A Review Of The Business Facilitation (Miscellaneous Provisions) Act, 2022
By Felicity Enyinnia
INTRODUCTION
The Business Facilitation (Miscellaneous Provisions) Act, 2022 (“BFA”), came into force on 8th February, 2023. The main objective of the BFA is to promote the ease of doing business and to eliminate bottlenecks in the operation of businesses in the country. The BFA also amended certain provisions of relevant legislations that regulate business operations in Nigeria. Prior to the enactment of the BFA, the procedure for the application of business certifications, approvals, as well as compliance with relevant laws and regulations, was plagued with systemic factors, such as bureaucracy, lack of accountability and transparency, which engendered unnecessary delays and huge financial burden on business owners. However, the advent of the BFA has greatly relaxed the shortfalls of the old regime by its provision of the single window system and the use of automated processes by the Ministries, Departments and Agencies (MDAs) in providing services to businesses. By this review, we seek to comment on certain laudable provisions of the BFA as well as on the provisions which we believe are somewhat impracticable.
The BFA is divided into two sections. The first section contains provisions which primarily seek to promote ease of doing business and transparency in business operations in the country. The second section (the Schedule) consists of amendments to relevant legislations that regulate business operations, in an attempt to bring them in conformity with the provisions in the first section of the BFA. The legislations amended by the BFA includes the Companies and Allied Matters Act, 2020 (CAMA), Investment and Securities Act, Nigerian Ports Authority Act, Nigerian Export Promotion Council Act, Pension Reform Act and Trade Marks Act, amongst others.
COMMENENDABLE PROVISIONS UNDER THE BFA
1. AUTOMATION OF APPLICATION PROCESSES
The major highlight of the BFA is that it mandates the use of automated processes in business registration, application of certifications and approvals necessary to engage in and carry on a business in the country. S. 3 of the BFA, although did not expressly provide for an automated application process, is instrumental as it mandates MDAs of the Federal Government that provide products and services to publish on their official website, within 21 days from the commencement of the Act, a complete list of requirements to obtain the products and services. The products and services referred to in s. 3 of BFA includes permits, licenses, approvals, registration, waivers, tax-related processes, filings, certification and other products and services, per the functions of the MDA. The MDA is also required to publish the processes, documents, fees and timelines required for the processing of the application for the products and services which they provide to businesses.
S. 3 of the BFA is commendable and its utility will afford business owners and companies intending to start up a business or seeking to obtain certification or the approval of any of the MDAs, the opportunity to gain first-hand information on the list of requirements, the processes, fees and timelines for the registration, application or approval which they require, without the need for an intermediary/agent or attending the office of the relevant MDA, as it was the case before the BFA. Also, the efficient implementation of the provision of s. 3 of the BFA by the MDAs will guarantee transparency and speed in the registration of businesses and other application processes necessary to run a business in the country.
In s. 8 of the BFA, the Registrar-General of the Corporate Affairs Commission (CAC) is mandated to ensure that all application processes at the CAC are fully automated from commencement to completion within 14 days of the commencement of the BFA. It is worthy of note that, before the enactment of the BFA, the CAC has increasingly automated its processes. For instance, business registrations and other post-incorporation applications at the CAC are fully automated. However, the CAC is yet to fully deploy the same technique for post-incorporation applications. In any event, this provision of the BFA is a laudable one as it will propel the Registrar-General of CAC to take necessary steps towards ensuring that all application processes at the CACA are fully automated within the 14 days provided or within a reasonable time afterwards. It is believed that where full automation of application processes at the CAC is achieved, the application process will be fast and seamless as well as forestall the delay now experienced by companies and business owners in obtaining certifications, approvals and other corporate forms from the CAC.
The BFA altered certain provisions of CAMA to enable companies to conduct the following activities electronically:
i. General Meetings. Prior to the amendment to s. 240 of CAMA by the BFA, only private companies are allowed to hold their general meetings physically as well as electronically. By the amendment, public companies are now authorized to hold their general meetings electronically provided that such meetings are conducted in accordance with the articles of the company. This new provision for an electronic general meeting will reduce the cost of organizing general meetings and also enable increased participation of the shareholders of public companies in the company’s general meetings as they can connect electronically anywhere in the world.
ii. Notice of Meeting. The amendment to s. 244 (1) of CAMA allows companies to give notice of general meetings electronically without restricting electronic communication (notice) to email communication as was obtainable under the deleted s. 244 (3) of CAMA. This new provision allows a company the discretion to utilize other means of electronic communication it so desires.
iii. Voting. The amendment to s. 248 (1) of CAMA by the BFA introduced electronic voting as an alternative to voting by show of hands. The introduction of electronic voting is imperative having regard to the new provision on electronic general meetings under s. 240 CAMA.
iv. Electronic Share Certificate. The amendments to s. 171 and s. 181 (1) of CAMA introduces the issuance of electronic share certificates by companies to their shareholders. By the amendments, a company is now at liberty to issue a physical or electronic share certificate to its shareholders. The introduction of electronic share certificates will increase flexibility in the corporate secretarial functions of companies and also reduce the cost of delivery of physical share certificates to shareholders.
2. THE POWERS OF THE BOARD OF DIRECTORS TO INCREASE THE ISSUED SHARE CAPITAL OF THE COMPANY
The BFA amended s. 127 of CAMA to empower the board of directors of a company with share capital to increase the issued share capital of the company, subject to the condition or direction that may be imposed in the articles or by the company in a general meeting. Before this amendment, it is only the members of a company that are authorized to increase the issued share capital of the company in the general meeting. The new s. 127 of CAMA, in providing that both the members and the board of directors may increase the issued share capital of a company, limited the powers of the board of directors in this regard, to avoid a situation of conundrum or conflict of duties between the two agents of the company.
As seen from s. 127 of CAMA, the board of directors of a company cannot validly increase the issued share capital of the company unless authorized to do so by the articles of the company or the members of the company in a general meeting. Therefore, to leverage the provisions of s. 127 of CAMA, the company is required to alter its articles to add instances and conditions upon which the board of directors may increase the issued share capital of the company. It appears that the intendment of the amendment to s. 127 of CAMA is to make it easier for a company to increase its issued share capital without the need to convene the general meeting of members of the company especially when the company needs to act swiftly to secure an investment or other business opportunities.
The BFA also amended s. 149 of CAMA to bring it in line with the amendment to s. 127, since the procedure for increasing the issued share capital of a company is by allotment of new shares. S. 149 of CAMA in the same vein as s. 127 authorized the board of directors to allot shares of the company. It is believed that the powers of the board of directors to allot the issued share capital of the company will not undermine the shareholding of the existing shareholders of the company because the authority of the board of directors to allot shares is derived from the articles of the company, so, it is safe to say that the shareholders of the company would have prescribed conditions that are favourable to them.
3. OTHER AMENDMENTS TO CAMA
Aside from the above amendments, there are several other commendable amendments to the provisions of CAMA by the BFA. For instance, the BFA altered s. 207 (4) of CAMA to reconcile the conflict in the provision with s. 204 of CAMA. Before the amendment to s. 207 (4), the section, as a general rule, provides that “notwithstanding any provision in CAMA or any other law to the contrary, a fixed charge on any property of a company shall take priority over a floating charge and other encumbrances.” On the other hand, s. 204 attempted to provide an exception to the above general rule by providing that “a floating charge shall trump a fixed charge where the terms of the floating charge prohibits the company from creating subsequent charge having priority over the floating charge.” However, the exception to the general rule intended by s. 204 was watered down by s. 207 (4) and rendered the provision useless.
In any case, the amendment to s. 207 (4) of CAMA by the BFA, has invigorated and given effect to the provision of s. 204 by clearly providing that s. 207 (4) shall operate without prejudice to s. 204.
The BFA also altered s. 222 of CAMA by providing elaborate interpretations of the keywords used in that section.
4. THE SINGLE WINDOW SYSTEM
The BFA amended s. 7 of the Nigerian Ports Authority Act, s. 2 of the Custom and Excise Management Act and inserted new sections (ss. 18A and 18B) to s. 18 of the Custom and Excise Management Act, to introduce the single window system. The amended s. 2 of the Custom and Excise Management Act defined “single window” to mean a platform or facility that allows parties involved in trade and transport to lodge trade-import, export or transit data required by government departments, authorities or agencies through a single-entry point interface to fulfil all import, export, transit and other regulatory requirements. The essence of the single window is to establish a one-stop office for all the MDAs offering products and services to businesses involved in local and international trade. The launch of the single window system will harmonize the operations of the MDAs and also enable ease of doing business for companies involved in local and international trade as they can now access all their trade needs from one office.
Similar to the single system is the provision of s. 5 of the BFA on “one government”. According to the Act, “one government” entails collaboration between MDAs in the performance of their duties to the public. The one government policy requires an MDA whose service is needed by an applicant to conduct the necessary verification or certification from relevant MDAs, in respect of the applicant.
5. AUTHORITY TO APPLY PENSION ASSETS FOR SECURITIES LENDING
The BFA amended s. 89 (2) of the Pension Reform Act, 2014, by providing in s. 89 (2) (a) that pension assets are eligible for securities lending as the Commission may approve. This new provision is commendable and it makes good financial sense considering the interest and other monetary benefits the Commission will derive by engaging in the use of pension assets for securities lending. The provision of this section is a viable way of generating funds to the pension scheme if properly administered and supervised by the Commission. Overall, transparency should be the watch word in the utilization of pensioners’ assets for securities lending by the Commission if we are to achieve squarely the intendment of the provisions of the amended s. 89 (2) of the Pension Reform Act.
6. INTRODUCTION OF SERVICE MARKS
The BFA amended s. 67 of the Trade Marks Act to include services within the context of goods that are eligible for registration under the Trade Marks Act. Following this development, a service provider is now at liberty to trade mark his/her brand name, logo, words, symbol or any design associated with his/her services with the Trade Marks Commission. To this end, the argument by legal scholars on the legality or otherwise of service marks in Nigeria has become spent having regard to the amendment to s. 67 of the Trade Marks Act by the BFA. The amendment to s. 67 of the Trade Marks Act reflects the practice in other common law jurisdiction, hence, commendable.
Holistically, the BFA is a welcome development and will engender flexibility in the operation of businesses in the country. However, the practicability of s. 4 of the BFA on default approvals is in doubt because the provision creates the impression that an applicant is entitled to a grant of a certificate, notwithstanding the fact that the application maybe irregular or incomplete if the time stipulated by the relevant MDA for the processing and grant of the certificate had expired and the relevant MDA fails to communicate its approval or the rejection of the application to the applicant. Whilst the provision of the BFA on default approval is not entirely discountenanced, it is proposed that the section cannot apply in all cases except the intention of the section is to waive irregularities in an application and/or deem as complete an incomplete application as it is likely that an application may be irregular or incomplete at the expiration of the time stipulated by the relevant MDA, to warrant the grant of the certificate or document required. To this extent, it is therefore pertinent, to limit the applicability of s. 4 of the BFA to applications that are regular, complete and have met the requirements as published on the official website of the relevant MDA, which in our view is the intendment of s. 4 of the BFA. The provisions of s. 4, as it is, are capable of various interpretations in the light of the above identified lacuna therein, hence, should be amended accordingly.
CONCLUSION
We believe that the provisions of the BFA have answered the call by stakeholders and investors for a more friendly and flexible method of doing business in the country as it relates to regulatory compliance and application processes. Also, we believe that the MDAs have the resources and facilities required to implement the provisions of the BFA with respect to the single window system and automated processes provisions.
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