A Cursory Glance at the Business Facilitation Act 2023

This era is the era of startups. And following the enactment of the Start Up Act 2022, which provides the legal and institutional framework for the development and operation of startups in Nigeria, positioning Nigerian startup ecosystem as the leading digital hub in Africa and fostering the development of technology-related talent in the country, the Nigerian government has not relented in providing enabling legal ecosystem for business enterprise through the instrumentality of its legislations.

Government policies and legislations are an important aspect of the economy. In this present era, no business can save themselves from the effect of government policies and legislations, as there is rarely any segment of business and commerce that is not affected by government policies.  The government as a business and economy facilitator is to also garner adequate supports to the businesses ecosystem by formulating business friendly policies capable of improving the performance of the businesses as well as the economy. The government also creates institutional apparatus for the implementation of the policies which protect the businesses and help them to grow further.

One of the impressive initiatives and significant milestones made by the Nigerian government, to boost ease of doing business in both public and private sectors and developing the country’s business environment, was the enactment of the Business Facilitation (Miscellaneous Provisions) Act,[1]  ‘the Act’ enacted by the National Assembly of the Federal Republic of Nigeria, with an essential mandate focused on delivering a climate for MSMEs (Micro, Small, and Medium Enterprises) and startups easier for them to start and grow their business.

The Act brought about remarkable digital government initiative that helps government use technology to simplify and automate public administration, make government services accessible online and from personal devices, boosting technology use in Ministries Departments and Agencies (MDAs).

The Act incorporated the essential provisions promoting accountability and transparency of government agencies and business operations. This is necessary acceding to the fact that, after creating legal reforms, such reforms could only be implemented and executed by civil servants. Hence, the Act addresses transparency and efficiency, the growth and scale which is geared towards taking care of poverty and by extension insecurity. The Act encourages government organisations to have their websites and input information relevant to the people they serve.

Through the instrumentality of the Act, the government has a legally binding agreement with the public, essentially detailing transparency processes, documentation, and timeline.

The objectives[2] of the Act are essentially to promote the ease of doing business in Nigeria, eliminate bottlenecks, and as an Omnibus Act, amending 21 business-related laws to remove bureaucratic constraints to doing business in Nigeria, and to institutionalise all the reforms to ease implementation. It would have been mostly difficult if not impossible to get to amend each of the relevant legislation that was amended by the Act. But the Act immensely reduced the rigorous process of amendment of the National Assembly, theAct which applies throughout the Federal Republic of Nigeria.[3]

MINISTRIES, DEPARTMENTS AND AGENCIES (MDAS) COMPLIANCE TO PUBLICATION: TRANSPARENCY REQUIREMENTS[4]

The Act mandates Ministries, Departments and Agencies (MDAs) of the Federal Government which provides products and services to publish a complete list of requirements, to include all processes, documents, fees, and timelines required for the processing of applications for the products and services to obtain the products and services. The products and services which include permits, licenses, waivers, tax related processes, filings, approvals, registration, certification, and other products and services, in accordance with the functions of the MDA.[5]

This publication is to be conspicuously published on the website of the relevant MDA within 21 days from the commencement of the Act, and the list of requirements is to be verified and kept up-to-date at all times. This leverages on the maximal use of information technology which enables business enterprise a click away to the relevant information essential to their business operations. The fact of which, the published list shall prevail in the event of a conflict between a published and an unpublished list of requirements.[6]

DEFAULT APPROVALS[7]

Another mandate required of the relevant MDAs is to communicate[8] approval or rejection of an application within the time stipulated in the published list, the implication of which, if and when the MDAs fail, would render all applications for products and services not concluded within the stipulated timeline be deemed approved and granted. Such an applicant whose application is deemed granted, on the expiration of the application timeline, is to notify the relevant MDA for the issuance of a certificate or document in evidence of the grant, and the MDA shall within 14 days, issue the certificate or document in evidence of thegrant.[9] This provision gives business enterprises timely deliverables on their application without unnecessary delay from the MDAs. Also, the notification given to the relevant MDAs on the expiration of the timelines, for all purposes shall be construed as a certificate or document in evidence of the grant. In essence, the Act provides for expedite application within stipulated timelines enabled by the service of ‘one government’,[10] which encourages collaboration between MDAs to process and deliver products and services to the public.

SERVICE LEVEL AGREEMENT

To process and deliver products and services to the public, the Act has also mandated that the MDAs shall have a service level agreement which shall provide for a list of products and services rendered;documentation requirements; timelines for processing applications; applicable fees; a summary of the procedure of application; redress mechanisms; and such other requirements as the MDA may consider necessary.[11]

The aim of the Service Level Agreement (SLA) which is to be published on the website of the MDAs, is to further gear each of the MDAs to having automated service, hosting their websites. Also, the SLA brings contractual obligation between the MDA and any applicant which becomes binding on the MDA in the processing of applications and sanctionable on the appropriate officer who fails to act within the timeline stipulated in the SLA, without lawful reason.

The provisions as to the SLA will in no minute way facilitate business applications and operations dealing with the various MDAs. Touting, which includes carrying out unlawful activity for personal gain has been prohibited in every port in Nigeria as well.[12]

CORPORATE REGISTRY MANDATE

The Registrar-General of the Corporate Registry in Nigeria, the Corporate Affairs Commission (CAC) among other amendments to its principal Act, the Companies and Allied Matters Act (CAMA), 2020, was also mandated to ensure that all application processes at the CAC are fully automated from the start to completion.[13]

THE OMNIBUS’ AMENDMENT

The Omnibus Act in its schedule set out the amendments made to the various legislations which will further influence business facilitation and the understanding of which business operators can harness to grow their business and level up to international best practice.

Increase in the issued share capital and allotment of new shares of such amount of a company having a share capital can now be either in its general meeting or by a resolution of the Board of Directors, subject to the condition or direction that may be imposed in the Articles or by the company in general meeting.[14] This amendment  gives room to Board of Directors to by its resolution increase the issued share capital of the company and allot same, provided that the powers to allot the shares of a company are not exercised by the directors of a company unless express authority to do so has been vested in the board of directors by the  company in a general meeting; or the company’s articles.[15]

Public companies are by the amendment of the Act, exempted from the mandate to first offer existing shareholders newly issued shares. The pre-emptive right of shareholders are only exclusive to shareholders of private companies.[16]

To further facilitate business operations, certificate of registration may be in physical or electronic form.[17]Business registration applicants are no longer in doubt whether electronic copies of certificate would suffice for registration with the Corporate Registry in Nigeria.

An instrument of transfer has been expressly provided for by the Act to enable the holder of any share of a company who wishes to transfer to any person only a part of the shares represented by one or more certificates. The instrument of transfer together with the relevant certificates including certificates issued in electronic form are then delivered to the company with a request that the instrument of transfer be recognised and registered.[18] This is an improved way of effecting transfer of shares without ambiguity.

In the initial phase, startups face many issues related to finance and technical knowledge. Hence, there is a great need to provide essential facilities, especially to young businesses. Therefore, as a firm passionate in Startup Advisory, relentless effort would continually be geared towards providing startups with the technical knowledge of harnessing the legal provisions and contributions. Startups and business operators are encouraged to make further consultations for ease of business. [19]

FOOTNOTES:

[1] 2022 Act No. 5

[2] S1 (1) of the Act.

[3] S2 of the Act.

[4] S3 of the Act.

[5] Ibid. 4

[6] S3 (5) of the Act.

[7] S4 of the Act.

[8] S 4 (2) of the Act further mandated the MDAs to have at least, two modes of communication the preferred modes of communication which shall be published on the website of the MDA.

[9] S4 (5) of the Act.

[10] S5 of the Act.

[11] S6 (1) of the Act.

[12] S7 of the Act.

[13] within 14 days of the commencement of the Act; S8 of the Act.

[14] No. 3 of the Schedule to the Act. S127 CAMA

[15] No.5 of the Schedule to the Act. S149 CAMA

[16] No.4 of the Schedule to the Act. S142 CAMA

[17] No. 7 of the Schedule to the Act. S171 (1) CAMA

[18] No. 8 of the Schedule to the Act. S181 (1) CAMA

[19] www.harlemsolicitors.com