Performing Loan (NPL) assets of Nigerian banks and other related matters. By the AMCON Act 2010 enacted by the National Assembly of the Federal Republic of Nigeria, the corporation is empowered to dispose of managed assets of Nigerian banks.

The amended AMCON Act was enacted on 29th July 2019 and it represents the second amendment of the AMCON Act which comprises of 24 sections. The amended sections are Sections 6, 10, 19, 31, 33, 34, 35, 39, 43, 45, 47, 48, 49, 50, 51, 52, 53, 55, 60 and 61. In addition to the amended sections of the AMCON Act, new sections were introduced which include Sections 33A, 50A and 50B. Key Features of the Bill

1. Tracing and tracking debtors’ hidden funds. AMCON may place any bank account or any other account related to a debtor under surveillance. All said bank accounts of the individual debtors and their companies will be monitored for the effective tracing and recovery of debts.

2. Naming and shaming recalcitrant debtors and making contracting with government subject to good standing with AMCON.

3. Holding selling EFIs to their loan sale obligations and giving teeth to claw back rights.

4. Checkmating debtors’ legal gymnastics and exploitation of legal technicalities to frustrate recovery.

5. Fast tracking the hearing and determination of AMCON cases. In essence, where a debtor or other party brings an action against AMCON in a competent court, until a final decision is made, no order of attachment can be made against AMCON.

6. Enhancing AMCON’s rights over collateral securing EBAs from securing interest to legal title.

7. Fine-tuning AMCON special powers. Objectives of the Bill To clarify the restrictions placed on the member of the board or any employee of AMCON regarding an involvement in the purchase of assets acquired by AMCON.

1. To clarify the effect of AMCON’s acquisition of Eligible Bank Assets (EBA) from Eligible Financial Institution (EFI), in terms of the powers, rights and obligations of the EFI in relation to the purchased EBA.

2. To ensure that an action in court does not restrict the vesting of an EBA in and the assignment of relevant contracts relating to the EBA to AMCON.

3. To extend the limitation period for any cause of action relating to any debt owed to AMCON by its acquisition of an EBA.

4. To regulate and properly define the powers of a receiver appointed by AMCON for a debtor company whose assets have been charged, mortgaged or pledged as security for an EBA acquired by AMCON.

5. To ensure that AMCON is exempted from the provisions of the Investment and Securities Act (“ISA”), in addition to the Capital Gains Tax Act, Companies Income Tax Act and the Stamp Duties Act; and

6. To establish the Banking Sector Resolution Cost Fund to ensure that AMCON is able to meet its obligations arising from debt securities issued by AMCON pursuant to the AMCON Act and would be utilized if AMCON if AMCON is unable to meet such obligations as and when due from its resources including the proceeds of sale and management of EBA it acquires from EFI.

Section 6 of the AMCON Amendment Bill Act seeks to amend section 60 of the AMCON Act as it relates to the Nigerian Capital market which will not be regulated by the ISA. Section 6 of the AMCON Amendment Bill thus provides that Section 60 will be amended as follows:

a) The deletion of the existing head notes and replacing same with the words Exemptions Granted to the Corporation; and

b) Inserting a new paragraph (c) as follows:

c) Investment and Securities Act”

Section 60 of the AMCON Act prescribes that AMCON is exempted from the application of the Capital Gains Tax Act, the Companies Income Tax Act, and the Stamp Duties Act. The proposed amendment to Section 60 further seeks to exempt AMCON not just from the taxes and transaction fees imposed pursuant to the ISA, but from also complying with the entire provisions of the ISA. This total exemption is not advisable because the ISA makes provision for the rules and laws that govern and regulate the capital Market. AMCON is an issuer primarily in bonds and is also potentially a major participant in securities lending as stipulated by the AMCON Act, and these activities are extensively regulated by the provisions of the ISA.

Part XV of the ISA deals with the borrowing by the Federal, State and Local Government and their agencies and regulate activities involving bonds. Part X of the ISA deals with the conduct of Securities business, under which securities lending is regulated. To exempt AMCON from the provisions of the ISA will mean that the bonds issued by AMCON will not be regulated by any legislation since the AMCON Act does not have provisions regulating the issuance and dealing in bonds.

The exemption will also make it difficult for the capital market players to deal in AMCON bonds since the players in the capital market will be subject to the ISA whilst AMCON will not. This could lead to conflicting policies regarding actions that can be taken in respect of the AMCON bonds. This is the same situation with securities lending, and this is governed by the ISA, and there are rules issued in respect of securities lending by both the Securities and Exchange Commission and the Exchange.

Based on the foregoing it is suggested that the specific areas in the ISA such as transactional costs, tax and regulatory fees which AMCON wants to be exempted from should be explicitly stated in Section 6 of the AMCON Amendment Bill rather than a blanket exemption from the ISA.

Benefits of the AMCON Amendment Bill

The AMCON Amendment Bill sure has a whole lot of benefits. Additionally, it has created an alternative source of funds which AMCON can utilize to meet its obligations under the AMCON Act. The AMCON Amendment Bill took steps to clarify the scope of AMCON’s powers regarding the acquisition of EBAs.

The aim of the relevant provisions was to ensure that AMCON is able to exercise its powers to achieve the intendment of the Act without unnecessary interference with its ability to do so. The Amendment Bill states that upon AMCON’s acquisition of an EBAs from an EFI, the Eligible Financial Institution’s obligations in relation to the EBA will remain with the EFI whilst AMCON is given the power to exercise rights in relation to the EBA. Additionally the Bill ensures that there are no legal impediments by any action in court restricting the vesting of an EBA in and the assignment of relevant contracts relating to the EBA to AMCON. Furthermore, issues involving statutes of limitation relating to debts owed to AMCON by its acquisition of an EBA has been addressed by the Bill and ensures that for the purposes of the limitation period, time will only begin to run and the cause of action deemed to arise, from the date of the purchase of the EBA.

Finally, the Bill has ensured clarity on the scope, powers and reduces the possibilities of litigation over the same by creating detailed provisions to regulate and properly define the powers of AMCON, where it acts as receiver appointed by AMCON for a debtor company whose assets have been charged, mortgaged or pledged as security for an EBA acquired by AMCON.

Furthermore by the Bill, the Federal Government will have the requisite powers it has to establish the Banking Sector Resolution Cost Fund and would ensure that the funds in the Banking Sector Resolution Cost Fund be utilized by AMCON if AMCOM is unable to meet its obligations at the appropriate time.

The Bill tends to targets debtors that are able but unwilling or refusing to pay and who hide their funds, financial and commercial information away from AMCON to frustrate recovery of the said debt. Section 6(1) (i) (iii) and new Section 50A(1).

By virtue of Section 50A (4) it gives a Comprehensive disapplication of banking secrecy laws and bankers confidentiality rules wherein AMCON may additionally apply to court ex parte to compel compliance and the court except where it sees a good reason to the contrary is required to make order and award cost of a minimum of N 5million. Section 50A (3), Section 6(1) (ua) (i) & (ii), Section 6(1) (ua) (i) & (iii), Section 50A (1), Section 50A (2).

The Directors of defaulting EFI are criminally liable to 3 years imprisonment under the new bill, Surveillance and access to debtors banking, financial and commercial information and BVN from banks by Ex parte order of FHC, access to debtors computer systems for the purpose of locating debtors funds by ex-parte order of the FHC, requiring any EFI by written notice for details of debtor’s bank balances and investments by way of deposits and financial instruments and a fine of N 10m and additional N 50,000 for each day of default. By Virtue of Section 50B(1), 50B(2) it prescribes rules or contractual obligations regarding confidentiality by empowering AMCON to publish a list of recalcitrant debtors in national daily/newspaper together and to furnish procuring entities with copy of published list.

Section 6(6) and new Section 50B (2) imposes an obligation on FG and Federal MDAs to seek AMCON clearance before contracting with or making payments to recalcitrant debtors on the list furnished. The Bill in Section 50B (3) Further prohibits procuring entities from awarding contracts to, or conducting business with, or making payments to debtors in the published list without AMCON’s prior written concurrence, and without satisfying themselves that any condition attached to AMCONs concurrence has been met.

Taking a critical look at Section 31(2), Section 31(7), Section 31(6) Section 31 (3), Section 31(4) and Section 31 (5), AMCON is empowered to demand from selling EFI’s, their directors or officers, delivery of information, books, accounts, records and documents in relation to acquired EBAs, and to make defaulting EFI’s liable upon demand by AMCON, to make a full refund.

It also mandatorily obligates the immediate debit and defaulting EFI the purchase price with interest, Criminalizes failure by directors or officers of EFIs to comply with the demand for delivery or furnishing of false or misleading information, books, accounts, records or documents {6months imprisonment. Furthermore, it also makes power to demand delivery applicable to EBA purchased before the enactment of the 2019 Amendment, and imposes fines in favour of AMCON for failure to comply with the demand for delivery of necessary documents on the acquisition of EBA {fine of N 1million+ N 50,000 for each day of default; EFI, directors and officers are severally liable for delivery of false or misleading information {EFI to pay fine of N10million, Directors/Officers N2million} to AMCON.

In Section 33A, Section 53 (7), Section 34 (6), and Section 35 (5) of the Bill seeks to checkmate debtors’ legal gymnastics and Exploitation of Legal Technicalities grant of immunity to AMCON, its directors and officers against action or proceedings by “reason only” of EBA acquisition and cessation and abatement of any such existing proceedings. The imposition of this condition for grant of stay of proceedings, stay of execution/injunction pending appeal and leave to appeal {all injunctive reliefs will be on condition of the deposit of claimed sum into an interest yielding account in the name of the registry of the relevant court}, Limiting remedy to a debtor to monetary compensation. Total disapplication of the statute of limitation in AMCON debt recovery and debt realization matters {as statute of limitation does not apply to EBAs purchased by AMCON. See the decision in MYEKO NIGERIA LTD v AMCON (2019) LPELR – 47643 CA.

Section 53 (1) and (3) requires the heads of courts, the president of the Court of Appeal and the Chief Judge of Nigeria to issue special practice directions exclusively for the expedited and accelerated hearing of AMCON matters and also Set time limits for the determination of AMCON matters: At the High Court, 6 months from filing fresh action while pending matters same 6 months form enactment of 2019 Amendment} – new Section 53 (3); Court of Appeal & Supreme Court- 60days- new Section 53 (5).

The Bill in Section 53(1) further mandatorily requires heads of courts to designate one or more special courts to exclusively hear and determine AMCON related matters speedily. The Bill further enhanced AMCONs right over collateral securing EBAs from security interest to legal title.

Section 34 (1) (a) and (4), shows there were difficulties experienced in exercising the power of sale attending security interest acquired upon acquisition of the EBAs by AMCON. The amendment provides a departure from the regime of the old Section 34 which focused on vesting of security interest hitherto held by EFI in AMCON given that there is unclear language of reference to vesting rights of EBA in the previous AMCON Act. The amended Act expressly provided for vesting legal title to acquired EBAs and in the collateral securing such acquired EBA, and vesting power of sale, possession, management etc., to AMCON to exclusion of all other creditors notwithstanding that only equitable security exists in such collateral.

The Bill further provided AMCON’s special powers, to wit, RECEIVERSHIP POSSESSION & FREEZING ORDER (SEC 49 &50) BANKRUPTCY & WINDING UP PROCEEDINGS POWER TO APPOINT SPECIAL PROSECUTOR

SUBSEQUENT CHANGES IN THE 2019 AMENDMENT ACT

Section 4 inserted a new subsection (2) – (5) which indicates the need for the prior consent of the AGF to enforce/execute money judgment against AMCON and protection against interim or interlocutory attachment of AMCON’s funds in any bank. Section 12 also has a new subsection (2) which introduces the Certificate of Judgment as a registrable instrument. Section 21 now has a new subsection (1) which vests the FHC with exclusive jurisdiction to try criminal offences under the Act.

Additionally, to confirm its financial commitment to the proposed Banking Sector Resolution Cost Fund, the Federal Government through the Central Bank of Nigeria, will contribute at least the sum of N50, 000, 000, 000.00 (Fifty Billion Naira) on an annual basis.

This amounts to approximately N 750, 000, 000, 000.00 (Seven Hundred and Fifty Billion Naira) over the tenor of fifteen (15) years. This step no doubt ensures that the proposed Banking Sector Resolution Cost Fund has available funds to meet its obligations as and when due. Furthermore, the amended Act recognizes the drive to strengthen the capabilities of AMCON, and it imposes an annual levy in an amount equal to fifty (50) basis point of the EFI’s total assets on ??.

The Effect AMCON Act has on the Nigeria Capital Market. The aftermath of the global financial meltdown and the Nigerian Banking crisis saw the Exchange’s All share index (ASI) drop from a peak of about 66, 000 points in March 2008 to less than 22, 000 points by January 2009, wiping out over N 8 trillion (or around 70 percent) of the total capitalization of the Exchange within this period.

As a consequence of the above, a number of stock broking firms had no-performing margin loans, which consequently were acquired by AMCON as EBA’s from various EFI’s in line with Section 5(e) of the AMCON Act.

AMCON purchased these margin loans from the EFI’s for about N 42.6billion but the value of the underlying assets or collateral was worth about N19.6 billion. In furtherance of AMCON’s clean-up of the banking sector, AMCON exercised its powers under Section 6(5) of the AMCON Act and offered forbearance of about N22.6 billion on the margin loans of eighty four (84) stock broking firms.

The forbearance has enabled the capital market regain some of its vibrancy which will ultimately have a positive impact on the wider economy.

Furthermore, in line with its powers on Section 6(a) of the AMCON Act, AMCON issues bonds and other debt instruments as consideration for the acquisition of EBA’s. The tranches were listed on the Exchange with a total face value of N 1.7billion.

The AMCON Act has also created the enabling environment for the trade in bonds offered by AMCON, investment securities with collateral and securities lending activities. The Exchange notes that securities lending is a key initiative to deepen the Nigerian Capital Market.

Furthermore, Clause 21(a) of the Guidelines for the operations of the Asset Management Corporation of Nigeria (15 November 2010) recognizes that trading in Managed Assets should be carried out on the floor of the Exchange.

AMCON has made a significant impact in the Nigeria Capital Market. A breakdown of the top (5) Sectors in which EBA’s originate from and which represents 75.35% of all EBA’s purchased by AMCON shows that the capital market accounts for 17.93% which is the third highest sector. Others are Oil and Gas (27.23%), General Commerce (18.49%), Manufacturing (6.24%) and Finance and Insurance (5.47%).

Conclusion

The stringent provisions of the Act is a welcomed idea as the increased rate of indebtedness and debt profile is affecting the economy. The gains of the Bill cannot be overemphasized as AMCON will have a source of funds to meet its obligations under the AMCON Act. There is a need to revamp the culture of diligent liquidation of loan facilities granted as at when due to saving our economy from total collapse as spearheaded by this AMCON Amendment Act, 2019.

Definition of Terms/Acronyms

Amendment: A minor change or addition designed to improve a text, piece of legislation, etc.”an amendment to existing bail laws”

AMCON –Asset Management Corporation of Nigeria

EBA – Eligible Bank Assets

EFI – Eligible Financial Institution

CBN – Central Bank of Nigeria Notes

The NSE’s Perspective on the AMCON Amendment Bill, February 18, 2014 AAA Chambers – The Revised AMCON Debt Recovery Approach vis-à-vis The AMCON Special Powers- A Critical Review of AMCON Amendment Act 2019, 17 March 2020