The Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN) and the Corporate Affairs Commission (CAC) have started an engagement to address bottlenecks and resolve conflict areas between section 124 of the Companies and Allied Matters Act 2020 (CAMA) and section 13 of Companies Regulations 2021.
A communiqué issued after an interactive session held virtually, Registrar and Chief Executive Officer, ICSAN, Taiwo Olusesi, urged the CAC to review and amend section 13 of the Companies Regulations 2021 to facilitate the ease of doing business.
Section 13 of the Companies Regulations 2021 provides that existing companies are 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.
ICSAN said this development was inconsistent with the provisions of CAMA and should be amended accordingly.
According to the communiqué, “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 because they are easier to reclassify, consolidate, subdivide, convert or reduce, and satisfy other strategic obligations, among others.
“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 explained that 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.
In his remarks, Registrar-General of CAC, Garba Abubakar, who acknowledged the gaps in CAMA 2020, said pending the amendment of CAMA, the commission decided to use the companies regulations to reflect the spirit of the law through the definition of ‘share capital’ in section 868 of CAMA.
He urged that affected companies should apply to CAC for an extension of time to fully issue their unissued shares with reason and CAC undertakes to promptly grant the required extension without any penalty.
