Barely one year after assuming office on January 7, 2020, as Registrar-General/Chief Executive, Corporate Affairs Commission, Alhaji Garba Abubakar, has recorded a major milestone for the commission by actualising a major vision of an end-to-end electronic solution for the registry.
Apart from settling over N6 billion of inherited liabilities in staff pension and taxes as well as improving the agency’s revenue profile, he told James Emejo in this interview that the CAC under his leadership will among other things ensure that the controversial Companies and Allied Matters Act, 2020 is enforced with far-reaching penalties where applicable. Excerpts:
Can you give an update on the implementation of the amended Companies and Allied Matters Act (CAMA), particularly considering the uproar it generated last year?
Yes, thank you very much for the question. If you remember, the CAMA 2020 was assented to by Mr. President in August 2020. After the presidential assent in line with the provisions of the Authentication Act, the law had to be gazetted and the responsibility for the gazetting has been vested in the clerk of the National Assembly. Finally, the official gazette was transmitted to us by the clerk of the National Assembly in November 2020.
The law has come with a lot of innovations, a lot of changes in some of the old provisions of the CAMA 1990 and so we needed to change the way and manner we are registering companies to bring them up to date and consistent with the new law. And as you may be aware, CAC is one of the few agencies of government that operates a self-service portal. Most of our transactions are done electronically – the registration process since 2014 was being done electronically and so we needed to make necessary changes to the registration software to accommodate the reforms introduced by the new law.
That took some time and in addition to changing the software, we also require a regulation that will drive the implementation because as I said, there are new provisions, new penalties which were not specified in the law: the responsibility for specifying the penalties was vested in the Minister of Industry, Trade and Investment. And even the disclosure requirements – the forms that were to be used to collect information, the form of returns should be filed by registered entities – all these things had to be done afresh to bring them in line with the new law. So all those things were done – the Minister approved the companies regulation 2021 towards the end of December and we had already announced to Nigerians that the implementation will start on the first working day of 2021. In fact, the approval of the minister says January 1, 2021. So, already, the implementation has started, we have a new registration software, an upgraded version that allows you to register your company electronically unlike before where the certificate was being printed by us and we are sending the certificates to customers through designated courier companies as well as certified true copies of documents. The new system allows for end to end electronic solutions. When you give, you get your certificate electronically and for the first time, post incorporation filing are also being done electronically. In the past, all post incorporation processes were manually done. So the upgrade has introduced a new interface that allows for post registration. When you register your company, you can change your directors without having to come to the CAC or having to send any documents to CAC. So this is a new system and sensitisation has started. And this is one of the best innovations you can have anywhere. The system we have built is comparable to any other system you have in other registries of the world. In fact, our own is even different in so many areas because as at today there’s no registry that uses QR code for validation but we are the first to introduce that. And the public search is also available. You can search any company once you can enter the name or address of the company, it gives you the information about that company – at least you will be able to see the name, the date of registration and the registration number for free. But if you want to view the details of that company, there’s a section for paid services and you only pay N1000 to view the status and details about its directors, secretaries and everything that had been filed in respect of that company.
But that will not come with a certified extract, authenticated by the commission you pay N5000.
But if you want to view only you pay N1000. So this is the stage we are in as I have said but you know typical of everything new because the portal started working on January 3, there may be isolated glitches but as we discover them we fixed it but it has so far stabilised and customers are using it and are getting results as well electronically. And that would actually reduce the cost of doing business because customers don’t have to pay the cost of any courier service – from the comfort of your home or using your own phone you can do your registration at the CAC.
Now that you have studied the new law, what would be your agenda for 2021 in terms of its actual implementation?
This year we would intensify our enforcement and compliance of the provisions of the law because most companies and other registered entities have not been filing returns as required by law.
You have a situation where a company is registered for 10 – 15 years and does not file returns.
It’s now easier for them to file because they don’t need to go through any lawyer and accountant or chartered secretary. With the new portal, a company can decide to have its own electronic account that would allow it to make all its filings directly and they’ll pay the basic fee. And the new portal also shows at a glance, the status of that company whether it is active, whether it is dormant, whether it’s receivership or whether it’s in liquidation.
So moving forward, any company that is not up to date with its filings would actually reclassify its status to read dormant and I don’t think anyone will agree to deal with that company of it is classified as dormant. Secondly, the process of striking out – although the law now provides for 10 years of inactivity before the commission could strike off the name but it doesn’t stop us from reclassifying and the law has now also provided for voluntary striking off and so the company at its own instance – where a company is registered and it has not commenced business and to not have any existing obligations to third parties – the company may apply to be struck off from the registry. The easy path for them – if you register a company and after registration you fill you don’t have any need for that company; instead to allow the company to remain on the register, you can apply to have it struck off. So we will intensify our compliance and with technology now it’s very easy to know those that have complied and those that have not complied. And another thing is that we are going to have the financial year end of every entity such that before the financial year end, we would prompt them reminding them that they are supposed to file their annual returns after the financial year end. And if after that period they do not file, then we would begin to calculate necessary penalties against them. So, the process has become more transparent, and you can easily know who owns what now with the consent of Persons with Significant Control (PSC). That is one register that is very important because of the various anti-corruption initiatives of the federal government. Now that we have a national register with the CAC, new companies are disclosing their PSCs at the point of registration.
Existing companies will begin to do that when they are filing their annual returns. So every company at the point of filing their annual returns moving forward disclose persons with significant control as required by law. So our agenda this year is to ensure full compliance by every entity in terms of annual returns and I’m terms of all their statutory duties to the commission and if they fail to do that we will wield the big stick by reclassifying their status to read dormant because once that is done nobody will agree to deal with you. And we are going to collaborate more with other agencies because we are the national register of companies: other agencies rely on the information we maintain in their dealings with some of these registered entities. We’ve given access to most government organisations and foreign missions in Nigeria to confirm to confirm status of companies and we will continue to do that such that before they deal with any registered company, they’ll verify to see whether that company is actually an active company and whether information provided by that company is consistent with the records we have in the CAC because by law any change in shareholding or the directorship of the company or the secretaryship must be filed with the commission. And companies that are not small companies are required by law to file their audited financial statements with the commission. So these are necessary avenues for government agencies to verify because some times when you are doing procurement, companies are required to submit three years audited financial statements – in most cases, these financial statements may be doctored because they prepare something that would sway the agency to give them that contract. But the entity is required to file this information with the commission.
So, moving forward, we are going to encourage these agencies to verify these financial information with the CAC. If the information is not consistent with what the company filed with the CAC, then there’s no need dealing with that company. So this is the way to go and these are some of the things we intend to do in 2021. We are going to have zero tolerance for non-compliance and we are going to make these companies to be up to date in their obligations to the commission.
The amended Act gives you far-reaching leverage to generate more revenue for government, could you share with us your revenue performance for last year as well as projections for 2021?
As for revenue, 2020 was one of our best year in terms of revenue generation. We had challenges of service delivery because of the various restrictions that limited the number of staff that were allowed to come to the office. We couldn’t meet our service timelines almost for a greater part of the year because of those restrictions. But thank God with the new system, everything is now electronic end to end and like I said, staff can approve from even outside this premises. In terms of revenue, we recorded a surge in registration activities, there were more registrations last year compared to previous years and we recorded more revenue. We had a revenue target of N18.2 billion but closed the year with over N19 billion. So in terms of revenue, the year was actually good for us. And for the first time in the last 10 – 12 years, we were able to give more money to the federal government in terms of operating surplus.
We are hoping that our target for 2021 which is N20 billion will equally be surpassed; with electronic systems, transactions are easily carried out, payments are made electronically and you don’t need any paper – although the new regulation has come with some fee reductions – some of the activities have been consolidated to make things easier for our customers but even with that we believe there will be greater compliance and the more the compliance level the more the revenue.
So we will intensify on that so we will give more revenue to government. The challenge we had last year was that I took over with a lot of liabilities of over N6 billion on staff pensions and taxes – so we had to clear most of these liabilities – we have cleared over 80 per cent of these liabilities. If not for that we would have given operating surplus of about N6 billion to N7 billion to the federal government in 2020.
So we expect that 2021 will be better and we would be able to give more money to the federal government to support government in its various developmental drive.
Your predecessors had considered writing off the indebtedness of registered entities which had not filed returns for a number of years to enable them start on a clean slate. Do you subscribe to this idea?
Thank you. On amnesty for annual returns, yes we are planning something on that because we recognised that the processing of filing before now was very difficult, whereas, the old fees for small companies was N2,000 – if you want to file, you have to go through a lawyer, an accountant or chartered secretary and at the end of the day you will end up paying N50,000, and that has made it difficult. However, with the electronic format, it is very easy Now for anybody to file his returns – you just pay the basic fees without hassles.
So we are reviewing the situations and very soon we will come up with a pronouncement on the kind of amnesty we are going to give registered entities as far as annual returns is concerned because it’s also good for us as it will help us to actually update the record of these companies. Some of them have not been filing anything, some of them have made some changes but the practice in CAC had been that any company that doesn’t have its annual returns up to date will not be allowed to do any post incorporation filing. But sometimes, if you calculate the costs of the returns, for those that have so many years of outstanding, it will even cost more than registering a new company. But if you give amnesty, it would be easier – not for all the years but for some reasonable number of years. We are actually looking into that and as I have said, very soon before the end of the first quarter. Because what we’ve done is that for post incorporation, we are allowing the two systems to run concurrently because we had some pending applications before the new application was deployed.
If we now insist that everybody must go back and do it electronically, it will be burdensome – we would run the two concurrently up to the end of March; we would still receive paper application for post incorporation but after March 31, every transaction must be done electronically. So may be before that time, we would make a pronouncement on the kind of amnesty we are going to give to registered entities and not just companies but business names and incorporated trustees.
And another thing I have not mentioned is the law has now provided for two new legal entity – limited partnership and limited liability partnership – Nigerians would ask why are we not registering these – you need the electronic solution to do that and so we are building the solution, a new software is being developed that would allow for registration.
As you migrate your registry online, what arrangements have you put in place to limit incessant downtime or breakdown in infrastructure which had elicited protests from clients in the recent past?
You see, one thing with technology is that there is no perfect technology anywhere in the world. What you do is to use your best endeavours to mitigate incidence of downtime. At the time we had those challenges in the past, we had issues with the hosting company, we had infrastructure failure Anthe hosting site but the arrangement we have made now is that we have three active sites so that if one site is not available, the second site will be available and the third site will be available. So at any point in time, customers will be able to transact with us.
You would agree that MSMEs are catalysts to economic diversification agenda of the current administration; but there are concerns over registration bottlenecks particularly with the emergence of the new CAMA. What is the commission doing about this?
The good things about the new law is that it has actually eased a lot of things for the SMEs in terms of disclosure. There’s this requirement about having to have a secretary, an auditor but all these things have been dispensed of and we have not increased the cost of registration. In fact, the cost has even come down by N5, 000 because you’re no longer required to pay for certified true copies of document; you just pay the basic registration fee and you get your results and you get your results electronically now. They can deal with the commission directly because one major component of the cost is actually the cost of professional services – if you’re going through lawyers, accountants and chartered secretaries. With the new law, the law has dispensed with these requirements that you must go through these accountants and secretaries. You can do it yourself but if you have enough resources to engage a lawyer – fine, but you can do it yourself. All these things will actually help small and medium enterprises.
What is your vision for the CAC?
On the vision, thank God that barely one year after I assumed office, one of my critical visions has been realised – that is to have an end to end electronic system – this has already been achieved. What we will focus on now is to stabilise the portal and make sure we meet the needs of our customers. So for the first time in Nigeria, you can sit from anywhere in the world, register your company and get your certificate electronically without having to visit Nigeria or having to visit the CAC. This is happening now – it started on January 4 and it’s on. That’s actually my first vision as registrar general bad we were able to achieve this within one year. So,with the support of my staff and other stakeholders we were able to achieve this. The other issue had to do with availability of information about registered entities – up to date information.
We’ve intensified the process of updating, because of the manual or semi-regular automated system, some processes were manually carried out. So sometimes, filings were made but the database was not updated to reflect these filings. So moving forward, this is what we are going to be doing so that the electronic information on our portal will be up to date and give a true reflection of the company. This will help for business decisions. If you want to deal with any company you have up to date information about the company or who the directors are, the shareholders and even the financial statements that would tell you the profit and loss in the last five years from the comfort of your home and so this is our focus and hopefully, God willing, we would realise this before my second anniversary.
What are the challenges limiting your operations so far?
Well, you know any government institutions will have challenges. But we are surmounting these challenges – the first is the server downtime that we recorded and secondly now is the restriction arising from the second wave of COVID-19. Not all staff are coming to the office and without the full compliment or all staff – and not every staff has a device to work from home and this is another challenge but we are praying that the restrictions will soon be over so that we would have full compliment or our staff for us to render services in line with our service timelines in a very efficient manner.
Now that the CAC establishment Act has finally been amended, how fulfilled are you in the discharge of your mandate?
Well, it’s a journey we just started. The level of compliance with the new law will determine the success or otherwise. And our ability to enforce these laws because law is meant to be respected.
If you have laws in your books and these laws are not respected, people are doing things with impunity then the purpose of the law will be defeated. So it is our responsibility to enforce this law and we are going to enforce it to the fullest.