The reenactment of the Companies and Allied Matters Act (CAMA) has been a subject of controversy in Nigeria’s public space, as some sections of it have been described as oppressive.
Section 839 (1) of the Act stipulates that religious and non-governmental organizations will be under the regulation of the Register-General of the Corporate Affairs Commission (CAC), and a supervising minister who will strictly regulate their affairs.
Under this rule, the CAC may wade into the organizations’ affairs, particularly when there is crisis. The Act thus empowers the Commission to suspend board of trustees of public organizations when a case of mismanagement is established, and appoint interim manager or managers.
Based on this section of the Act, many, especially religious leaders and non-profit organizations, are calling on the Federal Government to suspend it.
CAMA has been repealed and reenacted to boost ease of doing business in Nigeria, and the majority of its sections are geared toward that aim.
However, while religious leaders lead the uproar against the Act, experts said it’s in line with international best practices and should be welcomed.
Taiwo Oyedele, Fiscal Policy Partner and West Africa Tax Leader at Price water house Coopers (PwC), during the capability enhancement workshop organized for journalists by PwC, on Wednesday, said that the new CAMA will have significant impact on doing business, competiveness, attracting investments, and economic growth.
He highlighted five key changes that were introduced by the new CAMA: 1.the insolvency provisions to help companies in distress 2.Restriction on the number of public companies in which a person can serve as a director 3. Ability of an individual to form a single-shareholder company 4.Replacement of authorized capital with minimum share capital 5.Electronic filing, virtual meetings and electronic share transfers.
Compared to the old CAMA that had been in force since 1990, he said that key provisions and changes introduced by the new Act will have positive economic bearing on the country if implemented. Taiwo cited a section of the old CAMA that made provision for dissolving of public organizations instead of setting up interim management as provided in the new CAMA, to show that it isn’t as bad as it is perceived.
He however, outlined some steps that the government needs to take to ensure effective implementation of the Act.
Taiwo said the Act needs to be gazetted with a future commencement date to facilitate ease of transition. He added that for CAMA to yield the needed result, it has to be harmonized with other laws such as the Companies Income Tax Act which still requires audited accounts by all companies regardless of size.
“In addition, more flexibility is required for foreign companies who wish to operate business in Nigeria such that a branch registration should be permitted while incorporating a subsidiary will be optional. It is also necessary to ensure that the new law is kept under constant review with more frequent amendments or re-enactment say every five years,” he said.
While he applauded the new CAMA, he condemned governments’ use of taxation as means of revenue generation following the downturn of the oil sector as a result of COVID-19.
The federal government has been introducing new taxes since the outbreak of the pandemic, starting with the increment of VAT to 7.5% and the controversial Stamp Duty tax. And consequently, some state governments are following suit.
The Lagos State government introduced in August, a tax rule that requires ride-hailing drivers paying 10% tax on each trip, though it was reduced to N20 flat fee per trip after backlash. The State’s Film and Video Censors Board also introduced 5% levy on all audio and visual content produced and used however in Lagos.
There have been insignificant stimulus packages from the governments as business groan under the weight of the pandemic. With the increase in taxes, businesses, especially SME’s that are already functioning on life-support may not survive.
Experts have urged the governments to lower taxes especially as there has been little or no bailout for hardly hit business. The International Monetary Fund (IMF) had warned Nigeria in June, that is not the time to introduce new taxes.
PwC said the governments need to spend more to provide palliatives, tax concessions and support to vulnerable persons and businesses.
Given the unusual situation, government needs to be deliberate in implementing tax measures and fiscal policies. The overall objective should be to generate revenue in a manner that does not hamper economic recovery, the firm said.