Explaining the Companies and Allied Matters Act (CAMA) Law

August 29, 2020

101 24 minutes read

Femi Atoyebi, a Senior Advocate of Nigeria (SAN) and a very senior Pastor with the Redeemed Christian Church of God (RCCG) and Barrister Tomi Vincent, Legal Adviser to the Pentecostal Fellowship of Nigeria (PFN), Lagos State Chapter, in this article explain the CAMA Law.

*In the past one week or so, so much furore has greeted the signing into law of the Companies and Allied Matters Act, 2020 by the President, Mohammadu Buhari on 07 August 2020. Most of the complaints have come from a section of the church. I have read different comments and opinions from people from all walks of life, not least lawyers, politicians and clergy men and or their followers alike. The comments no doubt reflect the biases of their respective constituencies.*

I therefore feel compelled to add my voice to these from the perspective of a senior lawyer and a Pentecostal Pastor of about three decades. I also run a “Not – For – Profit” organization which seeks to help men and fathers become more alive to their responsibilities to their wives, children and the society at large.

CAMA

The Act comprises a total of 870 sections spread over 604 pages. Only a few sections of these deal with “Not – For – Profit” organizations. Apparently, the Act covers a wide range of areas on Company law and related subjects. Its sheer volume speaks eloquently to that fact. I do not pretend to know all about the provisions of the Act. Neither do I plan to deal with all of its provisions. What I will attempt to do in this write-up is to limit my comments and guidance to the “Not – For – Profit” organizations provisions and the differing comments (sometimes near violent in nature) that have greeted it.

I would like to point out by way of a general comment that the Act is not perfect. That being said, I am yet to see an Act that is perfect. However, every Practitioner and user of it will agree that it is long overdue for review. Every law is tested only when its provisions are interpreted by the courts. I imagine this will not be an exception.

These comments are made easier because it is focused on just the few sections. These are Sections 823 to 839. In summary, Sections 823 to 835 provide for the registration of voluntary organizations such as religious, educational, customary, social, cultural, sporting, charitable, etc, by their trustees who shall not be less than two in number, the qualifications of such persons to hold office as trustees, replacement of trustees and or their objects, etc. As those sections do not come into play in the raging feud, I do not intend to dwell on them. Section 838 provides for how to deal with the income and or assets of the Association namely, that it shall be applied in and towards the declared objectives of the Association as contained in its Constitution. The ‘offensive’ Section seems to be Section 839 of the Act.

For the advantage of those who may not have seen or read it, I set it out hereunder in full:

“SUSPENSION OF TRUSTEES, APPOINTMENT OF INTERIM MANAGERS, ETC

Section 839 (1) The Commission may by order suspend the trustees of an association and appoint an interim manager or managers to manage the affairs of an association where it reasonably believes that –
(a) There is or has been any misconduct or mismanagement in the administration of the association;
(b) It is necessary or desirable for the purpose of –

(i) Protecting the property of the association,
(ii) Securing a proper application for the property of the association towards achieving the objects of the association, the purposes of the association of that property or of the property coming to the association,
(iii) Public interest;

(2) The trustees shall be suspended by an order of Court upon the petition of the Commission or members consisting one-fifth of the association and the petitioners shall present all reasonable evidence or such evidence as required by the Court in respect of the petition.

(3) Upon the hearing of the petition, and the appointment of the interim manager, the Court, with the assistance of the Commission, may make provision with respect to the functions to be performed by the interim manager or managers who will be an individual as the court may, from time to time designate, or

1) The Commission may by order suspend the trustees of an association and appoint an interim manager or managers to manage the affairs of an association where it reasonably believes that —

(a) there is or has been any misconduct or mismanagement in the administration of the association;

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

(i) protecting the property of the association,

(ii) securing a proper application for the property of the association towards achieving the objects of the association, the purposes of the association of that property or of the property coming to the association,

(iii) public interest; or

(3) Upon the hearing of the petition and the appointment of the interim manager, the Court, with the assistance of the Commission, may make provision with respect to the functions to be performed by the interim manager or managers appointed by the order –

(a) the powers and duties of the interim manager or managers which may include the powers and duties of the trustees of the association concerned; and

(b) any power or duty specified under paragraph (a) to be exercisable or discharged by the interim manager or managers to the exclusion of the trustees.

(4) The functions shall be performed by the interim manager or managers under the supervision of the Commission.

(5) The reference in subsection (1) to misconduct or mismanagement extends to the employment for —

(a) the remuneration or reward of persons acting in the affairs of the association, or

(b) other administrative purposes, of sums which are excessive in relation to the property which is or is likely to be applied or applicable for the purposes of the association.

(6) A court of competent jurisdiction may, upon the petition of the Commission or members of the association —

(a) order or suspend any person, officer, agent or employee of the association from office or employment, provided that such suspension does not exceed 12 months from the date of the order or suspension;

(b) by order appoint such number of additional trustees as it considers necessary for the proper administration of the association;

(i) vest any property held by or in trust for the association in the official custodian, who shall be a person so designated by the court from time to time;

(ii) require the persons in whom any such property is vested to transfer it to the official custodian who will be an individual as the court may, from time to time designate, or

(iii) appoint any person to transfer any such property to the official custodian;

(d) order any person who holds any property on behalf of the association, or of any trustee for it, not to part with the property without the approval of the Court;

(e) order any debtor of the association not to make any payment in or towards the discharge of the debtor’s liability directly to the association but to make such payment into an interest yielding account held by the Commission for the benefit of the association;

(f) by order restrict (regardless of anything in the trusts of the association) the transactions which may be entered into, or the nature or amount of the payments which may be made, in the administration of the association without the approval of the court; or

(g) by order appoint an interim manager to act as receiver and manager in respect of the property and affairs of the association.

(7) Where, at any time after the Commission has made an enquiry into the affairs of the association, it is satisfied as to the matters mentioned in subsection (1), it may suspend or remove —

(a) any trustee who has been responsible for or privy to the misconduct or mismanagement or whose conduct contributed to or facilitated it; or

(b) by order of the Court, establish a scheme for the administration of the association.

(8) The court may by order replace a trustee removed under subsection (7).

(9) A person who contravenes an order under subsection (6) (d), (e) and (f) commits an offence and is liable on conviction to fine as the Court deems fit or imprisonment for a term of 6 months or to both.

(10) The Commission may make regulations in respect of —

(a) the functions, powers and remuneration of the interim manager and the manner in which the interim manager shall make reports to the Commission; and

(b) making reports to the Commission, and such other things as may be necessary for the effective administration of the association during the period of its interim administration.

(11) The Commission shall only exercise its power under this section in respect of any association with the approval of the Minister.”

It should be pointed out that the Act did not specifically mention church, mosque or any particular religion. The Act primarily seeks to introduce long overdue reforms into Companies Affairs and specifically, among other aspects, in the area of ease of doing business. Having read these areas of the Act dealing with the ease of doing business in Nigeria, I must commend the efforts of the drafters, which no doubt will open up our economy and allow much needed Foreign Direct Investment (FDI) into the country, if properly implemented. Notwithstanding, some interests (including some from my constituency – the legal profession) may still not be pleased with some of these sections, which is the point earlier made that no law can be perfect and we must keep reviewing them from time to time as circumstances change.

THE GROUSE OF SOME SECTIONS OF THE CHRISTIAN COMMUNITY:

The fears expressed by some sections of the Christian community is that Section 839 of the Act is a surreptitious attempt by government to control the church and stifle it. IF indeed there is a covert plan to harm or destroy the church by any government; past, present or future – the concerns would be legitimate and as a member and a leader of the Christian community, I will not stand by idly and watch. However, if such allegation is based on Section 839 of CAMA, regrettably, I am unable to agree with the proponents of such a theory for a host of reasons.

Firstly, the Act seeks to regulate the conduct of businesses of all classes as it is the responsibility of government, which includes companies of all descriptions, associations, including charitable organizations such as churches, mosques, educational institutions, social clubs and all. It is the same laws that regulate the operations of Banks and Financial Institutions by, among others, restricting the term of office of its CEO to ten (10) years, increase the capital base, etc. When the capital base was increased, some banks did not like it because they were unable to meet it and had to fold up or merge with other banks to remain afloat. In hindsight, that was a step in the right direction for our banking institutions.

There has also been the argument that it was the Presidency that was responsible for the Act. Apparently, I do not know who sponsored the Bill and I cannot hold brief for the government but as a lawyer, I am aware that it was an Act of the National Assembly (NASS) by which is meant, all our representatives across the length and breadth of Nigeria enacted the law and it was signed by Mr. President when it was placed before him. It is no gainsaying that the NASS is comprised of people of all faiths, beliefs and prejudices, including Moslem clerics and Pastors, etc. This is the way we have all chosen to make our laws and invariably some interest groups will not always be happy with some laws or sections of it.

The process of making a law under a Presidential system that we run is such that it affords everyone the opportunity to lend their voices to or against any law during the ‘making’ process. Firstly, it is widely circulated and then open to members of the public and particular interest groups to make presentations as to why they consider a portion or whole of it repugnant or objectionable. The Bill then goes through first, second and third readings before a technical committee meets to finalise it and then passed on to the President for his assent. As a lawyer, I am aware these procedural steps were followed in this case and several interest groups made representations to the NASS.

What worries me here is that it would appear that the Christian community was asleep or chose to ignore participation in the process. I was privileged to have served at some point in time as the National Legal Adviser to the Pentecostal Fellowship of Nigeria (PFN) when Pastor Ayo Oritsejeafor was President, and when the Association was having similar issues with a particular law, I had counselled at the time that “fighting” a law is undertaken while it is being enacted and not after it’s promulgation but during the process of enacting it. I suggested at the time that either PFN or CAN or the whole Christian community set up a standing Committee to be made up of Christian lawyers, legislators, professionals, etc, who would monitor what laws were being planned and to get actively involved in the process, by pushing its own agenda. I further suggested that as a community, Christians could even further its own agenda by sponsoring bills that could aid their vision as well. I am certain we have an array of the very best materials in these areas. Regrettably, I am unsure if this was done for, if it was, the story might have been different today. I suppose it is not too late.

Of particular concern to me is the objection by a section of the church leadership in the country that has been so vocal and even threatening government on the performance of its Constitutional duty to make laws for our country. As I alluded earlier, as a Christian and a Pastor, I do not see what disadvantage the church will suffer from the provisions of section 839 of CAMA over and above other religious and charitable organizations. I have seen and read some distortions on the relevant provisions to the effect that churches would be liable to taxes, but I cannot find any such provision in the Act. By law, Not-For-Profit organizations are not taxable; whether that be a church, mosque or whatever. My wife and I run a few. However, if we decide to diversify any of our charitable organization’s funds into a commercial venture whereby we make a profit, we would become liable to tax and it would make no difference that the parent body is a charitable organization. The taxable income would be limited to the business aspect of the organization so, if I decide to go into the business of printing from my charitable organization and make profit, that income would be taxable.

Now, to the argument that Section 839(1) is designed to take over churches. The section provides for the suspension of trustees of an association and to appoint an interim manager over its affairs (administrative) under certain specified conditions. I would have tended to agree with that argument if that section ends there, but it does not rather, it has three other sub-sections under (1) and additional 10 other sub-sections, all of which have to be read communally and not in isolation under the rules of interpretation of Statutes. I will suggest that every Christian who has one misgiving or the other go and read it, even if a layman, and if necessary, consult a lawyer. No one should rely solely on what someone’s views are, but we must educate ourselves so we can proffer sound argument on any point. With profound respect to the proponents of this argument, I am unable to agree with them. On the face of it, the Section does not say so and in the interpretation of statutes, it is not permissible to import into a law what it does not say, especially where the words employed are clear and unambiguous. Secondly, no specific reference was made to churches, mosques, or a particular faith.

Sub-section (a) of Section 839 provides an instructive condition precedent to the suspension of the trustees and interim take-over of an association, and it is that IF there has been any misconduct or mismanagement in the administration of the association, or IF it is necessary or desirable for the protection of the property of the association or ensuring its proper application towards its set objectives. Sub-section (c) states that this power may be exercised if the affairs of the association are being run fraudulently. To further allay the fears in some quarters, sub-section (2) then provides that an Order of court would be required to do this and in approaching the court by the Petitioner or the Registrar-General (RG), the application must be supported by 20% of the association who shall also present all reasonable evidence of their allegations to the court. It is ambiguous whether the 20% here speaks to the trustees or the larger organization which could be hundreds of thousands. I submit that common sense can only suggest that it is referring to 20% of the trustees.

*For the avoidance of doubt, I am a strong proponent of accountability and transparency in both private and public lives and more so, in religious settings which are to exemplify what their followers must seek to imbibe because basically, this accords with what the Christian religion teaches. See: 1Cor.4:1-2, 2Cor.8:20-21. Paul says in 2Cor.8:20-21 thus:*

*21 “Avoiding this, that no man should blame us in this abundance which is administered by us.*

*22 “Providing for honest things, not only in the sight of the Lord, but also in the sight of men.”*

*The Bible is replete with verses enjoining us to be accountable as stewards of the manifold blessings of God, and this is precisely what most serious churches teach and try to live by, which is why several people are attracted to some of them in the first place and as long as we keep to the tenets of the Bible, which is our Constitution as Christians, (which that section seeks to replicate and enforce), we should have nothing to fear.*

BASIS OF REGULATION OF NOT-FOR-PROFIT ORGANIZATIONS:

When a person or group of persons apply to register a charitable organization otherwise known as “Not-For-Profit” organization, the implications are that he is undertaking a venture that would benefit the society and therefore, government would confer on it some privileges such as exemption from taxes. In consideration, whatever funds that come into it is for the public and not for personal use. Consequently, the organization is accountable to government so, government must regulate the organization to ensure that its funds are properly applied in and or towards its declared objectives. This is a sacred duty government owes to its citizens and it would amount to gross abdication of that responsibility if government fails to do so. Every responsible citizen pays tax as he is obliged to do, but if government decides to exempt some because of the value they add to the society, that organization has both legal and moral obligations to be accountable for funds contributed to it. This is the international best practice all over the world. In my view, this should be a given and not open to debate. *Assuming for a moment that bad motive is behind the law in question, it would be literally impossible for any church that’s complying with the law to fall victim of it. When the enemy wanted to trap Daniel on the laws of the land, here is what the Bible says in Dan.6:4-5*

*“4 Then the presidents and princes sought to find an occasion against Daniel concerning the kingdom; forasmuch as he was faithful, neither was there any error or fault in him.*
*5 Then said these men, We shall not find any occasion against this Daniel, except we find it against him concerning the law of his God.” (Underlining mine for emphasis).*

*There is no nation on earth that can be run without laws. The alternative would be chaos and violence. To my mind, all that those sections seek to do is to ensure probity, accountability and transparency by all associations operating in the country; whether they be churches, mosques, social or academic so long as they are not for profit and are non-tax paying. They cannot eat their cake and have it. In the last few years, we have seen fracas in some churches with members of the laity throwing chairs at the clergy in the church for what they perceived as financial recklessness on the part of the former and it took the authorities to wade in and prevent a breakdown of law and order. Several other such incidents are either not known or reported and it is therefore incumbent on any responsible government to put in place laws that would drive sanity into the system.*

*I shudder to ask why the largest churches which are largely orthodox such as the Catholic Church and the Anglican Communion in Nigeria for example, are not complaining about the law. Certainly, they have the highest number of adherents and if they are comfortable with the law, we should be asking the right questions. Only this August, the UK Charity Commission was reported to have taken over the management of a popular Nigerian church in the UK for what it described as breaches of the Charity Commission’s laws and Regulations. It wasn’t the first and I do not think it will be the last*.
The same rules apply in the US to charitable organizations, including churches. Internationally acclaimed preachers in the US have been and are being indicted regularly under identical laws and the heavens did not fall.

Many may remember that only late last year or so, the sitting American President’s NGO, Donald J. Trump Organization, was indicted for mismanagement of its funds and ordered to refund about $2m to public coffers. Additional disciplinary measures were also taken against the organisation.

Why should Nigeria or any association be an exception? I can see none. The world has become a global village and transparency and accountability have become the twin pillars upon which it is being built. I have no doubt that the Nigerian church and its leadership as I know it has no problem with accountability and transparency as they comply with similar laws in Europe and the Western world at large, where they have churches. I believe that what those who have misgivings need is proper education by their lawyers. It would be instructive to hear from those opposed to the law to point out the material differences between the parallel laws in the UK and the US which they obey dutifully and CAMA that they are so venomously opposed to. This will help us to better appreciate their positions and ascertain if there are any marked differences in the laws. From my knowledge of those laws, there is no material difference with ours. Perhaps, they should also explain why they abide by the laws in those countries and do not want to in Nigeria.

NOW THE LAW HAS BEEN ENACTED, WHAT NEXT?

No matter what position we all take on the matter, the fact remains that it is now the law of our land and as law-abiding citizens, we have a civic duty to obey it with dire consequences for disobedience. This does not mean that we are all happy with it, but as I alluded to earlier in this write-up, objections to some of its provisions ought to have been taken long before now. But this does not mean that aggrieved parties are left without remedies. Firstly, they can approach the NASS for an amendment of the sections they are unhappy with. However, as previously articulated in this paper, it will be a difficult task in these circumstances to find justification to seek its removal from the law or, to have it expunged because one is unable to justify why a breach of it should not be punished, being what the Act seeks to prevent or punish as provided in Section 839 (1 & 2),

The only other remedy available to any organization that is unhappy with the law is to apply to de-register as a Not-For-Profit. Happily under the Act, it is not mandatory for an NGO such as a religious organization to be registered because under the Act, an organization can voluntarily choose not to register or opt out of registration and thereafter, government will not be able to regulate it. However, once it is de-registered, it loses all its privileges, including but not limited to its tax exempt status.

*SELF-REGULATION IS KEY:*
*I would like to end this write up with a word of admonition. The issue of regulating “Not-For-Profit” organizations is not new in Nigeria and the idea was first floated by the Jonathan administration, which was actually responsible for drafting the original provisions. I was privileged to have a copy of that draft law and I dare say that it was much more detailed and maybe, draconian than this abridged version. For instance, it proposed to limit the age of a serving General Overseer/Superintendent of a church to 70 years, which personally, I did not consider right, as such matters should be left for the particular organizations to determine in their respective Constitutions*.

There were other far-reaching provisions of that draft bill that I need not go into here.

*A few years ago, the Vice President delivered a paper to the Body of Senior Advocates of Nigeria (BOSAN) of which he is a member, on the occasion of our annual dinner in Lagos, the object of which was to challenge us to self-regulate. As a privileged group of lawyers my colleagues and I were thoroughly inspired and challenged by the speech. We all left the dinner seriously thinking how to heed the golden advice. He reviewed the history of the world’s leading monarchs and ruling classes, including the British and Dutch monarchs and noted that from their inception, they recognized that they are a privileged class of people. They also recognized that to continue to enjoy these privileges, they needed to self-regulate their behaviour in line with what is universally acceptable namely; that it must be accountable, transparent and that they must all be subject to the rule of laws like everyone else, failing which they stood the risk of losing their privileges*.

As the British monarch exemplifies the values of the British people, members of the family must at all times conduct themselves in a manner that is compatible with their status. The same goes for the political class all over the world or, should I say in civilized climes. Where a member of any ruling class behaves in a manner that is inconsistent with his status, such a person sticks out like sore thumbs and risks losing his privileged position in no time.

*Conclusion:*
*The time has come for the church to self-regulate its affairs by being accountable in matters of administration and finance, and to make the conduct of its business transparent, so that there would be no need to be regulated by government.*
More importantly, the government and other private institutions would look up to church organisations for leadership in the areas of accountability and transparency.
*Until that is done and seen to be done, any responsible government would consider it its duty to ensure that it runs, not like an independent association within the Republic, but as one that is subject to its laws.* For government not to wade in, in such circumstances, would be to invite every other interest group in the country to seek autonomy in it’s affairs within the State.
*The only plausible consequence, in such circumstances would be utter chaos.*

Meanwhile, a lawyer and legal adviser to the Lagos State chapter of Pentecostal Fellowship of Nigeria, Barrister Tomi Vincent had ‪on Tuesday January 30‬, said it is not compulsory for churches to register with Corporate Affairs Commission, pointing out however that if a church surrenders itself to the commission it must be ready to abide by all the dictates of the commission.

He made this remark at a programme organized by the Lagos Chapter of the PFN which held at the Jesus Evangelical Ministry off Allen Avenue, Lagos.

A tax consultant. Pastor Mrs. Yomi Adewale was also on hand to educate the pastors and founders of churches on their tax obligations.

Vincent who is known as the pastors’ lawyer said under the laws of Nigeria, people are free to gather and worship God the way they want. “there is no law that says you can’t gather and worship God. You are free to gather and serve God the way you want. But the moment you register your church with the CAC you cease to become independent in the sense that you become subject to the laws of the land.”

He said pastors should understand that they are no longer the owner of the church as it were, the moment they are registered with the CAC. “The moment you are registered you are no longer the owner of the ministry. The church is subject to the laws governing charity organisations. It is wrong for pastors to even think that government is victimizing the church because there are no separate laws for the church. It is the same law that governs non-governmental organizations that governs the church. So, if the church is a registered entity it must comply with all the laws of a registered entity.’

He said for instances, every registered entity with the CAC are expected to submit reports of their annual activity to the CAC. “If you have not been submitting reports of your annual activity to the CAC and you are a registered church organization you are running against the law of the land. You must submit annual reports and you are expected to comply with other directives like the payment of tax if your church is doing extra-church activities like school business etc.”

Bishop Sola Ore, PFN Chairman, Lagos Chapter

Vincent who took time to educate the pastors on the need to keep abreast of what the law says noted that many pastors over the years have been jailed due to their ignorance of the law. He brought newspaper clippings of reports on pastors who were jailed due to their ignorance pointing out that pastors should not be in a hurry to stand as surety for anybody especially for people they cannot vouch for. “the challenge is that the reputation of the pastor is always on the line so pastors need to be careful in making recommendations and signing as sureties for people. They should not be eager to give approval for business deals using their churches as platforms because when such deals fail they will be liable.”

One of the striking elements of Vincent’s presentation is the way churches handle the issue of trustees. He said, “When you are a trustee of a church you are not suppose to be paid from the church money. Trustees are expected to be people who hold an organization in trust. They are not entitled to anything from the organization. So, if you are a trustee of your church and you earn income from that church you are doing the wrong thing. One day the arms of the law will catch up with you.”

While urging the church leaders to put their house in order, he said, “Times have changed. That nothing is happening now does not mean something will not happen. It will come to a time that government will start investigating and ensuring that the laws of the land are complied with”

He stated that churches can run away from these trappings if they are just a gathering of people who come together to fellowship. “sometimes the urge to register is born out of the need to be able to open an account in the bank. I am aware that some banks now offer services for organisations that are not registered to open account. We can check with the banks. But the fact that we are registered makes us liable to government regulations.”

Pastor Adewale in her presentation took the pastors through the nitty gritty of tax stating emphatically that there is no law that says churches should pay tax. “Churches are not to pay tax but the pastors of the church who draw income from the church is expected to pay tax, his workers, I mean church workers who are paid salaries are expected to pay tax, the business arm of the church are also subject to tax. But the business of just gathering to worship God is not subject to tax. The government expects that the money that you raise in your church would be used to ensure the proper running of the church. But the moment the money is used for other purposes the law will come to play.”

She pleaded with the pastors to go for self-assessment before the ‪March 31‬ expiration date in order to avoid problem with government. “Before now, tax enforcers have been sleeping. But now they are awake and they are determined to bring to book any person that is defaulting in tax payment. We are expected to be law abiding and follow what the law says” she stated.

Adewale who is a marriage counsellor and Barrister Vincent took time to answer many questions bothering on tax payment, the modalities and laws governing non-governmental organisations. The Secretary of the PFN, Rev Toyin Kehinde promised at the event that the PFN would organize more of such forum to enlighten the pastors on the need to comply with government laws.

Earlier the chairman of the body, Bishop Sola Ore stated that the PFN is a law-abiding organization. “We are a law-abiding body. And we want every member of this body to be law abiding. It is wrong to claim you are being victimized when you fail to obey the law of the land. We are ready to fight for you if we know that you are unjustly being treated. But when it is clear that you are not obeying the laws of the land it will be difficult for us to fight for you. That is why we have to bring in experts to educate us on government regulations and the need to comply with them.”
*GOD BLESS NIGERIA*🇳🇬

August 29, 2020

101 24 minutes read