“Section 692 of CAMA and the Corporate Affairs Commission’s Power to Strike Off Companies
On July 31, 2023, in accordance with section 692 (3) & 4 of the Companies and Allied Matters Act (CAMA), the Corporate Affairs Commission (CAC) released a list of 94,443 companies set for striking off from the Companies Register. Notably, Ibe Bookshop & Stationeries Nig Ltd and the others have a 90-day period to update their statutory filings at the CAC to avoid being delisted from the Register of Companies in Nigeria.
This publication has sparked concerns among company owners, as they worry about the possibility of their businesses being delisted for failure to meet statutory obligations. Although the released list is extensive, a discernable pattern emerges: the listed companies were incorporated between 1976 and 1991, indicating a failure to pay annual returns and update their records with the CAC for over 30 years.
Section 692(3) empowers the Commission to strike off a company’s name from the register if it believes the company is not operational for 10 years or hasn’t complied with the Act’s provisions for a consecutive decade.
Considering the mandatory provisions of CAMA, the critical question is whether the CAC adhered to the law while releasing the notice on July 31, 2023. The section clearly outlines that the CAC must publish the notice in three national daily newspapers.
While section 692(3) uses the term “may,” it doesn’t provide the Commission with discretion on whether to publish the names in newspapers. A holistic interpretation of the section emphasizes that the use of “may” conveys a mandatory requirement. This aligns with established legal principles, where the word “may” can carry a mandatory sense based on context.
Consequently, the Corporate Affairs Commission appears to have violated the law by publishing the names solely on its portal without adhering to the mandatory requirement of publishing in national newspapers. The provision also indicates that the names should be published within 90 days of the last publication, after which the Commission can strike off companies that don’t respond.
This situation is a wake-up call for companies that have neglected their statutory obligations. However, it is crucial for the Corporate Affairs Commission to follow the law’s due process in executing its responsibilities to prevent unnecessary litigation resulting from this initiative.”