AN APPRAISAL OF THE ROLE OF CORPORATE AFFAIRS COMMISSION AS A REGULATORY BODY UNDER NIGERIAN COMPANY LAW
The Corporate Affairs Commission hereinafter referred to as “the Commission” or CAC for short, is one of the major regulatory bodies of companies in
Nigeria. The body is a creation that came into being by virtue of the Companies and Allied Matters Act (hereinafter referred to as CAMA) Cap 50, Laws of the
Federation of Nigeria, now Cap C20 of the Laws of the Federation, 2004.
Principally, the Commission is one of the innovations of CAMA that gives the
Commission the responsibility of incorporation of companies, registration of Business Names, Incorporation of Trustee of certain committees, bodies, associations and other regulations. CAMA also introduced Corporate audit Committee, insider trading, codified the duties of directors, the fundamental principles emanated in the rules of Fossal Foss V Harbottle, the rule in Royal British Bank V Turguard.
Before the advent of CAC, the Companies Act of 1968 was the Act that regulated the activities of companies in Nigeria. The present CAMA was borne out of draft documents prepared by the Nigerian Law Reform Commission in an effort to reform and improve on the Companies Act of 1968, which could no longer address the various challenges associated with the regulation and supervision of Companies in Nigeria.
In the pre-oil boom era of the Nigerian Economy (1970-1979), the then company legislation was severally criticized. “…One of the major criticism of the Act is that, it is little more than the putting together of some Sections of the repealed Companies Act Cap 37 and some Sections of the U.K Companies Act 1948, instead of taking the bold step of codifying both the statutory and case law on companies…” The preparation of such a code would have provided the opportunity for reviewing and modifying some of the more inconvenient common law rules.
In its Report on the reform of Nigeria Company Law 1988, the Nigerian Law Reform Commission commentary on the above inadequacy and some others observed that “with paucity of Nigerian cases on Company Law and the present heavy cost of obtaining English Law reports and textbooks, that difficulty in finding the law in this country can be well imagined…”
As a result of these numerous problems in our company laws as hitherto mentioned, the Nigerian Law Reform Commission was set up among other reasons “to evolve a comprehensive body of Legal Principles and Rules governing Companies and suitable for the circumstances of the country. These rules was to facilitate business activities in the country and protect the interest of the investors, the public and of the nation as a whole”
After extensive consideration and submissions of papers by various stakeholders, the Commission came out with a draft copy which was forwarded to the then Attorney General of the Federation and Ministry of Justice, who set up a
Consultative Assembly which further deliberated on the draft between 1988-1989 and submitted a reviewed copy to the AG and Minister of Justice who made further alterations before it was promulgated into law as the Company and Allied Matters
Decrees 1990 (No 1 of 1990) now referred to as the Companies and Allied Matter
Act, Cap 59 Laws of the Federation of Nigeria. The Act came into effect on 1st of January, LFN, 2004. It is this Act that now created the CAC and made it the Apex regulator of corporate Affairs in Nigeria.
Prior to the promulgation of CAMA 2004, the hitherto Companies Act of 1968 was under the control of Federal Ministry of Trade, through its Corporate Affairs Division. Then it had a central Companies Registry in Lagos which was later moved to Abuja in 1988. It was in charge of incorporation of Companies, filling of annual returns and other statutory documents required to be submitted to the Registry. The Registrar of Companies was in charge of the Company Registry. The Company Registry was saddled with plethora of problems, viz:-