Lagos, Feb. 18, 2021 – The Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN) on Thursday urged the Corporate Affairs Commission (CAC) to review section 13 of the Companies Regulations 2021.
Mrs Taiwo Olusesi, Registrar/Chief Executive Officer, ICSAN gave the charge in a communique on Feb. 16 in Lagos at the end of a virtual interactive session between CAC and ICSAN.
The interactive session was to resolve conflict areas between section 124 of the Companies and Allied Matters Act 2020 (CAMA) and section 13 of Companies Regulations 2021.
According to the communique, section 124 of CAMA only provided that existing companies issue shares of an amount not less than the minimum issued share capital (N100,000 and N2 million for private and public companies respectively) within six months after commencement of the Act.
It said according to section 13 of the Companies Regulations 2021, existing companies were mandated to fully issue unissued shares not later than June 30, even when they had more than the minimum issued share capital prescribed by CAMA.
The stakeholders said this development was inconsistent with the provisions of CAMA and should be amended accordingly.
“Unissued shares are used for settlement of contractual obligations to investors; unissued shares are used in the implementation of the employees share scheme.
“Unissued shares are also useful to companies on the grounds that they are easier to reclassify, consolidate, subdivide, convert or reduce, and to satisfy other strategic obligations, among others.
“The provision of section 13 of the Companies Regulations 2021 would not enable them to achieve the above objectives and that the section should be amended to facilitate the ease of doing business,” it said.
Alhaji Garba Abubakar, the Registrar-General of CAC, acknowledged the gaps in CAMA 2020.
Abubakar said: “Pending the amendment of CAMA, the CAC decided to use the Companies Regulations to reflect the spirit of the law through the definition of ‘share capital’ in section 868 of CAMA as ‘the issued share capital of a company at any given time.’
“Affected companies should apply to CAC for extension of time to fully issue their unissued shares with reason and CAC undertakes to promptly grant the required extension without any penalty.
“To make it easier for all stakeholders, CAC also agreed to give a general moratorium of two years for affected companies to comply without any penalty.
“CAC promised to advertise the above concessions on its website and national newspapers to ensure that all stakeholders are aware and take advantage.”
The institute, therefore, enjoined corporate organisations to take advantage of the extension of time offered by the CAC.
It also said ICSAN and other stakeholders, should continue to engage the CAC and other regulatory agencies to facilitate the ease of doing business in Nigeria.
