Background:
In this Briefing Note, we highlight, summarize and make relevant observations on the new provisions of the Companies and Allied Matters Act, 2020 (the Act) on Incorporated Trustees.
The Act:
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A. Highlights + Features:
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Title: |
Companies and Allied Matters Act, 2020. |
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Application |
All companies,
limited liability partnerships, limited partnerships, business names and
incorporated trustees registered under the Act, in Nigeria. |
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Relevant Sections: |
823 to 850 |
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Regulator: |
Nigeria’s Corporate Affairs Commission (CAC) |
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B. Summary of Relevant Provisions
on Incorporated Trustees: |
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S/N |
Heading |
Synopsis of
the Provision |
Reference |
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1. |
Related Associations |
An
Association may be treated as part of an already registered Association(s).
Associations with similar Trustees may also be treated as a single
Association. |
831
(i) and (ii) |
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2. |
Suspension or Removal of Trustees |
CAC may with the approval of the Minister of
Trade, through an order of Court, suspend or remove the Trustees of an
Association and appoint Interim Managers in the following instances: a) where there
is misconduct or mismanagement in the affairs of the Association; b) to protect
the property of the Association; c) in the
interest of the public; and d)
in the instance where fraud is committed in
the running of the affairs of the Association. |
839 (1),
(7)(a) and (11) |
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3. |
Procedure for Suspension of Trustees |
The
procedure for the suspension or removal of Trustees is as follows: a)
A petition to the relevant court by either of
CAC or one-fifth of the Members of the Association supported with reasonable
evidence. b)
Upon receipt of the petition with evidence,
the Court may give the following orders: i. suspend any
Member of the Association from office or employment for a period which will
not exceed 12 months from the date of the order; |
839 (2), (3), (4), (6), (7)(b) and (8) |
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ii.
replace removed Trustees or appoint
additional Trustees for the proper administration of the Association; iii.
vest any property held by or in trust for the
Association in the Official Custodian to be designated by the Court from time
to time; iv.
require a person vested with the property of
the Association to transfer same to the Official Custodian designated by the
Court; v.
appoint any person to transfer the
Association’s property to the Official Custodian; vi.
order any person or Trustee who holds
property for the Association not to part with it without the Court’s
approval; vii.
order a debtor of the Association not to
discharge its liability directly to the Association but to pay such debt into
an interest yielding account held by CAC for the benefit of the Association; viii.
restrict the transactions which may be
entered into or the nature or amount of payments to be made in the
Association’s administration without the Court’s approval; or ix.
appoint an Interim Manager as Receiver and
Manager of the Association’s property and affairs. c) The Court
shall stipulate the functions, powers and duties of the Interim Manager which
shall be performed to the exclusion of the Trustees, and under CAC’s
supervision. |
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4. |
Notification of Dormant Bank Accounts |
A bank is required to immediately notify CAC of any dormant accounts
held by or on behalf of an Association. Upon receipt of a notice, CAC may, with the
approval of the Minister of Trade, request the Association to provide
evidence of its activities. Where there is: (a) a failure of the
Association to respond satisfactorily within 15 days of the request; or (b)
CAC is unable to locate the Association or any of its Trustees, CAC may
dissolve the Association. CAC may further give direction to the bank to transfer the aggregate
amount, standing to the credit of the Association, to other specified
Association(s) after a written acceptance of such amount by that other
specified Association. Any amount
received by the Association must be received on the terms that: a) it will be
held and applied by the Association for the purposes of the Association; b)
it will not be subject to any restrictions on
expenditure; the receipt of any amount by the Trustee of an Association is a
complete discharge of the bank in respect of that amount. |
842
(1) to (6) |
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5. |
Re-activation of Dormant
Accounts |
A bank is
prohibited from re-activating a dormant account without first notifying CAC
if: a)
the account ceases to be dormant before any
transfer is made to other specified Association(s); b)
where CAC receives satisfactory account of
the activities of the Association. |
844 (1) and (2) |
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6. |
Bi-annual Statement of Affairs |
The Trustees of an Association are required
to submit a bi-annual statement of affairs to CAC in prescribed forms. Upon
failure to do so, every Trustee shall pay a penalty to be specified by CAC,
for every day in which the default continues. |
845 (1) and (2) |
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7. |
Accounting Records |
The
trustees of an Association are to keep accounting records which must show: a) the
transactions of the Association; b) the
financial position of the Association; c) assets and
liabilities of the Association; and d)
compliance with any of CAC’s regulations on
keeping accounts. |
846
(1) to (3) |
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8. |
Preservation of Accounting Records |
Accounting records of an Association are to be preserved for 6 (six) years from the date they are
made. |
847 |
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9. |
Filing of Annual Returns |
Annual
returns to be filed by an Association are to be accompanied by audited
financial statements. |
848
(2) |
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10. |
Merger of Associations |
Two or more Associations with similar aims
and objects may form a merger. |
849 |
For further information on the foregoing (none of which should be taken
as legal advice), please contact:
