THE Corporate Affairs Commission (CAC) has issued new guidelines for the recapitalization, merger, and share increment of banks and financial institutions in Nigeria, emphasizing timely compliance and documentation.
For new incorporations, requirements include payment of fees, while increases in share capital need various documents including statutory declarations and affidavits.
The Central Bank of Nigeria (CBN) had urged banks to expedite their capital increases to enhance financial stability, aligning with President Bola Tinubu’s $1 trillion GDP target by 2030.
The CAC in a statement posted on its X page on Friday, July 26, 2024, stated that the guidelines are in line with its powers under Section 8 (1) (e) of the Companies and Allied Matters Act (CAMA) No. 3 of 2020.
It states that his section emphasizes CAC’s powers in business management, formation, and registration.
Recapitalization is the process of restructuring an institution’s debt and equity mixture in a bid to stabilize its capital structure.
According to the institution, for new incorporation, the following are required: Approved Name Reservation or Availability; Approval-in-Principle from Sector Regulator; Duly completed online incorporation form; Payment of stamp duty and filing fees for the category of license authorization.
The CAC advises stakeholders to note that the certificate of incorporation shall be issued within 24 hours for applications that satisfy all requirements for the incorporation of companies prescribed in the Commission’s Operations Checklists available on its website.
For shares (options: private placements, rights issue, and/or offer for subscription), one must provide a duly signed company resolution and return of allotment.
Other requirements include: Statutory declaration by directors verifying that the issued share capital is fully paid up; Notice that regulatory approval is required; Affidavit deposed by a director of the company affirming that regulatory approval is required for the increase; Amended memorandum of association reflecting the new share capital; Payment of stamp duties and filing fees; Issuance of a letter acknowledging notice of increase and the requirement of regulatory approval.
It further noted that concerning issuance of a certificate of increase regarding shares, the notice indicating that regulatory approval is required must be filed in accordance with Section 127 (3), (4) & (5) of CAMA.
Annual returns and information on persons with significant control must be filed up-to-date.
“The certificate of increase shall be issued within 24 hours of filing regulatory approval,” it added.
The CAC further stated that for the merger of banks or any financial institutions, a duly signed special resolution for the merger by each of the merging companies is required.
Concerning Mergers and Acquisition, they will provide the Scheme of Merger duly approved by the Securities and Exchange Commission (SEC); Certified true copy (CTC) of the Court order authorizing the Extraordinary General Meeting (EGM) of each of the merging companies; Evidence of publication of the Court-ordered meeting in two newspapers and the Federal Gazette; CTC of the Court order sanctioning the Scheme of Merger
The CAC stated that annual returns and information on persons with significant control must be filed up-to-date.
Regarding the upgrade and downgrade of license authorization, the CAC disclosed that no consequential filing is required.
“All inquiries and complaints on these guidelines and applications submitted in pursuit of the recapitalization exercise should be addressed to [email protected] or call +234 816 920 9551,” it stated.
This announcement comes after the Central Bank of Nigeria (CBN) directed deposit money banks in the country to expedite actions on increasing their capital base to strengthen the financial system against potential risks.
This was made known by the Governor of the CBN, Olayemi Cardoso, during a press briefing after the 294th meeting of the Monetary Policy Committee (MPC) on Tuesday, March 26, 2024, in Abuja.
Recall that in November 2023, Cardoso, at the 58th Annual Bankers’ Dinner organized by the Chartered Institute of Bankers of Nigeria (CIBN), announced plans for a fresh round of banking recapitalization for Deposit Money Banks (DMBs).
Cardoso, in his report to the Policy Advisory Council on the national economy, said President Bola Ahmed Tinubu set an ambitious target of reaching a $1 trillion Gross Domestic Product (GDP) by 2030.
According to him, banks play a significant part in achieving the envisaged $1 trillion economy by 2030. Speaking on the recapitalization process, Cardoso highlighted the crucial need for banks to be recapitalized, considering the substantial developmental role the apex bank anticipates them to fulfil over the next seven years.
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