The Companies and Allied Matters Act 2020 (CAMA 2020) replaced CAMA 1990 after three decades. It is the most significant reform of Nigerian company law in a generation. For lawyers advising companies — or litigating disputes involving them — understanding the changes is not optional.
1. Single-Member Companies Are Now Permitted
CAMA 2020 introduced single-member private companies. A private company can now be incorporated with one shareholder and one director (who may be the same person).
Practical impact: This removes the need for nominee shareholders, which was a common workaround under CAMA 1990 that created unnecessary complexity and risk. Sole traders and entrepreneurs can now incorporate cleanly without involving a second person.
Section reference: Section 18(2) CAMA 2020.
2. Electronic Meetings and Written Resolutions
CAMA 2020 expressly permits electronic meetings and remote participation. Shareholders and directors can attend, vote, and pass resolutions via electronic means, provided the articles of association allow it.
Written resolutions — resolutions passed without a physical meeting — are also permitted for private companies.
Practical impact: For small private companies, this eliminates the formality (and fiction) of holding physical meetings that never actually occurred. It also brings Nigerian company law into line with international practice.
Sections: 240 (written resolutions), 237 (electronic participation).
3. Statement of Compliance Replaces Statutory Declaration
The requirement for a statutory declaration by a solicitor to obtain a certificate of incorporation has been replaced by a statement of compliance. This can now be filed electronically, which has significantly reduced the time and cost of incorporation.
4. Strengthened Minority Shareholder Rights
CAMA 2020 introduces much stronger protections for minority shareholders:
Unfair prejudice remedy (Section 311): A member who feels the company's affairs are being conducted in a manner unfairly prejudicial to their interests can apply to court for relief. The court has wide powers — including ordering the purchase of the petitioner's shares, varying the articles, or regulating the conduct of the company's affairs.
Derivative action (Section 312): A member can now bring a derivative claim on behalf of the company against a director for breach of duty. Under CAMA 1990, the rule in Foss v Harbottle made this extremely difficult. CAMA 2020's derivative action regime creates a clear statutory route.
Just and equitable winding up (Section 572(d)): Available where it is just and equitable to wind up the company — typically used where there is a deadlock between shareholders or where the relationship of mutual trust has broken down in a quasi-partnership.
5. Directors' Duties Codified
CAMA 2020 codifies the duties of directors in statutory form for the first time. The key duties under Sections 305-310 are:
- Duty to act within powers
- Duty to promote the success of the company
- Duty to exercise independent judgment
- Duty to exercise reasonable care, skill, and diligence
- Duty to avoid conflicts of interest
- Duty not to accept benefits from third parties
- Duty to declare interest in proposed transactions
The standard of care under Section 309 is both subjective and objective — a director must exercise the care, skill, and diligence that would be exercised by a reasonably diligent person with the general knowledge, skill, and experience of that director, and the general knowledge, skill, and experience that may reasonably be expected of a person carrying out that director's functions.
Practical impact for litigation: Claims against directors for breach of duty now have a clear statutory foundation. Lawyers should refer to the specific statutory provisions rather than relying solely on older common law formulations.
6. New Insolvency Framework
CAMA 2020 introduces three new corporate rescue mechanisms:
Administration (Sections 441-530): An administrator is appointed to manage the company with the objective of rescuing it as a going concern or achieving a better outcome for creditors than immediate liquidation. There is a moratorium on legal proceedings during administration.
Company Voluntary Arrangement (CVA) (Sections 431-440): Allows a company to reach a binding arrangement with its creditors without going to court. Requires approval of 75% in value of creditors voting.
Receivership reform: Administrative receivership — where a floating charge holder appoints a receiver to take control of the whole business — is significantly restricted. It is now only available in limited circumstances, including capital market transactions.
Practical impact: The administration procedure in particular is important. Before CAMA 2020, Nigerian law had no equivalent to UK-style administration. Companies in financial difficulty went straight to winding up. Administration creates a breathing space.
7. Incorporated Trustees
The provisions governing incorporated trustees — the vehicle used by NGOs, religious bodies, and associations — have been significantly updated. Key changes include:
- A register of trustees must be maintained
- Trustees must comply with reporting obligations
- The CAC has increased oversight powers including the ability to investigate and suspend trustees in certain circumstances
This is particularly relevant for lawyers advising churches, mosques, charities, and civil society organisations.
8. Business Name Registration
The requirements for business name registration have been simplified. The statement of particulars can now be filed electronically. However, the fundamental rule remains unchanged: a business name is not a separate legal personality. Liability falls on the individual or partnership behind the name.
Key Transitional Issues
Companies incorporated under CAMA 1990 needed to update their articles of association to take advantage of CAMA 2020's new provisions. Many companies have not done this. If you are advising a company incorporated before 2020, check whether:
- The articles have been updated
- The register of members and register of directors are in the correct form
- Any provisions in the articles that conflict with mandatory CAMA 2020 provisions have been removed
Provisions in pre-2020 articles that conflict with CAMA 2020 are void to the extent of the inconsistency.
Summary
CAMA 2020 is a comprehensive reform. For transactional lawyers, the key changes are: single-member companies, electronic meetings, and the streamlined incorporation process. For litigators, the codified directors' duties and the new minority shareholder remedies are the most important additions. For restructuring and insolvency practitioners, the administration and CVA procedures open a range of new options that simply did not exist before.
The cases interpreting CAMA 2020 are still developing. For the latest judicial treatment of specific provisions, searching a current Nigerian case law database is essential.