- August 5, 2020
- Posted by: Stephen Azubuike
- Categories: Legal Tips Digest, Opinions
In the famous 1998 motivational business fable, Who Moved My Cheeze?, the concept of the inevitability of change was beautifully presented. We learnt of change at work and in life generally, and reactions to it. When change occurs, people tend to react differently. Some will either move with the times while others will remain stagnant, grieving over the event leading to the change. There are others, too, who are always prepared for change while there those who refuse to prepare as evidence of their acute resistance to change. When change occurs, there are those who see it as a dream. This group never accepts the reality of change.
In times past, the whole idea and system of company registration and registration of business names and incorporated trustees were known to lawyers alone, given their legal training to better interpret statutory provisions and processes. But recent developments are changing the narrative, gradually.
The Corporate Affairs Commission (CAC) is an agency of the Federal Government charged with the authority to oversee corporate matters as provided under the Companies and Allied Matters Act (CAMA).
As part of its numerous functions, the CAC oversees the registration of companies, business names and incorporated trustees and have been interfacing with lawyers who assist members of the public with these registration processes for many years.
For lawyers, this is one aspect of legal practice and in fact, a branch of their business as lawyers. By statutory enablement (as provided under CAMA), a lawyer is required to execute a form known as Statutory Declaration of Compliance. This form is part of the incorporation documents needed in company registration only but not business names. By the Declaration, a legal practitioner simply confirms that there has been due compliance with the provisions of CAMA in making the application for company incorporation. The significance of this compliance requirement is better understood when one considers the jurisprudence surrounding the concept of company formation. By law, a company is an artificial person enjoying all the incidents of incorporation such as the capacity to sue and be sued, capacity to own properties in its own name, perpetual succession (meaning it can exist forever even if there is change in membership), etc. The process of statutory creation called a company (by way of incorporation) has a web of interconnected issues including the contents of a Memorandum of Association (which spells out the objectives of the company, subscribers and other details), Articles of Association (which contains essentially, the contract between the subscribers and the contract between the subscribers and the company itself), the shareholding structure of the company, etc. More so, there are legal issues relating to directorship of a company. Thus, a lawyer who is vast in all these issues is in a better position to vouch for compliance, hence the provision for Statutory Declaration of Compliance to be signed by a lawyer.
The relevance of lawyers in company incorporation, registration of business names and incorporated trustees is appreciated in view of the complexities involved especially in the case of companies. But given the approach by CAC to use standard forms and templates for most of these incorporation documents, the Commission tends to de-emphasize the relevance of legal practitioners in the process of incorporation. Furthermore, due to the Federal Government’s policy of gearing towards ease of doing business, the need arose to simplify the processes of business/company registrations (at least as a starting point) while also working to remove other obstacles including administrative bottlenecks on the way. By upholding the ease of doing business policy, the Government wishes to encourage many unregistered businesses to come on board to enjoy the statutory benefits of registration and also submit to the yoke of taxes as loyal and responsible business outfits. Part of the initiative gave birth to CAC’s current online platform where registrations and other incorporation matters take place.
While the ease of doing business campaign is on, the CAC appears to see lawyers as the most unneeded “elements” in company incorporation and especially, registration of business names. The Commission expressly attempts to demarket lawyers in the move to encourage the public to come forward. The mischief in the express demarketing of lawyers is that CAC can actually carry on with its mandate to ease up the process of registrations and be more efficient without necessarily seeing lawyers as the problem. Even if the process becomes as easy as ABC, there are many who would rather instruct lawyers to get it done. Currently, there are reports that CAC is moving for amendment of CAMA to do away with the need for Statutory Declaration of Compliance by a legal practitioner. This is aside the alleged system by the Commission of dealing with the Statutory Declaration internally by lawyers engaged by the Commission for that purpose, in less than transparent manner.
These developments in addition to the not-too-cordial relationship currently existing between lawyers and the Commission are evidences of the fact that CAC has moved and is moving the Cheeze.
What should lawyers do?
Lawyers may move through their association, the Nigerian Bar Association (NBA), to stop the proposed amendment that seeks to do away with the Statutory Declaration of Compliance by a legal practitioner in company registration. CAC must be made to stop demarketing lawyers and simply focus on their mandate to ease up registration processes and be more efficient. Is it not displeasing to note that in this era of Covid-19, the CAC that ought to show leadership by ensuring that their online service was in top form failed to rise up to the occasion.
More importantly, lawyers, especially young lawyers who benefit from the basic practice of business registration, incorporation of companies and incorporated trustees should build more capacity in post incorporation affairs such as filing of statutory notices, returns – annual returns and returns of certain significant changes in business (like shareholding structure, company officials, etc), increase and decrease in share capital, winding up, mergers and acquisition and a host of other complex transactions. These are matters that lawyers are best equipped to tackle and the CAC understands this too. Thus, only accredited lawyers can be allowed to deal with them.
Instead of sulking over registration matters, lawyers should brace up and move with the Cheeze. The Cheeze will keep moving.