Alhaji Garba Abubakar is the Registrar General (RG) of the Corporate Affairs Commission (CAC). In this interview, he highlights the relevance of the Beneficial Ownership Register (BOR) which the commission launched recently, alterations to the Companies and Allied Matters Act (CAMA) as a result of the Business Facilitation Act (BFA) recently signed into law by President Muhammadu Buhari, as well as other plans of the commission.
Why did CAC make BOR public?
If you recall, Nigeria subscribed to the principle of Open Government Partnership (OGP) in 2015 and became a member of the partnership. Part of the commitment is that member countries will implement a publicly available register of beneficial ownership of companies. By beneficial ownership, it means natural persons that control corporate entities.
Before now, our laws were not consistent with the principles of the Financial Action Task Force (FATF), which required members to have a register of beneficial ownership. So, in May, 2016, the president made a commitment at the London Anti-Corruption Summit that Nigeria was going to implement a publicly available register of beneficial ownership. As at the time of the commitment by the president, there was no legal framework to support BOR, so CAMA was repealed and re-enacted in 2020 and its implementation started in 2021. The law provided a framework for beneficial ownership disclosures, and so we decided to adopt the UK model of persons with significant control, which is broader and wider in scope.
Consequently, what is provided in CAMA’s Section 199 is that if you own shares in a company, up to five per cent, either directly or indirectly, or if you control or exert some form of influence on how a company is managed, or you have any trust arrangement, then you have to disclose this information to the company within seven days and the company has to submit such information to CAC within 30 days and CAC will publish this information. It is available to members of the public at no cost.
How significant is the register to companies’ operations?
Most procurement frauds are carried out using companies. So, because of these concerns, we brought a public register that tells you who owns what, and anybody can access the register. It facilitates investigation, it has open information available to the media to investigate and ask questions. It is a completely new arrangement that we have introduced to boost transparency. With this new arrangement, at the point of filing returns as a company, you must state the names of the ultimate beneficiaries of the companies. It is in line with the commitment of OGP and the Extractive Industries Transparency Initiative (EITI) which we subscribed to, as well as FATF 40+ recommendations.
Another requirement by the register is that if you are a politically exposed person or you are affiliated to such people, you have to disclose such information. In the case that a company is owned by the government, the CEO is identified as the person with significant control and his details will be published as the PSC, but for private companies, they are required to refer to the exchange.
Since the public is involved, what is the penalty for disclosing false information on the register?
The register is already live on our website. What we don’t have yet is that it is not in an open data format until the day of the launch. So on the launch we will have a standalone register that will allow the public to query the database.
For the penalty, the law is clear. Anybody who violates it is liable on conviction to two years imprisonment. So, once we discover that, we will report to the relevant law enforcement agencies and they will take it up from there.
However, to ensure the integrity of the information we are getting, we have integrated with the National Identity Management Commission (NIMC) to validate the information we are getting from individuals, which will not even require you to upload your signature. Therefore, on that note, we are doing instant validation.
BFA has altered some business laws, including CAMA. In what area has it affected your operations?
When the National Assembly passed CAMA in 2020, nobody anticipated that we would have a situation where Nigeria would be under lockdown for two months whereby companies were unable to call general meetings of their members. At the verge of the lockdown, these companies approached us to allow them to have their meetings using proxies. There were no provisions for electronic meetings in CAMA and we couldn’t go and start afresh, but the BFA has amended CAMA to allow companies to hold meetings virtually. But they must first amend their articles of association to provide for that. It is a major change and it will go a long way to reduce cost for the companies and it will allow for more participation.
There is also the issue of multiple directorships. Most of the changes are actually timely and they do not affect the functions of the CAC.
There have been complaints on high charges of daily search. Have you addressed that?
People that are making such complaints are doing so because they lack the necessary information about our search categories. We have four forms of searches. You can view information of any company with just N1,000. If you want a certified extract, it will attract a fee of N5,000, then you can ask for historical information about a company, the extraction will be done by our officers and the report will be issued to you for N10,000, but if you want us to give you a company’s file to do the search yourself, you must pay N50,000. We are doing that to discourage people from handling our records.
What have been the challenges so far in your operations?
The major challenge is funding. Government policies have impacted on us. Before now, we were allowed to generate, spend and remit surplus money to the government, but that policy has changed and we are only limited to spend 60 per cent of our revenue, while 40 per cent is deducted automatically as operating surplus. So, this year has been difficult. But we are hoping the government will address it because we have presented that to the government.
Any other plan for 2023?
We have deployed an electronic financial statement platform. So, companies no longer have to scan and upload their financial statements. The funding was provided by the European Union (EU), and it was developed in line with the principles of Extensive Reporting Language.
