AN APPRAISAL OF THE BUSINESS FACILITATION (MISCELLANEOUS PROVISION) ACT 2023 AND NOTEWORTHY AMENDMENT ON OTHER LAWS
by
Efe Precious Rukevwe, Esq.
BACKGROUND
According to World Bank’s rating, Nigeria currently ranks 131st out of 190 economies on the ease of doing business. In order to promote the ease of doing business, His Excellency, President Muhammadu Buhari; GCFR signed the Business facilitation (Miscellaneous Provisions) Act 2023 also known as the Omnibus Act into law on the 14th February, 2023 as part of the Federal Government Initiatives to enable micro, small and medium-sized enterprises (MSMEs) to thrive in Nigeria and removing the bureaucratic constraints to doing business in Nigeria.
The main objective of the Act is to:
a) Promote the ease of doing business in Nigeria and eliminate bottlenecks; and
b) Amend relevant legislation to promote the ease of doing business in Nigeria and institutionalize all reforms to ease implementation.
According to Jumoke Oduwole, special adviser to President Buhari on ease of doing business, the act which was drafted as an executive bill, also led to the amendments of 21 business laws.
The Nigerian Bar Association section on Business Law (NBA-SBL) has expressed satisfaction with this new law.
HIGHLIGHTS OF THE ACT
a. Transparency Requirements for MDAs:
The Ministries, Departments and Agencies (MDAs) are required to prepare service level agreements which would contain a list of product and services rendered, timelines for processing applications, applicable fees, a summary of the procedure of application, redress mechanisms and such other requirement as the MDAs may consider necessary. The MDA shall maintain a register of applications for products and services and also state the time period for the provision of their products and services. Where they fail to communicate their approval or rejection of any application within the stipulated time, the application will be deemed approved.
b. Corruption tackling strategy on port operations:
The Omnibus Act expressly provides that touting is prohibited in any port in Nigeria and the violation of this provision as stated in section 7(14) of this act attracts a fine of 1 million naira or imprisonment for a term of at least 6 months or both, and stipulates that the staff on duty shall be properly identified by uniform and official identity cards, while staff off duty should stay away from the port except with the express approval of the MDA head.
CONSEQUENTIAL AMENDMENTS
1. Amendments of the companies and allied matters Act (CAMA) 2020:
The National Assembly has adroitly seized the opportunity bestowed by the omnibus Act to review, add and make corrections on CAMA 2020 to make sure it’s in tandem with global best practices.
Some key changes introduced to CAMA by the Omnibus Act are:
1.1 Exemption from Incorporation: The Act provides additional ground for exemption from incorporation; amending section 78 of CAMA in subsection (3) by inserting after paragraph (B) a new paragraph (c) which stipulate that foreign companies intending to carry on business in Nigeria may now be exempted from incorporation as a separate entity by any other external Act of the National Assembly.
1.2 Increase in Share Capital: Amended was made on section 127 of CAMA 2020 by substituting subsection (1), a new subsection (1), which stipulates that a company having a share capital may increase its issued share capital by the allotment of new shares of such amount as it considers expedient in a general meeting or a resolution of the Board of Directors, subjects to the condition that may be imposed on the Articles or by the company in general meeting.
This amendment provides flexibility for companies seeking to increase their share capital by abolishing the previous restriction on General meeting only.
1.3 Virtual meeting for private and public companies: Due to the amendment made on section 240(2) CAMA, henceforth, both a private company and a public company may hold their general meeting electronically, provided that such meetings are conducted in accordance with the articles of the company.
I commend this provision because it’s sufficient that they can hear and be heard in deciding matters affecting the company regardless of their locations. It also makes the meeting more accessible to shareholders because it allows for participation from any part of the world.
1.4 Preemptive Right: The Omnibus Act eliminates the difficulty that a public company will face in order to execute right issue, by restricting section 142 of CAMA to private companies only, and also eliminate the ambiguity of “reasonable time” in section 142(2)(c) by stating that the reasonable time within which such offer is to be accepted by existing shareholders is 21 days.
1.5 Electronic share certificate: The act amended section 171 CAMA by providing that the word “certificate” may be in physical or electronic form. This is to ensure convenient, speedy and easy dispensation of share certificate by the company after an allotment or transfer of shares.
Some other amendment made on CAMA by the omnibus Act includes:
Amendment of section 244 (1) CAMA to allow companies to give notice electronically to members, and also amendment of section 248 CAMA to include voting electronically. The Act also amended section 275 CAMA, by increasing the number of independent director a public company is required to have, from 3 to one-third of the total number of director. The major purpose for appointing more independent directors is to ensure that there are persons on the board of directors who have no personal interest and can act solely in the best interest of the company.
The act also amended section 283 CAMA, that a person is only disqualified from being a Director under section 283 CAMA, if such a person was previously removed as a director on ground of fraud, dishonesty or unethical conduct.
2. Amendment of the Foreign Exchange (Monitoring and Miscellaneous Provision) (FOREX) Act: The Act amended section 6 of the Forex Act by stipulating various ground which may result in the revocation of the appointment of an authorized dealer or authorized buyer as against the previous uncertain ground that the central bank can revoke if it sees reasons to.
3. Amendment of the Immigration Act:
Section 36 of the Immigration Act was amended, the power to grant approval to Non-Nigerians before practicing any profession or business was transferred from the Minister of Interior to the comptroller General of Immigration. This is in line with the principle of division of labour and specialization. The omnibus act also stipulates that up to date requirement for obtaining visa should be published on the immigration related website, and all entry of visa to Nigerians shall be issued or rejected within 48 hours of receipt of valid application.
4. Amendment on the industrial Inspectorate Act (IIA):
In the amending the IIA, the ease of doing business law reviewed the existing threshold for existing business to process and obtain certificate of acceptance of fixed assets from the “minimum twenty thousand naira” to “five million naira” or as the minister may by regulation prescribe. Therefore, unless the asset is valued at 5 million naira and above, new and existing business do not have need to obtain certificate of acceptance of fixed assets.
5. Amendment of Nigeria Investment Promotion commission (NIPC) Act: Prior to now, only companies with foreign shareholding has to apply to the commission for registration before commencing of business as was provided under section 20 of the NIPC Act. However, the omnibus Act now makes it imperative on all enterprise registered in Nigeria, which subsequently acquires foreign participation after commencement of business, to register with the commission within 3 months of such acquisition.
CONCLUSION
I commend the federal government for introducing the omnibus Act. With the recent amendment of CAMA 2020, the omnibus act has seen the need for an increase in the numbers of independent directors of a public company, this will ultimately result in transparency and effective decision making. Also, with the creation of electronic voting, members of the company who has right to vote, can vote from anywhere in the world conveniently.
The omnibus Act went further to amended the Custom Exercise Management Act Export (prohibition) Act, FOREX Act, Immigration Act, Industries Inspectorate Act, NOTAP Act, NIPC Act, to address various issues that relates to the ease of doing business and creates a conducive atmosphere that will promote business in Nigeria.
Efe Precious Rukevwe, Esq.
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