The Corporate Affairs Commission (CAC) has issued new guidelines for recapitalising and merging banks and other financial institutions.
This announcement was made in a statement on its X page on Friday, July 26, 2024.
Recapitalization Process
Recapitalization involves restructuring a company’s debt and equity to stabilize its capital structure.
CAC’s Guidelines
The guidelines align with Section 8 (1) (e) of the Companies and Allied Matters Act (CAMA) No. 3 of 2020. This section grants CAC powers in business management, formation, and registration.
New Incorporation Requirements
For new incorporations, the following are required:
- Approved Name Reservation or Availability.
- Approval-in-Principle from the Sector Regulator.
- Duly completed online incorporation form.
- Payment of stamp duty and filing fees for the license category.
The CAC assures stakeholders that the certificate of incorporation will be issued within 24 hours if all requirements are met. Details are available on the Commission’s Operations Checklists at www.cac.gov.ng/resources.
Increase in Share Capital
For shares (private placements, rights issues, or offers for subscription), the following are needed:
- A duly signed company resolution and return of allotment.
- Statutory declaration by directors verifying that the issued share capital is fully paid-up.
- Notice that regulatory approval is required.
- Affidavit by a director affirming the need for regulatory approval.
- Amended memorandum of association reflecting the new share capital.
- Payment of stamp duties and filing fees.
- Issuance of a letter acknowledging the notice of increase and the regulatory approval requirement.
- Filing of regulatory approval.
- Issuance of a certificate of increase.
The CAC states that the notice indicating regulatory approval must be filed per Section 127 (3), (4) & (5) of CAMA. Annual returns and information on persons with significant control must also be up-to-date.
“The certificate of increase shall be issued within 24 hours of filing regulatory approval,” the CAC added.
Merger Requirements
For bank or financial institution mergers, the following are required:
- Each merging company duly signed a special resolution for the merger.
- The scheme of merger was approved by the Securities and Exchange Commission (SEC).
- Certified true copy (CTC) of the Court order authorizing each merging company’s Extraordinary General Meeting (EGM).
- 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 also states that annual returns and information on persons with significant control must be up-to-date.
For license authorization upgrades and downgrades, no consequential filing is required.
All inquiries and complaints regarding these guidelines and applications should be addressed to bankrecapitalization@cac.gov.ng or call +234 816 920 9551.
What You Should Know
This announcement follows the Central Bank of Nigeria (CBN) directing deposit money banks to expedite actions to increase their capital base to strengthen the financial system against potential risks.
CBN Governor Olayemi Cardoso emphasized this need during a press briefing after the 294th Monetary Policy Committee (MPC) meeting in Abuja on March 26, 2024.
In November 2023, Cardoso announced plans for a fresh round of banking recapitalization for Deposit Money Banks (DMBs) at the 58th Annual Bankers’ Dinner organized by the Chartered Institute of Bankers of Nigeria (CIBN).
Cardoso highlighted that President Bola Ahmed Tinubu set a target of achieving a $1 trillion GDP by 2030. Banks play a significant role in reaching this goal. Cardoso stressed the crucial need for banks to be recapitalized to fulfil the developmental role the apex bank anticipates over the next seven years.
