PAPER SERIES - Companies and Allied Matters Act 2020 and its Innovations: Implications for Corporate Finance and Securities Transactions.
COMPANIES AND ALLIED MATTERS ACT 2020 AND ITS INNOVATIONS: IMPLICATIONS FOR CORPORATE FINANCE AND SECURITIES TRANSACTIONS.
On 7 August 2020, the Companies and Allied Matters Bill, 2020 passed by the Senate and the House of Representatives of the National Assembly was signed into law by the President of the Federal Republic of Nigeria. The Companies and Allied Matters Act, 2020 ("CAMA 2020") repeals the Companies and Allied Matters Act, Cap. C20, Laws of the Federation of Nigeria, 2004 ("CAMA 1990"). Innovatively, CAMA 2020 provides for the incorporation of companies, limited liability partnership, limited partnership, registration of business names, together with the incorporation of trustees of certain communities, bodies, and associations.
Company law in Nigeria dates back to the English Company Law consisting of common law principles, doctrines of equity and statutes, which became part of the Received English Law incorporated into the Nigerian legal system. With regard to statutes of general application, the relevant statutes were the English Companies Act, 1862. This English Act consolidated the Joint Stock Companies Act, 1856 and subsequent amendments that provided for achieving limited liability by registration, and introduced the modern form of the memorandum and articles of association in place of the deeds of settlement, as well as having provisions for winding-up.
Before the enactment of CAMA 2020, Nigeria has had four other principal company statutes - the Companies Ordinance 1912, the Companies Ordinance 1922, the Companies Act 1968 and the Companies and Allied Matters Act, 1990.
CAMA 1990 had its amendments. Section 2(e), 26 and 358 of the Act were amended by the Companies and Allied Matters (Amendment) Decree, 1990, which also made the Act effective from 31st December 1990. It accordingly validated all acts done or purported to be done under the principal act since 2 January 1990. The Act was further amended in 1991 by the Companies and Allied Matters (Amendment) Decree, 1991 in respect of section 2, 137 and 359(2). The Act was amended between 1998 - 1999 by the Investment and Securities Act, 1999, which repealed Part XVII (section 541 to 623 of the Act) and re-enacted the sections as sections 1 to 148 of the Investment and Securities Act, 1999. The Investment and Securities Act 1999 was subsequently amended to the extant Investment and Securities Act, 2007.
It is important to point out that the Investment and Securities Act, 2007 now provides for the regulation of certain types of securities transaction such as capital markets debt and equity offerings, mergers and acquisitions, mandatory takeover bid, collective investment schemes, open-ended investment company, real estate investment company etc. and it also created and conferred the Securities and Exchange Commission with the primary regulatory powers of such transactions.
This Paper Series shall evaluate CAMA 2020 and its innovations, particularly from the standpoint of its implications for corporate finance and securities transactions in Nigeria for individual, private and public companies and even institutional investors. Paper Series I will discuss the Repeal, Saving and Transition from CAMA 1990 to CAMA 2020. Subsequent Paper Series will discuss -
- the Re-registration or re-organisation of Companies.
- Company's Contracts, Authentication and Service of Documents on a Company.
- Company's Share Capital and Disclosure of Persons with Significant Control.
- Share Transfer and Transaction by Company in Respect of its Shares.
- Debenture, Debenture Trust Deed and Realisation of Security.
- Procedure for Major Asset Transaction and Minority Protection.
- Company Voluntary Arrangements.
- Arrangements and Compromise.
When any of the above-identified provisions of CAMA 2020 has a complementary or corresponding implication to corporate finance and securities transactions governed by the Investments and Securities Act, 2007 and various Securities and Exchange Commission Rules and/or the Rules of any of the securities exchanges such as the Nigerian Stock Exchange, FMDQ Exchange and NASD, the relevant Paper Series will discuss that innovation and its implications for such a transaction.
PAPER SERIES I
Repeal, Saving and Transition from CAMA 1990 to CAMA 2020
As bold and innovative as this new piece of legislation might be in the transformation of the corporate and business arena in Nigeria, several legal issues and questions arise as a result of the new CAMA 2020. For instance, was CAMA 1990 repealed? If yes, what happens to transactions, dealings and actions carried out according to its provisions? At what point did the new CAMA 2020 come into effect?
This Paper Series I discusses the legal framework for the repeal of CAMA 1990 and its 1991, 1992, 1998 amendments. It also discusses the saving provisions for acts, transactions, dealings and proceedings implemented on the premise of CAMA 1990 as well as the transition to CAMA 2020.
II. Repeal of CAMA 1990
Section 869 of CAMA 2020 deals with the repeal of CAMA 1990. It states that subject to the provision of this Section, the Companies and Allied Matters Act 1990, the Companies and Allied Matters (Amendment) Act 1990, the Companies and Allied Matters (Amendment) Act 1991, the Companies and Allied Matters (Amendment) Act 1992 and the Companies and Allied Matters (Amendment) Act 1998 are upon the commencement of CAMA 2020 repealed.
The repeal of a legislation is defined as the abrogation or annulment of a previously existing law by the enactment of a subsequent statute which declares that the former law shall be revoked and abrogated. It is the law that a subsequent legislation must expressly abrogate a prior legislation, before it is said to have repealed it, stated differently, it is a general principle of law that a statute is not repealed simply because a similar statute dealing with the same subject is enacted, still holds good and valid.
The effect of the above section 869 of CAMA 2020 is that CAMA 1990 and all its subsequent amendments are expressly abrogated or annulled upon the commencement of CAMA 2020. The effect of this repeal is that the repealed law no more has legal life, and as it does not exist any longer; it cannot be cited as if it still exists. If it must be cited at all, it must be cited as a repealed law, which has no life to influence an argument. A repealed law cannot be the basis for any comparison with existing law. It cannot be quoted side by side with existing law. A revoked legislation or order has no more force of law from the date of the revocation and a Court cannot by its interpretative jurisdiction revive the revoked legislation because it is moribund or dead from the date of the revocation.
Section 6 of the Interpretation Act, however, seeks to mitigate the effect of the repeal of a legislation on already existing rights, completed transactions, pending proceedings etc. The section states that the repeal of an enactment shall not -
(a) revive anything not in force or existing at the time when the repeal takes effect;
(b) affect the previous operation of the enactment or anything is duly done or suffered under the enactment;
(c) affect any right, privilege, obligation, or liability accrued or incurred under the enactment;
(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed under the enactment;
(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if the enactment had not been repealed.
III. Saving and Transition to CAMA 2020
In saving prior acts, dealings, transactions, and proceedings carried out under CAMA 1990, Section 869 (2) - (7) of CAMA 2020 states that,
"(2) Nothing in this Act shall affect any order, rule, regulation, appointment, conveyance, mortgage, deed or agreement made, resolution passed, direction given, proceeding taken, instrument issued or thing done under the enactment hereby repealed; but any such order, rule, direction, proceeding, instrument or thing if in force immediately before the commencement of this Act shall, on the commencement of this Act, continue in force and so far as it could have been made, passed, given, taken, issued or done under this Act shall have effect as if so made, passed, given, taken, issued or done. (emphasis added)
(3) Nothing in this Act shall be construed so as to prohibit the continuation of an inspection by inspector appointed under any enactment repealed, begun before the commencement of this Act, and section 358 of this Act shall apply to a report of inspector appointed under any enactment repealed as it applied to a report of inspectors appointed under section 357 of this Act.
(4) A register kept under the enactment repealed shall be deemed to be kept under the corresponding provision of this Act.
(5) Funds and accounts constituted under this Act shall be deemed to be in continuation of the corresponding funds and accounts constituted under the enactment repealed.
(6) Nothing in this Act shall affect the incorporation of any company registered under any enactment repealed.
(7) Any individual, firm, or company who immediately before the coming into operation of this Act was registered as a business name under the enactment repealed shall be deemed to be registered under and in accordance with the repealed Act.
The above-stated provisions of Section 869 (2) - (7) of CAMA 2020 are quite clear on what they seek to achieve. Essentially, these subsections are to serve as saving and transition provisions for acts, dealings, transactions, and proceedings done or already commenced according to the provisions of CAMA 1990, which has now been expressly repealed by Section 869 (1) of CAMA 2020.
Subsection (2) above, for instance, is aimed at validating any order, rule, regulation, appointment, conveyance, mortgage, deed or agreement made, a resolution passed, direction given, proceeding taken, instrument issued or thing done under CAMA 1990 upon its repeal. The subsection, however, provides that any such order, rule, direction, proceeding, instrument or thing if in force immediately before the commencement of the Act shall, on the commencement of the Act, continue in force and so far as it could have been made, passed, given, taken, issued or done under the CAMA 2020 shall have effect as if so made, passed, given, taken, issued or done.
It is a settled principle of law that the repeal of an enactment shall not (a) affect anything not in force or existing at the time when the repeal takes place; (b) affect the previous operation of the enactment or anything done or suffered under the enactment. Further, it is a well-known rule of construction that unless the contrary appears, the rights of the parties in a pending proceeding are not affected by the alteration of law during such pendency. However, a literal reading of subsection (2) would show that it expressly wants the continuation or any subsequent actions, dealings, transactions or proceeding premised on an already existing order, rule, regulation, or proceeding to continue as if it was made, passed, given, taken, issued or done under CAMA 2020. It follows that it is CAMA 2020 that will now give validity to any subsequent step(s) that parties may decide to take in respect of that transaction or proceeding and not the repeal CAMA 1990.
Section 869 (4) to (7) of CAMA 2020 deems certain acts already commenced under the repealed CAMA 1990 to continue and remain valid or deemed as having been done under CAMA 2020. These acts include amongst other a register kept under the enactment repealed; funds and accounts constituted under CAMA 2020, which shall be deemed to be in continuation of the corresponding funds and accounts constituted under the enactment repealed; and then any individual, firm or company who immediately before the coming into operation of this Act was registered as a business name under CAMA 1990.
The intentions of the National Assembly in its enactment of Section 869 (2) - (7) of CAMA 2020 is mainly to treat the various enumerated deemed acts as if they were prior acts or possessing qualities that ordinarily they will not possess without the new enactment. The Courts in Nigeria have also held that the word "deem" means to treat a thing as being something that it is not or as possessing certain qualities that it does not possess. It is a formal word often used in legislation to create legal fictions. A deeming provision, according to Advanced Law Lexicon, Vol. 2 (3rd edition) is a provision of law which makes supposition. The deeming provision is intended to enlarge the meaning of a particular word or to include matters which otherwise may or may not fall within the main provision.
III. Commencement of CAMA 2020
A review of the provisions of CAMA 2020 will show that it does not expressly state its commencement date. The possible challenge that this will pose is that some persons may argue that it will commence on the date it was signed by the President of the Federal Republic of Nigeria, others may contend that it will commence on the date it is published in the National Official Gazette of the Federal Republic of Nigeria.
Interpretatively, it has been held that an Act is passed when the President assents to the Bill for the Act whether or not the Act then comes into force; or where no other provision is made as to the time when a particular enactment is to come into force, it shall come into force -(a) in the case of an enactment contained in an Act of the National Assembly, on the day when the Act is passed; (b) in any other case, on the day when the enactment is made. Where an enactment is expressed to come into force on a particular day, it shall be construed as coming into force immediately on the expiration of the previous day.
The significance of the repeal of CAMA 1990, the saving of acts, dealings, transactions and proceedings implemented according to it and the transition to CAMA 2020 is one area of our company law and corporate law practice that can be taken for guaranteed, but it is capable of having far-reaching legal implications.
Parties and their counsel to any transaction or proceeding governed by CAMA 1990 need to carry out a critical evaluation of CAMA 2020, especially its repeal and saving provisions, to determine its effect on an already completed or pending transaction and proceeding.
Author: Ikemefuna Stephen Nwoye. LL.B (ESUST) 2010, Qualifying Certificate (NLS, Lagos) 2011, LL.M in International Business Regulation, Litigation and Arbitration (NYU, New York) 2014. A Barrister and Solicitor of the Supreme Court of Nigeria (2012) with expertise in the areas of finance, capital markets, mergers and acquisitions, and dispute resolution. This paper should not in anyway serve as a substitute for legal advice or opinion. The views expressed are personal to the author and do not necessarily reflect the views of any organisation or person that the author is or might have been affiliated to.
 Explanatory Memorandum of the Companies and Allied Matters Act, 2020.
 Hon Dr. J. Olakunle Orojo, Company Law and Practice in Nigeria, LexisNexis 5th Edition at pg. 16.
 Id. at pg. 21.
 ASIMS (Nig) Ltd & Anor v. Lower Benue River Basin Development Authority & Others (2001) LPELR-6980(CA)
 Oyeyinka v. Osague (1994) 2 NWLR (Pt.328) 618.
 Citibank (Nig) Ltd v. Abia State Internal Revenue Service (2018) LPELR - 46246 (CA); see also Adesanoye v. Adewole (2006) LPELR 143 (SC).
 Section 6(1) of the Interpretation Act; SPDC v. Anaro & Others (2015) LPELR - 24750 (SC).
 Are v. A.G Western Region (1960) SCNLR 24; Unilorin v. Adeniran (2007) 6 NWLR (Pt. 1031) 498.
 see SPDC v. Anaro & Others (supra), the Supreme Court of Nigeria held that where a cause of action accrue before the advent of an alteration of the law governing same, the applicable law is the one which was in operation at the time when the cause of action accrued unless the subsequent legislation manifestly and unambiguously provides that the altered law takes retrospective effect.
 Orji v. Dorji Textiles Mills (Nig) Limited (2009) LPELR - 2766 (SC); Duke v. Duke (2012) LPELR - 19700 (CA).
 see Chief Denis Osadebay v. AG Bendel State (1991) LPELR -2781 (SC) where the Supreme Court held that the date of commencement of any law is the date of its publication. Except where otherwise stated. Ebiriukwu v. Onanyerenwa (1959) 4 F.S.C 212; (1959) SCNLR 540. Where a retrospective date is provided, it is undoubtedly stating that that is the date of commencement.
 Section 2 of the Interpretation Act Cap I23 LFN 2004. See also APC v. INEC & Others (2014) LPELR - 24036 (SC)