The Institute of Chartered Secretaries and Administrators of Nigeria and the Corporate Affairs Commission have agreed on the need to close the gaps in the provisions of the Companies and Allied Matters Act 2020.
ICSAN disclosed this after the communique issued at the end of the webinar held by the institute with the Registrar General, Corporate Affairs Commission, Alhaji Garba Abubakar, on some provisions in CAMA 2020.
The webinar, which was organised to discuss the theme, ‘Are existing companies prohibited from having uninsured shares after June 30, 2021 under section 124 of CAMA?’ had the President, ICSAN, Mr Bode Ayeku, as the chief host.
According to the communiqué, stakeholders noted that there is a conflict between section 124 of CAMA which merely provides that all existing companies must issue shares to an amount not less than the minimum issued share capital (N100,000 for a private company and N2m for a public company) within six months after the commencement of Act.
They also noted Section 13 of the Companies Regulations 2021 which mandates all existing companies to fully issue their unissued shares not later than June 30, 2021, even when they have more than the minimum issued share capital prescribed by CAMA.
Stakeholders expressed the view that there was no provision in CAMA compelling existing companies to fully issue their unissued shares.
They said section 13 of the Companies Regulations 2021 requesting existing companies to fully issue their unissued shares not later than June 30, 2021 was inconsistent with the provisions of CAMA and should be amended accordingly.
They also noted some of the strategic and contractual reasons why companies have unissued shares.
According to them, unissued shares are used for settlement of contractual obligations to investors; and are used in the implementation of the employees share scheme.
They added that 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.
In the communiqué, the registrar-general thanked ICSAN for organising the interactive session to address the concerns of the stakeholders on the above theme.
He said that there were gaps with CAMA 2020 and amendments would be needed to close the identified gaps.
He noted that 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 “means the issued share capital of a company at any given time.”
ICSAN is a professional body dedicated to the protection and promotion of corporate governance and public administration through continued professional training, guidance and policy advocacy.
It is the only professional body authorised in Nigeria to conduct the examinations leading to the qualification of chartered secretaries and administrators.
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