INCORPORATION OF A COMPANY WITH MULTIPLE CAC FORMS ENDS FRIDAY, 31ST MARCH, 2017

INCORPORATION OF A COMPANY WITH MULTIPLE CAC FORMS ENDS FRIDAY, 31ST MARCH, 2017

BY BARR. ANTHONY EZEAMAMA

The Corporate Affairs Commission (CAC) in their recent meeting with stakeholders on Wednesday, the 29th day of March, 2017 which held at the Lagos Chamber of Commerce and Industry Conference and Exhibition Centre, Alausa, Ikeja, Lagos and attended by yours sincerely, advised that effective from the close of business on Friday, the 31st of March, 2017, CAC will stop the current incorporation of company regime that requires the submission of multiple incorporation forms. This decision was taken with the view of ushering in fully, the recently introduced incorporation regime that requires the submission of only a single CAC form (i.e CAC Form 1.1 – Application for Registration of Company) for incorporation purposes.

To this end, as from the 1st day of April, 2017, these multiple CAC forms will longer be accepted by the CAC for incorporation of new companies in Nigeria:

(1) Form CAC 2 (Statement of Share Capital and Return of Allotment);

(2) Form CAC 3 (Notice of Situation/Change of Registered Address);

(3) Form CAC 4 (Declaration of Compliance with the Requirements of Companies and Allied Matters Act);

(4) Form CAC 2.1 (Particulars of the Company Secretary); and

(5) Form CAC 7 (Particulars of Directors).

It need be emphasised that Forms CAC 2.1 and 3 are however still post-incorporation documents.

CAC also advised that as from 1st May, 2017, all incorporations will now be processed online on the CAC portal as the current practice of manual registration will cease on 30th April, 2017. CAC however noted that the hard copies of the incorporation documents uploaded online must still be submitted to the CAC for certification and capturing of their original signatures as well as for their record keeping.

Also the stamping of Form CAC 1.1 and the Memorandum and Articles of Association of the company would also be processed online.

TAKEAWAY

Persons who have initiated the process of incorporating their companies with the CAC but are yet to submit the required incorporation documents to the CAC as at today, the 31st of March, 2017 are advised to note these new changes and should immediately contact their solicitors for advice and direction.

Anthony Ezeamama is a corporate commercial lawyer and tax specialist.

MONETARY POLICY COMMITTEE RETAINS MONETARY POLICY RATE AT 14 PERCENT - WHAT DOES THIS PORTEND TO INVESTORS AND YOU?

MONETARY POLICY COMMITTEE RETAINS MONETARY POLICY RATE AT 14 PERCENT - WHAT DOES THIS PORTEND TO INVESTORS AND YOU?

BY BARR. ANTHONY EZEAMAMA

The Monetary Policy Committee (MPC) is a Committee of the Central Bank of Nigeria (CBN) established pursuant to section 12 of the CBN Act, 2007 to facilitate the attainment of price stability in the economy amongst others. The MPC essentially augments the efforts of the Federal Government by providing the monetary and credit policy direction for the economy (e.g fixing of interest rate) while the Federal Government on their part provides the fiscal policy direction (e.g government taxation policy, provision of electricity and good roads etc). The MPC rising from their meeting on Tuesday, the 21st of March, 2017 voted to retain the Monetary Policy Rate (MPR) at 14 percent while the Cash Reserve Ratio (CRR) was also retained at 22.2 percent as was the case in the previous period amongst others. It need be mentioned that the MPR is simply an indicative or benchmark interest rate which is used to determine other interest rates in the economy while the CRR is the amount of customers’ deposits that licensed banks are required by law (section 15 of the Banks and Other Financial Institutions Act) to maintain with CBN in cash at a material time. The CRR determines how much of customers’ deposits banks can lend to the public at a material time. Consequently, the higher the CRR, the lower will the banks be able to lend to the public and vice versa. Both the MPR and the CRR are potent monetary policy tools at the disposal of the CBN to fight inflation.

Therefore, the pegging of MPR at 14 percent will naturally have different kinds of effects (whether good or bad) on different classes of persons and transactions some of which I will consider below.

IMPORT OF 14 PERCENT MPR ON DIFFERENT PERSONS AND TRANSACTIONS

(1) Tax Authorities/Tax Payers: By several provisions of the Nigerian tax legislations (see for instance sections 54 of the Petroleum Profit Tax Act, 74(1) of Personal Income Tax Act as amended, 34 of the Value Added Tax Act as amended and 32(1)(b) of the FIRS (Establishment) Act to mention but a few), defaults in tax compliance carry with it payment of penalties and interest at the prevailing commercial rate or MPR and in extreme cases (e.g in the case of blatant tax evasion), fines and imprisonment upon conviction by a court. Consequently, tax defaulters at this time are liable to pay at least 14 percent interest on the principal sum/tax owed by them to the tax authorities.

(2) Investment Account Holders: The MPR being an indicative rate determines how much of interest banks will be willing to offer and pay to their investment account holders (e.g fixed deposit account holders). For instance, banks usually quote savings rate at MPR minus 8 or 7 percent per annum. This therefore translates into between 6 – 7 percent interest per annum on such investment accounts at this time (also depending on the amount fixed and the negotiating powers of the parties). Little wonder, over 2 million Nigerian investors opted to patronise the popular Ponzi scheme, MMM last year.

(3) Pricing of Loans Facilities by Financial Institutions: Most Naira denominated loans are generally priced using either MPR or the Nigerian Inter-Bank Offered Rate (NIBOR) or the Nigeria Treasury Bills Rate (NTB) as the benchmark interest rate. However most institutional lenders will in other to hedge their risk against fluctuations of these rates set a floor rate of interest. For instance, such loan can be priced at 5 percent over MPR with a floor rate of 21 percent. This in a simple term means that no matter the percentage of the MPR at any time, the interest rate payable on the loan cannot be below 21 percent.

(4) CBN/Financial Institutions Transactions: The rate of interest at which the CBN will borrow from banks or lend to them is tied to MPR. It used to be plus or minus 2 percent. This simply means that if that was to be at this time that CBN will lend to the banks at 16 percent and borrow from them at 12 percent.

Other categories of financial activities and persons affected by this MPC decision are the base lending rates of banks, inter-bank lending rate, the rate of interest/coupon payable by the government on issued bonds and treasury bills and ultimately cost of living generally.

TAKEAWAY

In conclusion, it can be sensed that the reason behind this MPC decision is to keep inflation which is already double digits in check. One however expects a robust fiscal policy response from the Federal Government so as to complement the efforts of the MPC/CBN in reviving the ailing economy and push it out from this present economic recession in no distant time. Until then, it would appear that this MPC decision may translate into little or nothing to an ordinary man on the street if not the imposition of more misery and hunger on him.

Anthony Ezeamama is a corporate commercial lawyer and tax specialist

RE: Bank Verification Number Registration

The Central Bank of Nigeria (“CBN”) in collaboration with the Bankers Committee launched the Bank Verification Number (“BVN”) project as part of its overall strategy to ensure effectiveness of the Know Your Customer (“KYC”) principles in the industry in February, 2014.

The implication is that all account holders in Nigeria are expected to enroll with, and be issued a unique identification number by their respective banks. The policy is aimed at reducing fraud, increase the efficiency of banking operations and ease customers’ access to credit facilities.

In the case of corporate accounts, the BVNs of signatories to the corporate accounts would be linked to the corporate accounts.

The requirement applies both to customers resident within and outside of Nigeria. The Central Bank of Nigeria (CBN), on Wednesday 19th August, 2015 via a circular titled, Circular on the Framework for the Enrolment of Nigerian Banks' Customers in Diaspora For Bank Verification Number (BVN) Issuance, issued guidelines for enrolment BVN by customers living abroad to ease the difficulties of registering bank customers in Diaspora. In this regard, the CBN has created two options:

1. Use of Foreign Based Nigerian Banks

Customers of Nigerian banks are required to present themselves to the offshore branches/subsidiaries of any Nigerian bank (where such facilities have been made available), for the BVN enrolment. The deployment of scanners and other devices to these locations have started in earnest.

Nigerian banks abroad are expected to capture necessary data, generate a BVN and communicate same to the customers. Thereafter, the customers are expected to forward the assigned BVN to their banks, for linkage with their accounts.

“A web portal to achieve this linkage to bank accounts has been developed and deployed, while the process of such linkage will be made available by the Nigerian Interbank Settlement System (NIBSS) to all those enrolled abroad,” the CBN explained.

1. Use of a Consultant – Online Integrated Solutions (OIS)

The second option, is to employ the assistance of a company, known as the Online Integrated Solution (OIS). The CBN explained that the company had been engaged to establish stations for data capture and generation of BVN at the cost of £30 per transaction, to be paid by the customer.

The company is expected to capture necessary data for online transmission to the NIBSS, who would thereafter, generate the BVN and communicate same to the customer.

The customer may approach OIS for BVN, where the communication from NIBSS is not received within 48 hours after the enrolment. Thereafter, Nigerian bank customers in the diaspora are expected to forward their BVN to their banks for linkage with their accounts as in option one above.

The address of the enrolment locations and the kick-off dates are as follows:

S/No.	City/Country	Address	Possible Go-Live Date
	Washington DC, USA	Washington (11900 Park Lawn Drive, Suite 160, Rockville , MD)	Aug. 24th 2015
	Dubai, UAE	Dubai (2907 Platinum Tower Cluster 1, Jumeirah, Lake Towers)	Aug. 19th 2015
	Johannesburg, South Africa	No. 6 Bolton Road, Rose Bank, Johannesburg, SA	Sept. 7th 2015
	Beijing, China	Unit 1, Suite 1801, Kun Sha Building, 16XIN Yaun LI Str. Chaoyang District, Beijing, PRC	Sept. 7th 2015
	Shanghai, China	(RM 2025, 22/F, Catic Building, 212 Jiangning Road, Jing’an District, Shanghai, PRC).	Sept. 7th 2015
	Guangzhou, China	Unit 27/28, 41st Floor, R&F To-Win Building, 30 Huaxia Rd, Tianhe District, Guangzhou, PRC	Sept. 7th 2015
	New Delhi, India	Plot No. 4, Ground Floor, Institutional Area, Malcha Marg, Chanakyapuri, New Delhi 110021, India	Sept. 7th 2015
	Atlanta, USA	918 Holocomb Bridge Roswell, Atlanta	Sept. 7th 2015
	London, UK	56-57 Fleet Street, City of London EC4Y 1JU	Sept. 14th 2015
	Leicester, UK	The Peplum Center, Orchardson Avenue, Leicester LE4 6DP	Enrolling already
	New York, USA	To be determined (TBD)	To be determined (TBD)
	Houston, USA	To be determined (TBD)	To be determined (TBD)

By a circular dated Tuesday, June 30th 2015 with reference number BPS/DIR/GEN/CIR/02/008 signed by the Director, Banking and Payment Systems Department, CBN, Mr Dipo Fatokun, the apex bank had extended the deadline for the Bank Verification Number registration by four months, from June 30 to October 31, 2015. All customers are therefore expected comply with the BVN requirement on or before 31st October, 2015.

Evolution of The Nigerian Payments System

Evolution of The Nigerian Payments System 

Over the last decade, the Nigerian payments system has evolved from manually processed cash transactions to online and real-time electronic payments system. This evolution is in response to growing commercial activities and the penetration and utilization of the cyber space/technology for commercial activities. It is no more necessary for Merchants to display their wares physically for the inspection of consumers, an online store, is just as efficient, if not more so.

Consumers world over can access and order goods and services via mobile gadgets and technologies. This development ultimately required an effective, efficient, and secured means of settlement of transactions. The established and then conventional means of cash settlement of payment has become inefficient and time consuming. Consequently, local and international companies ventured into this new goldmine of opportunities and began to provide solutions and services to solve this problem. This marked the beginning of a new era in Nigeria’s payments system.

 Notwithstanding the success recorded and the merit of these new methods of payment, there was a need for proper regulation and a necessity to set clear defined boundaries regarding the roles and rights of parties and the extent of operations of the different players in this industry.

In that regard, the Central Bank of Nigeria (“CBN”), empowered by law, being the overall regulator of the country’s financial system, rose to the occasion.

 History of the Regulatory Regime

The CBN has wide powers to regulate matters concerning Nigeria’s fiscal and monetary policies. Section 47 (2) and (3) of the Central Bank of Nigeria (Establishment) Act (the “Act”) empowers the CBN to promote and facilitate the development of efficient and effective systems for settlement of transactions (including development of electronic payment systems). The CBN is also empowered to prescribe rules and regulations for the effective operations of all clearing and settlement systems.

 Until a few years ago, the CBN was not as technically equipped as it is today to regulate and control electronic payment systems in Nigeria and as a result, most of the activities in the sector was unregulated. Then, the CBN merely issued letters of authorization to companies desirous of operating payment systems in Nigeria. However, in 2007, CBN launched the Payment Systems Vision 2020 which identified series of recommendations to increase the resilience of the payments system infrastructure and work-streams to encourage the usage of electronic payment methods. It was aimed at facilitating economic activities by providing safe and efficient mechanisms for making and receiving payments with minimum risks to the CBN, payment service providers and end users, extending the availability and usage to all sectors and geographies, banked and unbanked, and conforming to internationally accepted regulatory, technical and operational standards. In line with the above objectives, the CBN began to develop the technical ability necessary to regulate the industry and it also began to put in place necessary regulatory framework to achieve these goals. As a result, it is becoming increasingly difficult to do anything in the Nigerian payments industry without requiring the approval of the CBN.

 Very recently, the CBN through a letter advised that although it has not developed guidelines for the regulation of the operators of web payment portals and gateways, any company desirous of operating a web payment portal or gateway must apply and obtain a Payment Solution System Service Providers (“PSSP”) licence. The idea is that the CBN intends to bring all entities and parties participating in the Nigerian payments system within its reach for ease of control and supervision.

 We have discussed the existing regulations below and the consequences of operating without obtaining a licence from the CBN or in breach of the terms and conditions of a licence granted by the CBN.

 Current Regulatory Regime

 In exercise of its powers, the CBN has issued various guidelines to prescribe rules and regulations for the effective operations of all clearing and settlement systems. Some of these guidelines include:

1.  Guidelines on Electronic Payment of Salaries, Pensions, Suppliers and Taxes in Nigeria, February, 2014;
2.  Guidelines on Transactions Switching Services;
3. Guidelines on Point of Sale (POS) Card Acceptance Services; and
4. Regulatory Framework for Mobile Payments Services in Nigeria.

The above guidelines regulate all the operators in the Nigerian payments system and also prescribes sanctions for erring service providers. On 9th July, 2015, the CBN published a circular titled ‘Sanctions on erring banks and e – payment service providers for infractions of payments rules and regulations’. This circular prescribes the appropriate sanction to be imposed on an operator in the Nigerian payments system for infringements of extant guidelines, circulars, rules and regulations issued by the CBN on all forms of electronic payments system. 

 Recently, on 9th September, 2015, the CBN released an exposure draft of the Standards and Guidelines on Electronic Channels Operations in Nigeria for the public’s review and comments. The public is expected to review and forward recommendations to the CBN on this guidelines to enable it capture the opinion of industry practitioners and operators. When implemented, this guidelines will codify most of CBN’s existing guidelines on all electronic payments system in Nigeria.

 The following are relevant operators in the Nigerian payments system industry, Card Holders, Merchants, Merchant Acquirers, Card Schemes, Payment Solution System Service Providers (“PSSP”), Switching Companies, Internet Service Providers, Issuing Banks, Nigerian Central Switch, Nigeria Inter-Bank Settlement System, Payments Terminal Service Aggregator (PTSA) etc.

 No entity or company can provide any services within the Nigerian payments system without  obtaining a licence from the CBN.

Electronic Signature in Nigeria

The introduction of the new Evidence Act in 2011 solved one of the recent problems of execution or signing of documents in Nigeria. With growing business activities over the internet and the need to consummate legal relations on internet platforms,  clients have been asking whether parties can execute documents using electronic signature. The simple answer to this question is YES.

Section 93 (2) of the Evidence Act, 2011, provides that where a rule of evidence requires a signature, or provides for certain consequences if a document is not signed, an electronic signature satisfies that rule of law or avoids those consequences. It went further to state that an electronic signature may be proved in any manner, including by showing that a procedure existed by which it is necessary for a person, in order to proceed further with a transaction, to have executed a symbol or security procedure for the purpose of verifying that an electronic record is that of the person.

This is even more so when the same Evidence Act recognises the admissibility of electronic evidence, which was not the case previously. However, some government agencies and parastatals may still require that individuals sign the documents physically for administrative purposes, as they are yet to acquire technologies that will enable them verify or rely solely on electronic signatures.

Private Security Outfits in Nigeria: Who Regulates Them?

In Nigeria, there are many private security outfits providing services to the financial sector, the private sector and many other commercial ventures. Like many other services rendering companies, one may wonder how and who polices these quasi-policemen. Well, your answer lies below.

LICENSING

By virtue of the Nigeria Security and Civil Defence Corps Act, 2007 (the “NSCDC Act”), the Nigeria Security and Civil Defence Corps (“NSCDC”), has the mandate to oversee and regulate the activities of Private Guards Companies (“PGCs”). Section 3(1), (b), (c) of the Act states that the NSCDC may:

 1.make recommendations to the Minister of Internal Affairs on the registration of PGCs;

2.from time to time, inspect the premises of PGCs, their training facilities and approve same if it is up to standard;

3. supervise and monitor the activities of all PGCs and keep a register for that purpose;

4. periodically, organize workshops and training courses for private guard companies, and seal up any PGC that operates without a valid license.

Currently, the supervision of private guards’ operations is handled through the Private Guards Companies Department of NSCDC.

 The Private Guards Companies Act Cap. P30, Laws of the Federation of Nigeria, 2004 (the “Act”), stipulates the general regulations governing the operation and activities of PGCs. The training syllabus and instruction notes of PGCs must be screened and approved by the Minister of Interior. The Act provides that no organisation shall perform the service of watching, guarding, patrolling or carrying of money for the purpose of providing protection against crime unless the organisation is licensed by the Minister of Interior (the “Minister”). An application for a licence should be in writing through the NSCDC to the Minister in the manner, and giving such particulars, as specified the Act.

The following are the criteria that must be met by an applicant:

1. Incorporate a company at the Corporate Affairs Commission, with a minimum share capital of ten million Naira (10 million Naira);

 2. No fewer than two of the board members must be retired senior security agents from government owned security agencies; and

 3. The Articles of Association of the company must contain a clause indicating that the company is engaged in the provision of security services.

In addition to the above requirement for licencing, there are a number of other industry registrations that are required of a PGC intending to operate in the different sectors of the Nigerian economy.  For instance, the operation of any company within the oil and gas sector in Nigeria is subject to obtaining a licence from the Department of Petroleum Resources. Also, to be eligible to provide services to some Nigerian organisations (such as like the Nigerian National Petroleum Corporation) registration with the Nigerian Petroleum Exchange is required. 

A licence is issued for a specific period and an application for a renewal must be made three months before the expiration of the licence. The Minister also has the power to revoke a licence where the licensee breaches any of the conditions or terms of the licence. Although there seems to be no territorial restriction to the operation of a PGC, the law requires that the licence states the number of offices, branches and other places of business the company is permitted to maintain.

BEARING OF FIREARMS BY PGCs

PGC are not authorised to bear or possess firearms in the course of their duties. It is an offence for anyone working for a PGC to bear or possess firearms. However, a bill is pending at the National Assembly for the amendment of the Private Guard Companies Act Cap. P30 L.F.N. 2004. It proposes inter alia for the arming of some ‘qualified’ personnel of the PGCs.

Until this Act is passed, the powers of the PGCs is limited to providing intelligence and supporting the public security outfits in the prevention and combating of crimes.