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With new Business Act: Coys share capital to rise, CBN may cancel idle forex licence, others

President Muhammadu Buhari in February 2023 signed the Business Facilitation Bill into law. The law is targeted at improving Nigeria’s business environment among others. In…

President Muhammadu Buhari in February 2023 signed the Business Facilitation Bill into law. The law is targeted at improving Nigeria’s business environment among others. In this report, Daily Trust analyses key highlights of the law and the major changes it has brought to other business-related legislations.

 

The Business Facilitation (Miscellaneous Provisions) Act 2023 is part of the commitments of the federal government to create an enabling environment for doing business.

Daily Trust reports that on February 13, 2023, the Business Facilitation Bill 2022 (also known as the Omnibus Bill) was signed into law (the Act) with the main objective to “promote the ease of doing business in Nigeria and ease bottlenecks in the business environment.

However, the coming of the act has brought amendments to some already existing business-related laws such as the CAMA, and Forex law among others.

Companies and Allied Matters Act (CAMA) 2020

First and foremost, one of the major disruptions of the Business Facilitation Law on CAMA is the increase in share capital. The Act has amended the provisions of sections 127(1) and 149(1) of CAMA as a company may now have to increase its issued share capital by the allotment of new shares, either in a general meeting or by a resolution of the board of directors, subject to the condition or direction that may be imposed in the articles or the company in general meeting.

Daily Trust checks show that the existing provisions of Section 127(1) of CAMA state that a company may increase its share capital only by the members in a general meeting, and not otherwise.

As such, the new amendment now removes any constraint or limitation which a company may experience where it seeks to increase its share capital, without the requirement of a general meeting of its shareholders, provided that the shareholders in general meeting or the company’s articles have authorised the board to issue such resolutions.

Consequently, a company may have to amend its articles to empower the directors to increase its share capital where this is not already provided in its articles.

The company alternatively may have its members sign a resolution empowering the directors to do so and setting the parameters for the exercise of this authority.

Secondly, the law has now changed the return of allotment of shares by companies.

The act by amending the provisions of Section 154(1) of CAMA has cut the period within which to make a return on allotment of shares to the Corporate Affairs Commission (CAC) from one month to 15 days.

Thirdly, Due to the amendment made to Section 378(1) of CAMA, a company’s financial statement must comply only with the requirements of the accounting standards as prescribed by the Financial Reporting Council of Nigeria (FRCN).

This amendment eliminates in its entirety the requirement to comply with the accounting standard as provided in the First Schedule of CAMA and the requirements of the FRCN, as stated in the existing provisions of CAMA.

Amends Forex Act 2004 – Idle forex licence to go

Another impact of the Business Facilitation Act is on the Foreign Exchange Monitoring and Miscellaneous Provisions (Forex Act 2004).

The business facilitation act has amended the FOREX Act by providing the various grounds on which the Central Bank of Nigeria (CBN) may revoke the appointment of an authorised dealer or buyer licensed to transact in foreign exchange.

These grounds include failure to utilize the license within 30 days; inability to commence its exchange business within six months from the date of issuance; failure to comply with a directive under the FOREX Act, where the entity conducts or intends to administer its business in a manner that threatens the interest of customers or potential customers.

Others are failing to disclose in its application, any material information known to the entity or reasonably expected to have been known by the entity, etc.

NOTAP Act, 2004 – Moratorium for unregistered overseas trade

Checks by Daily Trust revealed that in Section 5(2) of the NOTAP Act, there is an obligation to register with NOTAP not later than 60 days of execution, every contract or agreement entered into by any person in Nigeria with a person outside Nigeria relating to the use of trademarks, patented inventions, supply of technical expertise and supply of basic or detailed engineering, etc.

However, the business facilitation act has now amended the act as companies in their first two years of business operation shall not be liable to late registration penalties where such contracts are registered before the end of the second year of their business operation.

It also provides that for companies to qualify for exemption for late filing, they must not be more than two years in operation.

It also affirms that the contract or agreement is filed not later than the end of the second year of its operation.

Trademarks Act 2004 now covers goods, services

In the provisions of the Trademarks Act, a trademark is required to be registered in respect of particular goods or classes of goods, and subject to this registration, no person shall have the right to institute an action against any person for the infringement of an unregistered trademark.

Similarly, under the Trademarks Act, no provision was made for the definition of “goods”, nor is there any provision for such definition under the Interpretation Act of 1990.

Subsequently, the Business Facilitation Act has amended Section 67 of the Trademarks Act, as “goods” has been defined to include services.

Consequently, the definition of a trademark under the Trademark Act has been amended as “trademark” means a mark used or proposed to be used in relation to goods or services for the purpose of indicating a connection between the goods or services and a person having the right, either as a proprietor or as a registered user, to use the mark, with or without any indication of the identity of that person, and may include shape of goods, their packaging, and combination of colours.

This amendment provides explanations on what the words “goods” as used by the Trademark Act mean and also enlarges the scope to include services provided by a person.

How law ‘ll accelerate MSME growth – PEBEC 

Commenting on the new law, Dr Jumoke Oduwole, Special Adviser to the President, Ease of Doing Business/PEBEC Secretary, said it will serve as a launch pad in the delivery of an enabling environment for micro, small and medium-sized enterprises (MSMEs) in the country.

She said the act is a 2023 legislative intervention by the Presidential Enabling Business Environment Council (PEBEC) which amends 21 business-related laws, removing bureaucratic constraints to doing business in the country.

“The new law also codifies Executive Order 001 on Transparency and Efficiency in Public Service Delivery, the administration’s first executive order, aimed at strengthening ease of doing business reforms across the country.

“It is a culmination of over four years of collaboration between public and private sector stakeholders, including the Attorney General of the Federation, and the Federal Ministry of Justice, the Nigerian Bar Association (NBA) section on Business Law through the participation of over 40 law firms and consulting firms, the Nigerian Economic Summit Group (NESG), and the National Assembly Business Environment Roundtable (NASSBER).

“The Business Facilitation Act, 2023 consolidates the last seven years of PEBEC-led reforms and demonstrates the administration’s sustained commitment towards making Nigeria a progressively easier place to start and grow a business,” she also stated.

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