Ease Of Doing Business In Nigeria And The Impact Of The Business Facilitation Act -By Oyetola Muyiwa Atoyebi & Pwaveno Ditto

INTRODUCTION

The Business Facilitation (Miscellaneous Provision) Act (BFA), 2023, is a legislative intervention by the Presidential Enabling Business Environment Council (PEBEC), passed into Law on February 13^th, 2023, with the view of creating an enabling environment for businesses to thrive without unnecessary restrictions. The Business Facilitation Act has amended various business-related laws eliminating bureaucratic constraints to doing business in Nigeria. Some of these laws include; the Companies and Allied Matters Act, 2020, Customs and Excise Management Act, the Financial Reporting Counsels Act, the Immigration Act, the Investment and Securities Act, the National Office for Technology Acquisition and Promotion (NOTAP) Act, Trade Mark Act, Standard Organization of Nigeria (SON) Act, National Housing Fund Act, Nigerian Investment Promotion Commission (NIPC) Act, amongst others.

This article shall highlight the provisions of the (BFA) vis-a-vis the provisions of these laws, carefully emphasizing the amendments done, and the consequential impacts of these amendments on the Nigerian business Environment.

GENERAL PROVISIONS                                                                                                        

By the provisions of Section 1 (1) a & b, the objectives of the Act are to eliminate bottlenecks, amend relevant legislation to facilitate and promote the ease of doing business in Nigeria as well as institutionalize all the reforms to ease implementation[1]. Generally, the BFA among other things, mandates all Ministries, Departments, and Agencies (MDA’S) of the Federal Government, which provide business-related services, to publish a complete list of requirements to obtain permits, licenses, waivers, filings, approvals, registrations certificates, and other services in accordance with their functions and to ensure that the list is kept up to date at all times[2]. MDA’s are also required to communicate their approval or rejection within the stipulated time, failure to which will be deemed an approval and a grant[3]. The BFA also provides for a One Government Directive, requiring the collaboration of all MDA’s to process and deliver services to the public and conduct necessary verifications or certifications. There is also now the requirement to have a service level agreement that will be binding on the MDA and which amongst others shall provide a list of products and services rendered, documentation, and timeliness required[4]. Further to these general provisions, the Registrar-General of the Corporate Affairs Commission (CAC), has within 14 days of the commencement of the Business Facilitation Act to ensure that all application processes at the CAC are fully automated from start to completion[5].

CONSEQUENTIAL AMENDMENTS TO OTHER BUSINESS-RELATED LAWS

The schedule of the BFA has made consequential amendments to at least 21 business-related laws in the bid to achieve its primary objectives as stated in Section 1 of the Business Facilitation Act, 2023. This article will briefly outline the amendments effected by the BFA on a few of these laws as well as the implications of these provisions.

THE COMPANIES AND ALLIED MATTERS ACT

The BFA has expanded the boundaries of the provision for the exemption of foreign companies registering as separate entities in Nigeria[6]by adding a third paragraph (paragraph (c)). By this, it has included the exemption of foreign companies that have been “exempted under any other Act of the National Assembly”[7]. To this effect, there are now three types (previously two) of exemptions available to foreign companies for the purpose of carrying on business in Nigeria. This additional provision has expounded the scope of the exemption and would go a long way to foster foreign participation in Nigeria.

Section 127 (1) of the CAMA provides for a Company (limited by shares) to increase its issued share capital only in a General Meeting. The BFA has amended this provision and has replaced the whole of (1)[8]. The implication of this amendment is that a resolution of the Board of Directors alone would suffice to increase the share capital of a company, of cause, subject to the terms imposed in the Article of Association.

Section 142 of the CAMA has been amended to restrict the enforcement of pre-emptive rights to existing shareholders, and has provided that the offer of shares be accepted within21 days after which it shall be deemed declined[9].The one-month requirement for returns on the allotment of shares to CAC[10] has also been reduced to 15 days[11].  

In furtherance to this, the BFA has now imbibed the trend of technological advancement by making provision for electronic share certificates to be issued[12], allowing for virtual meetings[13], and electronic voting[14]. Before now, the CAMA restricted conducting of Virtual meetings to Private Companies[15] and the only valid means of voting was by show of hands or a poll[16].

By the provisions of the BFA, the minimum number of independent directors of a public company would no longer be three (3)[17] but one-third of the Board[18]. The BFA amended sub-section 3 of Section 307 of the CAMA (which provides for multiple Directorships) by introducing an entirely new sub-section 3 of Section 307, of the CAMA. To this end, the BFA emphasizes that a person can be a director in only five public companies – and any person who before the commencement of the Act was already a director in more than five public companies is required to resign as a director of all, but five, of the companies before the next annual general meeting of the companies, following two years from the commencement of the Act[19].

The provision of Section 572(a) of CAMA 2020 provides to the effect a company must have a due debt to a person of a sum exceeding₦200,000 (Two Hundred Thousand Naira), before it can be described as a company that is unable to pay its debt. However, the BFA has amended the provision to replace the₦200,000 (Two Hundred Thousand Naira),requirement with a sum to be determined by a regulation issued by the Commission. In simple terms, the Commission, by regulation would determine the amount that a company will owe before it can be said to be unable to pay its debt.

CUSTOMS AND EXCISE MANAGEMENT ACT

The most significant amendments under the Custom and Excise Management Act are in regard to goods that are uncleared or missing from vessels, aircraft, ships, and other vehicles. The BFA now requires[20] that a list of goods that have not been cleared should be made and reported on the fifth day after vessels have been cleared as opposed to the previous requirement of 15 days[21]. Also, with regards to the unloading of vessels, the customs officer is required to transfer uncleared goods to a government warehouse within 4 days as opposed to the previous provision of 14 days[22]. This will ensure expeditious handling of goods and would ensure that proper reports are made and kept in real-time.

The BFA also introduces the principle of a “single window”. The Act defines a Single Window[23] to mean a platform that allows parties involved in trade and import to lodge all transit data through a single-entry point interface to fulfil all regulatory requirements. This means that all data regarding imported goods should be passed through one interface. This will ensure proper monitoring of goods that are imported into the country for efficient control.  Part 26 of the schedule to the Act inserts subsection (a) and (b) after Section 18 of the Custom and Excise Management Act further stating requirements for the use and maintenance of a single window.

FINANCIAL REPORTING COUNCIL ACT (FRCA)

The BFA has now made a compulsory requirement for every Company, government organization, and corporation to have financial statements and prepare them in line with financial reporting standards issued and adopted by the Financial Reporting Council of Nigeria[24].

IMMIGRATION ACT

The BFA has amended the Immigration Act to effect the following changes[25]:

1. Entry visas to Nigeria shall be either issued or rejected with reason within 48 hours of receipt of valid applications[26].
2. A comprehensive list of requirements, conditions, and procedures for obtaining visas on arrival as well as other entry visas, including estimated timeframes, shall be published on all immigration-related websites, Embassies andHigh Commissions, and Nigerian ports of entry[27].

By the provisions of the BFA only the Comptroller General of Immigrations now has the power to make a departure prohibition order, instead of the Minister. Changes in the particulars of business permits are to be given to the Comptroller General of Immigration. It also provides that the Immigration Service should accredit and use an electronic communication system to enable the automated submission of any document, information, or return required by the Act. In addition, it empowers the Immigration Service to make regulations relating to the standards of operation and quality of any chosen system.

INVESTMENT AND SECURITIES ACT (ISA)

Section 43 of the BFA[28] amends section 67(1) of the ISA. The amended subsection prescribes that no allotment of securities can be made unless certain conditions are met, which differ depending on whether the company is public or private. For a public company, the minimum number of securities to be allotted is as stated in the prospectus, as determined by the directors. The sum payable on application for that amount must be paid to and received by the company before any allotment can be made. For a private company, the conditions for allotment are prescribed by the commission through regulation.

NATIONAL OFFICE FOR TECHNOLOGY ACQUISITION AND PROMOTION (NOTAP) ACT

Section 5(2) of the  NOTAP Act requires that every agreement or contract for the transfer of foreign technology to Nigeria must be registered with the National Office not later than 6 days from its execution. However, the provision of the BFA has included a proviso exempting companies from penalties for non-registration in their first two years of business operations, where the agreement in question is registered before the end of the two-year grace period[29].

TRADE MARK ACT

The provisions Section 67(a)of the Trade Marks Act has been amended, defining goods used in the necessary context within the TMA to include both goods and services, as the case may be. The general implication of this is that rights accruable to a trademark proprietor would now be applicable also to proprietors of a service mark in Nigeria.

Trade Mark is now defined under the BFA to include service marks, laying to rest the legal debate on whether a trademark includes a service mark.[30]

STANDARDS ORGANIZATION OF NIGERIA (SON) ACT

The BFA has amended the SON Act[31] to reflect a change in some of its functions. The functions of the SON are now stated thus:

• To undertake necessary investigations into the quality of facilities, materials, and products imported into Nigeria and establish a quality assurance system;
• Compile and publish an inventory of products requiring standardization; and
• To undertake the registration of all specified regulated products.

NATIONAL HOUSING FUND ACT

Section 4 of the National Housing Act originally provides that every Nigerian earning an income of N3,000 (Three Thousand Naira) and above in both the public and private sector per annum, is liable to contribute 2.5% of his basic monthly salary. The BFA has now been modified and amended to apply only to employees earning the national minimum wage and above.[32]

NIGERIAN INVESTMENT PROMOTION COMMISSION (NIPC) ACT

By virtue of the provisions of the BFA, Nigerian businesses that have acquired foreign participation must now register with the Commission within three months of starting operations.

Also, the BFA now enables the Commission to specify priority areas of investment and their applicable benefits and incentives; and negotiate specific incentives packages for strategic investments in addition to the incentives available to any enterprise under the laws.

Furthermore, the Commission is now required to publish in the Federal Government Gazette and on its website, the criteria for determining strategic investment, details of special incentives awarded through negotiation, and designate an investment that satisfies the criteria as a strategic investment.[33]

CONCLUSION

The provisions of the BFA and its consequential amendments to existing business-related laws in Nigeria will no doubt aid the ease of doing business. It is a commendable and welcome development and will encourage local and foreign investments as well as economic growth for the Country. Its implementation by the operations of the MDAs would create and promote ease and transparency in the Nigerian business environment.

SNIPPET

The schedule of the BFA has made consequential amendments to at least 21 business-related laws in the bid to achieve its primary objectives as stated in Section 1 of the Business Facilitation Act, 2023.

KEYWORDS

Business, CAMA, NOTAP, SON, Trade Mark, Consequential Amendment.

AUTHOR: Oyetola Muyiwa Atoyebi, SAN

Mr Oyetola Muyiwa Atoyebi, SAN is the Managing Partner of O. M. Atoyebi, S.A.N & Partners (OMAPLEX Law Firm).

Mr. Atoyebi has expertise in and vast knowledge of Corporate Law Practice and this has seen him advise and represent his vast clientele in a myriad of high-level transactions.  He holds the honour of being the youngest lawyer in Nigeria’s history to be conferred with the rank of Senior Advocate of Nigeria.

He can be reached at atoyebi@omaplex.com.ng

CONTRIBUTOR: PWAVENO DITTO

Pwaveno is a member of the Dispute Resolution Team at OMAPLEX Law Firm. She also holds commendable legal expertise in Corporate Law Practice

She can be reached at pwaveno@omaplex.com.ng

[1] Business Facilitation (Miscellaneous Provision) Act, 2022

[2] Section 3(1)& (4) of the BFA

[3] Section 4(1) of the BFA

[4] Section 6(1) of the Act

[5] Section 8 of the Act

[6] Section 78 (3) of the CAMA

[7] Part 1, paras 2 of the Schedule of the Act

[8] 127(1) of the CAMA

[9]Section 4, Part 1 of the Schedule to the Act

[10] Section 154 of CAMA, 2020

[11]Section 6, Part 1of the Schedule to the Act

[12]Section 7, Part 1of the Schedule to the Act

[13]Section 11, Part 1of the Schedule to the Act

[14]Section 1, Part 1of the Schedule to the Act

[15] Section 240 of the CAMA, 2020

[16] Section 248 of the CAMA. 2020

[17] Section 275 of the CAMA, 2020

[18]Section 14, Part 1 of the Schedule to the Act

[19]Section 16,Part 1of the Schedule to the act

[20]Section 27, Part III of the Schedule to the Act

[21] Section 31(a) of the Customs and Excise Management Act

[22] Section 31 (a) of the Customs and Excise Management ACT

[23]Section 25, Part III of the Schedule to the Act (amending to include the definition of “Single Window”)

[24] Part V of the schedule to the Act

[25] Part VII of the Schedule to the Act

[26] Now Section 20(7) of the Immigration Act

[27] Now Section 20(8) of the Immigration Act

[28] Part X of the Schedule to the Act

[29]Section 48, Part XII of the Schedule to the Act

[30] Part XXI of the Schedule to the Act

[31] Section 65, Part XX of the Schedule to the Act

[32] Section 44, Part XI of the Schedule to the Act

[33] Section 53, Part XV of the Schedule to the Act