Vincent Okonkwo: The Boy Who Cried Wolf – The misinterpretations of the CAMA Act 2020

A Rejoinder to “State Theft, Cronyism and Civil Right Violations: Inside the Hidden Horrors of the CAMA 2020 Bill” as featured on NewsWireNGR on 16^th of August 2020.

Imagine you woke up from a bad dream, only to find out that you are in another bad dream and then you wake up from that dream, but it is still another dream. That in many ways is what it must be like to be Nigerian. Most things pertaining to Nigeria are a continuing series of nightmares; sometimes even the things that are supposed to help fix the nightmares – like proper journalism. 

I read a recent feature on NewsWireNGR on the new CAMA Act, stuck between alarm and cringe, as I assume every person who have actually read the new Act was. For what it is worth, it was a comparatively good read, not lacking for literature and comprised of well-expressed thoughts. Its only fault, of course, was in the purposeful lack of quality analysis on the very subject it attempted to address – the CAMA Act 2020, particularly on the various provisions of the new Act it sought to critique. In what was approximately 8 minutes of unnecessary alarmism, the writer of the feature attempted rather desperately to create a picture of doom where none exists, and failed – crying wolf most unnecessarily down the wrong corridor.

Between insisting that the new Act does not improve the ease of doing business in Nigeria, and comparing the Act, albeit lightly, to other proposed laws and regulations put forward under the Buhari administration, “that all pursue the same holy trinity of legislative and regulatory agenda – attacking freedom of speech and the civil space, abrogating property rights and economic prospects and instituting regulators, offices and bodies that exist above the jurisdiction of the court system”, the writer inadvertently made a terrible picture of the new Act, in an incoherent attempt to vilify the Nigeria government. While the latter is warranting of all the flak that could come its way, the Act itself, for all its faults, deserves a more honest appraisal. Despite some shortcomings, it is quite frankly the work of various earnest stakeholders in the corporate space, and it is one of the most genuine and dispassionate pieces of legislation in Nigeria since forever.

This writeup seeks to as smoothly as possible, clarify some of the mis-interpretations in that feature, and offer a more appropriate critique, were necessary, of some of the spots of bother within the new CAMA Act which the feature sort to address.

The feature in commencing claims that the New CAMA Act “over the course of its 870 sections spread out over 604 pages, the bill has at least four clauses containing these anti-democratic policy directions strategically hidden in plain sight.” In subsequent paragraphs, it addressed about six provisions of the new Act which the writer posits to be undemocratic and contrary to the common good of the Nigerian people. These six provisions are outlined below and analyzed from dispassionate legal, practical and rational stand points.

1. Section 839 – Suspension of Trustees, Appointment of Interim Managers, etc. 

This section provides that the Commission may, by order suspend the trustees of an association and appoint an interim manager or manager to mange the affairs of an association where it reasonably believes that – 

1. There is or has been misconduct or mismanagement in the administration of the association;
2. Protecting the property of the association
3. Securing a proper application for the property of the association towards achieving the objects of the association, the purposes of the assoictaionassociation of that property or of the property coming to the association,
4. Public interest
5. The affairs of the association are being run fraudulently 

Admittedly, this Sections appears a bit overreaching and may present a concern if one chooses to be overly cynic. But a proper analysis of this section reveals that it is a relatively appropriate, if not standard, provision of Law on the regulation of NGO. It is not novel, or particularly out of place for government to regulate business entities in a manner that leads to the dissolution, winding up or change of control of such entities, in the event of certain improper practices by such an entity. Under Section 314 of the CAMA 1990, the Commission had the power to investigate a Company whose affairs are being run improperly, and under 323 of the Act, the Commission could petition for the Company to be wound up after such investigation, and the Court could put the Company under receivership (effectively changing its control) further to this application. Of  course this is a different process, expectedly, since it pertains to the affairs of Companies.

A more appropriate comparison then is to the UK Charities Act, which provides in Section 76 that the UK Charity Commission can suspend the trustees of an NGO and appoint an interim manager “at any time after it has instituted an inquiry under section 46 with respect to any charity, the Commission is satisfied—

(a) that there is or has been any misconduct or mismanagement in the

administration of the charity, or

(b) that it is necessary or desirable to act for the purpose of—

(i) protecting the property of the charity, or

(ii) securing a proper application for the purposes of the charity of

that property or of property coming to the charity.

Not to belabour this heading, the UK is one of the modern standards for democracy and it tells of a misinterpretation to insist that a provision which is perfectly democratic in the UK context, is any less so in Nigeria – not in itself anyways.

2. Section 705– Qualification of Insolvency Practitioner

Perhaps the only Section which presents a realistic concern, Section 704 requires that Insolvency Practioners be registered with Business Recovery and Insolvency Practioners Association of Nigeria (BRIPAN). The writer exaggerates that “Section 704 looks like a boring, bog-standard section about company law and the process of liquidation and insolvency practise. A closer look however reveals something very unusual that meets all the criteria for what can be described as corruption.” This is not the case.

The concern with section 705 is that it compels registration with a private body to practice as an Insolvency Practitioner. While it is inarguably inappropriate to give powers to a private body in a Federal Act, the claim that this is a hallmark of corruption is just a bit highhanded.  Those who followed the development of the Act would recognized that the BRIPAN has been a major contributor to the Bill, liaising with PEBEC, the CAC, other stakeholders and even the World Bank to ensure reforms in the Insolvency space, a space understood to be greatly needing of intervention. It underscores this development that BRIPAN was included in the new Act as an organization to help standardize practices in the insolvency space. It would non’t be the first time a private orgainisation has held a similar station in the Nigerian Corporate environment – the Nigerian Stock Exchange is a quick example. 

Ultimately, the outright inclusion of BRIPAN in the Act is far reaching but it is more an overreaching by the Bill Drafters and relevant stakeholders, than an attempt at cryonism by the Federal Government or the President. The Bill itself was drafted by various stakeholders in the corporate space in Nigeria, with contribution from various categories of stakeholders in the space and not by the Federal government – it is hard to imagine then, that it can be is a vehicle for Federal corruption.

3. Section 863 – Penalty for Carrying on Business without Registration

The writer of the feature in focus claims that this provision criminalizes the informal sector. This claim would be more off-putting if it wasn’t so ridiculous. The provision of this Section imposes penalties  on carrying out business as a Company, limited liability partnership, limited partnership or under a business name without being registered under the Act. 

For the avoidance of doubt, the penalty would apply only wher:

1. The business is required by law to be registered. (a bank for example)
2. The business refuses to be registed or its attempt at registration is cancelled by the commission.
3. The entity goes ahead to carry on business, (fraudulently)pretending to be properly registered and holding out itself so to be.

Notice that the definitions of these terms and indeed the rest of the Act are left to the discretion of the courts? 

With the exception of limited liability partnership and limited partnership (which were both introduced by the Act), the other two business types are standard corporate entities which were required to be registered under the old CAMA Act and failure to register either was illegal. Failiure to register a business name was penalized under the old Act under Section 584 and failure to register a Company although not expressly penalized, was expressly contrary to the provisions of the Law and excluded a such unregistered entity from enjoying the status of a Company. The two additional business entities are similar to Companies and are required to be registered in all climes where they are operated.

Coming to the question of it, it is impossible to imagine that this Section affects the informal sector anymore than the previous Act. Players in the private sector predominantly operate sole proprietorships and can go ahead in this way. They are also allowed to run partnerships and even NGOs without having to register with CAC as they always have been. It is impossible to imagine how this.

4. Section 17 – Pre-Action Notice

Pre-Action Notices are standard for government organisation over the world. A pre-action notice is a letter usually given by the intending plaintiff’s solicitors to the prospective defendant, giving the, notice of intention to institute legal proceedings against them. Statutory Bodies such as the NNPC, NAICOM, DPR and even Federal Universities all have pre-action notice requirements in their enabling legislations. In fact, that old CAMA did not provide the CAC with a pre-action provision, from a legal jurisprudence standpoint, was a legislative oversight. The claims by the writer that the pre-action notice is an attempt to put the CAC above the law smacks of a remarkable lack of knowledge of the Law and complementary lack of willingness to apply themselves to properly investigate the subject of their critique, which only barely falls short of an psychedelic excursion. 

5. Section 80 – Registration of Foreign Companies 

The writer claims in another improperly wrapped conspiracy theory that this section allows “Chinese Companies” to operate in Nigeria without registering. First, this Section is not even new! Section 56 of the Old CAMA provides that a foreign Company can be exempted from registering in Nigeria if they are:

1. foreign companies (other than those specified in paragraph (d) of this subsection) invited to Nigeria by or with the approval of the Federal Government to execute any specified individual project;  
2. foreign companies which are in Nigeria for the execution of specific individual loan projects on behalf of a donor country or international organisation;  
3. foreign government?owned companies engaged solely in export promotion activities; and  
4. engineering consultants and technical experts engaged on any individual specialist project under contract with any of the governments in the Federation or any of their agencies or with any other body or person, where such contract has been approved by the Federal Government.  

Section 80(1) of the Act is mutatis muntatis (an exact replica) with the reproduced provision of the Old Act.  Secondly, Chinese Companies? Where from the above provision can it be interpreted that Chinese companies are exempt from registration in Nigeria? If a Chinese company is invited for a project by the Federal Government and is as such exempted, how is this indicated of an exception specifically for Chinese companies? How…

There is an art to proper critiquing and it is in calling things as they are without mincing words whether for fear of repercussion or for want of favour from a benefactor, whoever they may be, whether they be the general public. Anything short of this, is bad critiquing and the feature which is the subject of this rejoinder was as bad as I have seen in a while. It needn’t matter that the critique sort to favour the public sentiment (which is predominantly stationed against the government) while vilifying everybody’s villain (the Nigerian Government). The fact remains that it was constituted of incorrect analysis, exaggerated interpretations and convoluted explanations meant to distort the truth, and this, however utilitarian the objective behind is, is utterly disingenuous. 

I disapprove of the Nigerian government as much as the next person. It is consistent with common sense to be worried that the Nigeria government may exploit loopholes in new Laws, as they have with old Laws. But this is as much as there is to it. It is intrinsically a problem of government, not with the Laws. 

Vincent Okonkwo is a lawyer, based in Lagos

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