NewsOnline Nigeria reports that the Corporate Affairs Commission (CAC) has announced guidelines for the recapitalization and merger of banks and other financial institutions, among other matters.
This was disclosed in a statement posted on its X page on Friday, July 26, 2024.
Recapitalization is the process of restructuring an institution’s debt and equity mixture in a bid to stabilize its capital structure.
The CAC states 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.
This section relates to CAC’s powers in business management, formation, and registration.
New Incorporation
For new incorporation, the following are required:
NewsOnline Nigeria reports that 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 at www.cac.gov.ng/resources.
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:
Regarding shares, the CAC stated that the notice indicating that regulatory approval is required must be filed in accordance with Section 127 (3), (4) & (5) of CAMA.
It added that 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.
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.
Other required documents are:
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 tobankrecapitalization@cac.gov.ng or call +234 816 920 9551,” it stated.
NewsOnline Nigeria reports that 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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