Company And Allied Matters Act (CAMA): Explaining The Allegations

The 5 allegations against CAMA (company and allied matters act).

Two weeks ago I had to correct a widespread mischaracterisation of the concept of waiver of sovereign immunity. Today I see myself again forced to discuss the Companies and Allied Matters Act (CAMA) 2020. So far the reviews I have read appear not to be from a standpoint of legal knowledge but pure sensationalism.

The yet to be gazetted CAMA 2020, which has no commencement date, for now, comprises a whopping 870 sections! A comprehensive review of the Act is therefore no mean feat. Indeed I do not know one person who has. But that has not stopped piecemeal reviews.

It is therefore in response to the piecemeal review of the CAMA especially the most widely circulated one by a respected writer that I am forced to issue the following observations. A more comprehensive review of the Act remains a work in progress.

To put my observations in perspective, it is pertinent to acknowledge that there is a near breakdown of trust of our leaders by the people and it must be said that the current administration (both at the Federal and State level) have not painted themselves in gold in terms of their regulatory legislations.

But to hold the government to account or to take them to task when they have done wrong, we can’t afford to get it wrong ourselves or be guilty of sensationalism. Otherwise, you throw them a lifeline, divert attention to your embellishments, and cast doubt on your credibility. I now begin my response to the five allegations contained in the Article, in reverse order.

Allegation 5 is that CAMA 2020 in section 78 mandatorily requires foreign companies to register EXCEPT Chinese companies. This is as laughable as it is mischievous. To be honest I don’t understand the basis at all. All I will do is to reproduce the text of the 1990 and 2020 Acts.

It is clear that Sections 78 & 79 CAMA 2020 are mere reproductions of Sections 54 & 55 CAMA 1990. The only difference as far as I can see between the provisions of Section 80 CAMA 2020 and Section 56 CAMA 1990 is that the application for exemption is now made to the Minister.

Despite my limited knowledge of the law in general and the principles of interpretation of statutes in particular, I have tried painstakingly albeit unsuccessfully to read into the sections the exemptions exclusively accorded to Chinese companies.

Allegation 4 is that “The CAC is Now Above The Law – Literally”. The ground on which the allegation is brought is that section 17 CAMA provides that a suit shall not be commenced against the CAC unless a 30-day Pre-Action Notice has been served on CAC by the intended plaintiff.

Is that all?

This is the sort of accusation that my former boss would hear and scream, “you are pulling my legs” or “you are kidding me!”
Granted that it appears that the Pre-Action Notice requirement was not provided for under CAMA 1990 and is now required under the new CAMA. But does that make the CAC above the law? The answer must necessarily be answered in the negative.

Any law student about to write Bar Finals & who claims not to have heard of Pre-Action Notices ought not to be allowed into the exam hall let alone being called to the Nigerian Bar. A simple search of the word “Pre-Action Notice” in Law Pavilion returns 1650 results in 0.02 secs.

Nigerian law is replete with instances of Pre-Action Notice requirements in similar legislation. For the sake of time and space, I will restrict my examples to four – NPA, NIMASA, NNPC, and NAFDAC. Can we also argue that those Agencies are “above the law – literally?”

Despite my misgivings about the Pre-Action Notice requirements in Nigerian laws and their occasional abuse by officials, in the context of the allegation that it makes the CAC, “above the law – literally”. I am only able to arrive at one verdict.

Allegation 3, and which is the most dangerous of all the allegations in my view, is the allegation that CAMA 2020 criminalised the informal sector and thereby rendered 21 million Nigerians as criminals! Haba!!

Some people complained that lawyers needlessly attacked the writer & claimed that the interpretation of statutes is the exclusive preserve of lawyers. Without going as far as that, I don’t know if anyone on here will take me seriously if I issue medical advice with magisterial authority.

There’s a reason why the interpretation of statutes is an art and why people have written textbooks or enunciated principles on the interpretation of statutes. Allow me to explain to you why and how the writer fell into a schoolboy error in his construction of section 863 CAMA 2020.

Section 863 CAMA provides that a person or association of persons shall not carry on business in Nigeria AS A COMPANY, LIMITED LIABILITY PARTNERSHIP, LIMITED PARTNERSHIP OR UNDER A BUSINESS NAME without being registered under this Act. This is punishable on CONVICTION to a fine.

There are a number of principles that we call in aid when faced with a statute for interpretation. One is that provisions of laws must be given their ordinary interpretation. Another one is that statutes are not interpreted in isolation but on a combined reading with other sections.

Firstly, the section DID NOT make it compulsory for all Nigerians intending to do business (including those in the informal sector) to register under the Act. Far from it. That is not the literal interpretation of that section. The writer read into the section, what was not there.

The section says you must register if you want to carry on business as a company or a partnership or a business name. Do you think it is like six and half a dozen? Read the next sentence.
Section 19 CAMA as an illustrative example stipulates that no association or partnership of MORE THAN 20 PERSONS shall be formed for the purpose of carrying on business for profit or gain without registration as a company under the Act. The section also provides exceptions.

What this means is that 20 persons OR LESS can come together and do business WITHOUT THE NEED for registration under the Act. If more than 20 persons come together to do business for profit without registration, they thereby contravene section 863. Nothing more nothing less.

Similarly s. 814 CAMA provides circumstances under which a person or group of persons must register as a business name e.g. when they want to do business with a name that is not their true surnames. In other words, Okafor & Okafor can do business without compulsory registration!

Above all, s. 863 CAMA ends by providing that where an alleged offence has been committed by a person or group of persons under that section, such persons can only be punished if convicted (obviously by a Court of competent jurisdiction) and the punishment is fine.

The corollary of the point being made is that the allegation that s. 863 CAMA criminalised the informal sector & rendered 21 million Nigerians criminals so wide off the mark that I think the writer must in good conscience withdraw that article.

Allegation 2 is that the lawmakers were guilty of legislative cronyism by expressly naming The Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN) as the government-recognized body which insolvency practitioners must be registered with in order to practise.

For me, this is the first potent allegation against the new CAMA but it is not that easy to conclude whether the allegation is grounded or baseless. Once again, let me explain.

The basis on which the writer quarrelled with the insertion of BRIPAN in the Act is that BRIPAN is a private company limited by guarantee which was registered in 1994. The writer then proceeded to peek behind the veil to reveal a company registered as Insolvency Practitioners Association Nigeria Ltd/Gte. For the avoidance of doubt, Business Recovery and Insolvency Practitioners Association of Nigeria is the same as Insolvency Practitioners Association Nigeria Ltd/Gte. I have confirmed that.

I do not speak for BRIPAN, I am not even a member and have no experience or interest (yet) in insolvency practice. But it is important to interrogate what’s wrong with the insertion of BRIPAN in the Act. Although the National Assembly is not sovereign, and laws passed by National Assembly are not supreme, the yardstick to measure the validity or otherwise of a law is whether or not such law contravenes the provisions of the Constitution, expressly or by necessary implication and is thereby unconstitutional, null and void. To date, I am yet to read anyone saying what precisely is unconstitutional about the insertion of BRIPAN in the CAMA.

For the record, CAMA does not say that only members of BRIPAN can be Insolvency practitioners. It says in addition to being a lawyer or accountant or of any other relevant discipline, you must be authorised either by BRIPAN OR OTHER professional bodies to act as an insolvency practitioner.

Please read sections 705 & 707 for yourselves. That’s why I said earlier that it is better to err on the side of caution and state the facts as there are so you don’t give the government leeway to say but it is not restricted to BRIPAN alone. You get the point.

In concluding this penultimate point, I think the writer has a point about the express insertion of BRIPAN in the Act. I agree that it leaves a bad taste in the mouth but I would not call it corruption based on what I know for now. I stand to be corrected.

Allegation 1 is that the CAMA is NGO Bill in disguise because what NASS failed to do before through the NGO Bill they have now achieved through the backdoor. I agree that the legislative & regulatory agenda of the present NASS as illustrated in several of their proposed legislations appear aimed at attacking freedom of speech & civil space and to abrogate property & economic rights.

However, I strongly disagree with the writer’s conclusion that s. 839 CAMA means that “the CAC may remove and replace the trustees of a CSO if it determines that it is in “the public interest” to do so – in its sole opinion and based on criteria nobody else has access to.”

The above interpretation is doing damage to the literal interpretation of that section. Once again for the record, a community reading of the said s. 839 of CAMA shows that an order of court is required to suspend the trustees of an NGO under that section. Additionally, the extant principles of Nigerian administrative law are adequate to ensure that the wrongful exercise of the regulatory powers of the CAC are brought under the supervisory control of the courts.

A proper reading of the CAMA in its entirety will reveal that the CAC also has supervisory powers over other types of entities like companies, partnerships, and business names. Is the argument that NGOs (e.g. churches) are above any form of supervision? If so let us say so.

In the final analysis, I also do not think there is merit to the allegation that the CAMA 2020 is the NGO Bill in disguise.

It is imperative to conclude as I begun, there appears to be a near breakdown of trust between our leaders by the people and this must be fixed if we are to make progress as a country. In the meantime, however, to hold the government to account or to take them to task when they have done wrong, we can’t afford to get it wrong ourselves or be guilty of sensationalism. If we do so, we unwittingly throw the government a lifeline, divert attention to our embellishments, and cast doubt on our credibility. This would be neither good for us nor the country.

The author of this article, Orji Uka, is a Lagos based legal practitioner.

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