President Muhammadu Buhari on August 7, 2020, assented to the Companies and Allied Matters Act, 2020 ("CAMA 2020" or "the New Act3"), which repeals and replaces the Companies and Allied Matters Act, 19904 (the "Repealed Act"). CAMA 2020 reflects a myriad of commendable amendments and introduces new provisions arguably more fitting for contemporary business and insolvency practices5.
It substantially extinguishes some bottlenecks contained in the Repealed Act. For instance, it abolished the compulsory requirement for the use of common seal by companies6; significantly reduced filing fees for the registration of charges7; exempts Private Limited Liability Companies from the mandatory appointment of Company Secretary8; provided alternatives for rescue of Insolvent Companies from distress and liquidation through Voluntary Arrangements and Administration9; extension of mergers beyond Limited Liability Companies(LLCs) to Incorporated Trustees10; to mention a few11.
In the context of Insolvency & Restructuring practice captured by Chapters 17 to 28 of Part B of CAMA 2020, there is one vital area of strong gap in the law which has been addressed12 although paradoxically under a Chapter 26 titled "Miscellaneous Provisions applying to companies which are insolvent", and that is the issue of regulation of insolvency practice and practitioners.
This article involves a critical review and analysis of this new regulatory framework for the Insolvency profession and practice.
Part 1- the Pre CAMA 2020 position
No proper regulation
Prior to the passage of the CAMA 2020, there were virtually no provisions in the previous law adequately addressing the issue of regulation of Insolvency Practitioners ("IP") in Nigeria as is obtainable in so many other jurisdictions. For instance, the United Kingdom pursuant to the Insolvency Act, 1986 ("UK Insolvency Act')13 contains key provisions on the meaning of IPs, qualification, standards, duties, obligations and rights, scope of practice, recognition and authorization of IPs, etc.
Existing CAMA had virtually no framework for regulation of Insolvency Professionals (hereafter IPs) and Insolvency practice. It had no working definition or description of who an insolvency is, his expected level of competence and skills in terms of education, training and qualifications, his standards, ethics, responsibilities, subjection to proper regulatory oversight et al, albeit it would usually describe some powers and corresponding duties of some IP offices. The result of this state of uncertainty and lack of regulation is that virtually any person, irrespective of literacy and competence could be appointed in the different offices of Insolvency Practitioners then available. In practice, debt recovery agents, receivers and financial consultants/advisers of all sorts as it were would typically lay claim to such offices, as the law generally provided only a requirement of general legal capacity14.
Specifically, prior to CAMA 2020, existing CAMA makes a few provisions only with regards to powers/duties of certain offices of IPs but failed to properly regulate qualification, standards, competence, discipline, etc of the profession to curb incidences of fraud/defalcation or incompetence and mismanagement notwithstanding that best practice requires that every IP stand as a fiduciary of the insolvent company whose assets it is entitled to deal with as deemed fit for a reorganization or liquidation purpose15.
Furthermore, eligibility to act as an IP was basically framed by the law in terms of disqualification rather than qualification such that for example, under Ss.387 to 389 CAMA, appointment of a receiver is made having regard to the basic considerations that he a) had no legal incapacitation (infancy or judicial acknowledgment of lunacy), and had no integrity16 or conflict of interest17 issues.
Accordingly, the position pre CAMA 2020 may be rightly assessed as not having addressed critical aspects of regulation of the profession and practice of insolvency.
Justification for regulation
Several provisions of the 1999 Constitution of the Federal republic of Nigeria (CFRN) as amended provide a constitutional and legal justification for regulation of the most fundamental of individual rights and by extension the regulation of appointment, standards, duties, responsibilities and powers of an IP to avoid the popular truism that power (in this case to deal with the assets of a company arbitrarily or for self-gratification) corrupts, and absolute power corrupts absolutely.
Sections 4, 11 and 45 of the 1999 CFRN clearly provide for curtailment of any type of right by the National Assembly -inclusive in this instance of right to appoint or act as an IP- for reasons that may be reasonably justifiable for a democratic society, e.g. public policy, health, security, order, etc18. It is understood generally that any type of rights, including fundamental individual rights if left unchecked or unregulated would occasion harm and anarchy in society. Also, the 1999 CFRN under item 49 of Schedule 2 (Exclusive Legislative List) made pursuant to S.4 of the CFRN mandates the national legislator to make laws for the regulation of professional occupations.
It becomes clear therefore that -like for any other profession such as medicine, law, engineering, architecture and indeed insolvency and restructuring- it is vital for a law such as CAMA to regulate the profession and practice of insolvency.
Regulation: a new normal?
CAMA 2020 brings in a new framework for regulation which is intended to bring the profession and practice up to speed with current global best practices and assuage some of the lacunas and shortcomings in CAMA 2004 earlier briefly presented. However, by reason of some little unclarities and a few inconsistencies in this Chapter and some parts of the Act, this strong attempt at regulation is not in itself without a couple of its own challenges as we shall analyze below.
Part 2: Analysis of the dynamics for regulation under CAMA 2020
The Starting Point: description of IP by reference to Insolvency offices
The New Act and its framework for regulation of IPs begins with a description in Section 704 CAMA 2020: Essentially, an Insolvency Practitioner is described as including one who acts in relation to a company in the capacity of either liquidator, provisional liquidator or official receiver; administrator or administrative receiver; or receiver and manager, or as nominee or supervisor of a company's voluntary arrangement.
Whilst this seems to echo the provision of Section 388 of the UK Insolvency Act (hereafter UK IA or IA) of 1986 as amended19, it differs in some respect by its lack of specificity, inclusive or exclusive qualification as the case may be.
The Nigerian descriptive provision does not include a receiver in the description of a person appointed to act as an IP. Unfortunately, its interpretation section defines a receiver as including a manager, meaning a receiver and manager, creating a little bit of uncertainty as these two offices (i.e. Receiver v Receiver and Manager) are not quite co-terminus.
Section 388 UK IA defined an IP as any person acting in the capacity of a (provisional) liquidator, an administrative receiver, an administrator, a nominee or supervisor of a CVA but not a receiver appointed under a fixed charge or the official receiver. In other words, the UK provision does not accommodate in its definition either a receiver or a receiver and manager, but only an administrative receiver, which term is also accommodated by the Nigerian provision.
It would seem that in line with international best practices that UK Insolvency law clearly differentiates between offices of Insolvency Practitioners and that of private/debt recovery agents for secured creditors. The UK IA also differentiates between IPs and court officials occupying what is understood as an insolvency office. The UK statutory description also makes a difference between collective procedures or proceedings and non-collective procedures/proceedings, such that its description of insolvency office holders is by reference to (private) persons appointed in the context of an administrative or out of court or in court arrangement and procedure involving different categories of creditors or the whole body of creditors of a company would be involved and or ranked at varying degrees.
For this reason, an official receiver, being usually and naturally a court official (the Deputy Chief Registrar or the sheriff of court20 in Nigeria) is not considered to be a person acting as an Insolvency Practitioner under UK Insolvency Law. In the same vein, a receiver appointed under a fixed charge is not to be considered as an Insolvency Practitioner.
Unclarities about the Official Receiver under the new CAMA
Before analyzing further on the propriety of considering an Official Receiver as an IP, it is pertinent to note that the position in the new law in this regard is not new but a retainer of the slightly conflicting approach created by definition sections of the 2004 CAMA21 in terms of definition of who an official receiver is.
Just like CAMA 2004, whilst Section 582 CAMA 2020 defines him/her under provisions in relation to winding up by the court as "the Deputy Chief Registrar of the Federal High Court or an officer designated for that purpose by the Chief Judge of the Court", Section 868, being the general interpretation section of CAMA 2020 defines him as "the officer by whatever name called or known charged with control of affairs in bankruptcy and if the appointment is vacant for any reason whatsoever, means the sheriff".
It is speculated that the language of bankruptcy used (which relates in Nigeria to personal or individual insolvency) might be as a result of an import by reference of the prominent notion and role played by such an official in individual insolvency in the extant Bankruptcy Act22. This is because Sections 582 and 600 CAMA 2020 which deal with the role of an Official Receiver and the power of debenture holders to appoint him as a receiver for and on their behalf are all provisions which are dealing with this office in the context of a winding up by the court. Section 868 stands out oddly since it deals with affairs in bankruptcy and does not refer even to companies. It also does not relate with any substantive provision in the Act which deals with the office of an Official receiver, which office always makes reference to a court official and winding up
Furthermore, conceptually, to the extent that there is nothing that bars debenture holders23 from an out of court appointment of an official receiver as a receiver in the context of a receivership (see also Chapter 19 CAMA 2020), another interpretation -which is intended to reconcile the two offices of court officials mentioned by the two CAMA 2020 provisions cited above- may be to view the general definition under Section 868 as being applicable to such instances not covered by the specific definition of the office of an official receiver in a winding up by the Court under Sections 551, 582 and 600.
In that case, it is opined that the definition provided by Section 868 would become applicable to an out of court appointment of an official receiver by any secured creditor inclusive of mortgagees, debenture or charge holders or the power of a Federal or State High or even an appellate court to appoint a sheriff as an official receiver in pursuance to judgment relating to enforcement of such private secured right or enforcement of a bankruptcy proceeding.
This proposed interpretation of various provisions such as Sections 551, 582, 600 and 868 would make for a more harmonious interpretation particularly since Section 94 (m) empowers the Chief Judge to make rules for the appointment of receivers and managers for attached or sequestrated properties under the Sheriffs & Civil Process Act Cap. 407, LFN, 199024 which is a statute dealing with enforcement of judgment.
Another alternative interpretation of course may also be to circumscribe this broad definition to a residual and very limited interpretation which arises only where there is a vacancy in the office of an official receiver under the Act.
A final interpretation is to assume that this is a mistake arising from the legislative draft process and review of the final text of the law.
Whether an Official Receiver should be an IP
Historically, the office of official receiver (both in the UK and in Nigeria) is to assist the court in receiving statement of affairs and reports, taking inventories, conducting certain investigations at the behest or on behalf of the court including on the basis of an application to the court. This can be done in the context of a receivership by the court or in a winding up by the court.
To that extent, it may be argued that an official receiver does not really act as an Insolvency Practitioner particularly when considering that every other offices identified by the UK Insolvency Act relates to non-court officials but private practitioners and professionals who engage in dealing with the assets of the insolvent company either in the context of a collective form of reorganization or liquidation of such assets for the purpose of a redistribution of rights or proceeds to a body of creditors. This approach accords also with international definition of insolvency proceedings under international instruments such as the Cross-Border Insolvency Model Law25.
However, this may be debated and ascribed to peculiarities of the Nigerian Insolvency terrain26. It may be argued that an Official receiver- though a court official- certainly occupies an insolvency office which relates to a clearly recognized collective procedure, namely winding up proceedings under the outgoing or incoming law.
It may also be argued that in the context of Individual Insolvency (i.e. bankruptcy proceedings under the extant Nigerian law), he occupies and plays a vital, active and unavoidable role throughout the entire process of bankruptcy proceedings alongside a trustee in bankruptcy.
In South Africa, where the Official Receiver is described as a Master, his office and highly trained and capable staff specializes in administration of insolvent estates, companies, close corporation and trusts, and interacts constantly with solicitors and attorneys27. He also regulates liquidators.
However, speaking from the perspective of qualifications, competences and high standards and requirements for the purpose of acting as an IP, the same cannot be said about the competences and skills of these court officials in the area of insolvency practice.
The office of an Official Receiver in Nigeria is certainly (at least for now) ill equipped both in terms of staffing and requisite knowledge/skills.
The challenge in our view is therefore in terms of capacity, staffing and competence of this office: otherwise, this office should have been excluded or outsourced to private and properly trained IPs who would be so identified and designated by the Chief Judge through Rules or Practice Directions and the office of the DCR would then act in an administrative coordinating function. The new law certainly insists on qualification, education, training and certification and implies that court officials who may occupy this office must meet up the regulatory conditions arising from the new law.
A Receiver of a fixed charge should not be described as an Insolvency Practitioner
Whereas the UK provision it borrows from is quite clear and leaves no room for ambiguity, Section 704 CAMA 2020 does not meet up with this standard to the extent that the combined provisions of Sections 868 and 704 regrettably seems to incorporate the appointment of receivers, and that of receivers and managers into persons qualified to act as Insolvency Practitioners.
This unfortunately cannot be supported by insolvency principles and the interact between Insolvency Law and the law of Secured Credit.
Receivers are typically appointed out of court by the debenture or charge holders, whether fixed or floating, with a view to realizing such assets provided as security. Where the charge is a fixed charge, this leads the charge holder to appoint a person as a receiver only. But where the security is a floating security or fixed and floating charge or debenture, then the appointment may be both as receiver and manager over the company and all its assets and undertaking to enable the appointee beneficially manage the company and either resolve the indebtedness through an administration of the business of the company under the stewardship of the receiver and manager, or realize the assets in the best manner possible for the company as a going concern and for all the other stakeholders, inclusive of the receiver and manager's appointors28. A receiver and manager is held to the same type of standard of fiduciary obligations imposed on directors in dealing with the assets of the company, running it beneficially as a going concerning and generally acting in the best interests of the company29.
Furthermore, Receivers simpliciter appointed by the court in its equitable jurisdiction historically were so appointed by the court on its own or upon application by a claimant or creditor to preserve dissipation of assets or to assist the receiver collect the proceeds of a property for the benefit of a private party.
Thus, it has been said that in receivership and managership cases, a decision to continue trade or to realize the assets (and if so which asset is to be realized) must be based on a Plan by a professional: otherwise a decision not to continue trading may amount to a breach of duty of care owed the company30.
It follows that neither an out of court or in court appointment of a receiver simpliciter is a collective insolvency proceeding or procedure.
Furthermore, except for the holders of a fixed charge, receivership was essentially abolished in the UK and replaced by administrative receivership for holders of floating charges who were only allowed to appoint administrative receivers31 or administrators. Put in another way, what is understood as receivership and managership in Nigeria was converted into administrative receivership in the UK32 and imposes the same duties on an administrative receiver as much as it does to an administrator in terms of insolvency principles and rules33.
The new CAMA 2020 appears to tow that line with its general acceptance and novel introduction of the term administrative receiver into general Nigerian Insolvency Law and in its various provisions which clearly point to a bias towards collective procedures and a business rescue approach34
In Nigeria, prior to CAMA 2020, the concept of administrative receivership was more specifically introduced with the special regime created under the AMCON (Amendment) Act 201535, and involved an administration, possible reorganization and rescue attempt and engagement with the body of creditors of the company with due regard to priority of ranking of claims, subject to the specificity and peculiarities inherent to this special regime aimed at supporting bank non-performing assets management.
Prior to the above special law and till the new law, the appointment of receivers and managers has been for improved options for private debt recovery purpose (albeit such office holder duty ought to act in the best interest of and be the agent of the company36, as is the case for Administrators37). In practice, the receiver and manager usually had no engagement with other creditors of the company and focused only on satisfaction of the debt owed to his appointors, including usual piecemeal assets sale.
It is therefore unfortunate and potentially ambiguous to have identified pure receivership (indirectly in Section 868), and receivership and managership (directly) as being a performance in the office of an Insolvency Practitioner, particularly with the acceptance of the concept of administrative receivership.
Qualification to act as an IP
The New Act proceeded to spell out the necessary qualifications38 required to practice as an IP; which provisions are rather a departure of the approach under section 390 of the UK Insolvency Act (UK IA) which it borrows some leaves from.
First, both agree -although implied in the language of Section 705 CAMA 2020- that only an individual, as opposed to a corporate body, is entitled and qualified to act as an IP39.
However, whereas Section 705 creates only a single source of regulation through the Corporate Affairs Commission (hereafter CAC), Section 390 (2) of UK IA has a bifurcated model such that a person is qualified to act as an IP either through authorization of recognized professional bodies40 or through authorization by the Secretary of State or a competent authority41, but overall power of recognition of the professional bodies lies ultimately with the Secretary of State.
The UK IA also makes provisions relating to partial authorization of IPs to act (either in relation to companies or individuals) and full authorization to act (in relation to companies, individuals and insolvent partnerships). However, unlike the UK IA, CAMA 2020 does not provide for such distinction - meaning that qualification to practice as an IP in Nigeria is akin to full authorization within the meaning of the UK Insolvency Act42.
Analysis of the conditions for qualification
The Corporate Affairs Commission is empowered by the Act to regulate practice as an IP, and Sections 705 to 707 appears to lay out detailed but arguably inconsistent43 and possibly draconian44 conditions in terms of the model of regulation adopted.
There are four conditions which appear to be cumulative45 and they address issues in relation to education, professional certification/licensing, experience, and regulation/authorisation.
Section 705 CAMA 2020 envisages that for a person to qualify as an Insolvency Practitioner under CAMA 2020; he must have (a) obtained a degree in law, accountancy or any of the disciplined named therein; (b) possessed at least 5 years of post-qualification experience in matters relating to insolvency; (c) is authorized by virtue of his certified membership of the Business Recovery and Insolvency Practitioners Association of Nigeria(BRIPAN) or any such body recognized by the Commission and (d) holds an authorization granted by the Commission.
Whilst the educational and professional certification requirements are quite laudable, it is opined that post qualification experience condition was not properly articulated, as is the case in other jurisdictions. Doubtless experience is as important as knowledge and competence or integrity, however this requirement ought to have been laid out in terms of graduation of the level of insolvency related work and office that may be held. For instance, in South Africa46, the Nigerian CAC equivalent known as the Companies and Intellectual Property Commission (CIPC) regulates the insolvency profession and particularly the Business Rescue Practitioners. The regulations provide for a stratification of those qualified to practice with a recognition of both the need for qualification beyond an average businessperson, and the need for some reasonable level of experience for related insolvency work. Thus, a qualified BRP would qualify as a junior BRP if he or she is less than 5 years' experience post qualification experience and would be authorized to act only for MSMEs, an experienced BRP would be between 5-10 years' experience is authorized to act for medium enterprises with a substantial turnover level, whilst a Senior BRP is one above 10 years' experience who is authorized to act as BRP for big major corporates.
Although not yet gazetted, and despite the repeal and savings provision of section 869 CAMA 202047, another important consideration is that there does not seem to be any robust transitional or period or continuance provisions for things commenced prior to the law allowing for the provisions of the new CAMA to take effect in an orderly manner, at least particularly in relation to Insolvency profession, practice and regulation48. It must be remembered that typically, the position pre CAMA 2020 features persons practicing and holding offices without any educational, licensing, experiential and authorization requirements and yet no special provision was enacted to manage and deal with same. Continuance is only mentioned under Section 869(3) CAMA 2020 for inspection activities of CAC officials.
This is contrast to the UK IA from which the new law borrows some leaves: Section 437 UK IA and Schedule 11 thereof deals with transitional provisions and savings such that it allows for continuance for already commenced procedures or proceedings, and activities by IPs prior to the Act. It would therefore be advisable that a good transition period be provided as commencement date at the point of gazetting of the law or/and that the CAC immediately takes steps via subsidiary rule-making to clarify a transitional period to onboard existing practitioners in terms of authorization and endorsement of existing cases being handled.
Even South Africa's Companies Act of 2008 which ushered a reform of the existing insolvency regime did not come into force until May 2011.
Recognition & Regulation
The recognition of BRIPAN by the New Act as one of the professional bodies that grants qualification to IPs may not have come as a surprise to Insolvency Professionals and stakeholders as BRIPAN49 in conjunction with its national body - INSOL and the World Bank have been at the forefront of advocacy in the area of insolvency law for the past decade, championing legislative reform and the cause for the development of the practice of insolvency in Nigeria in line with global best practices, and organizes regular and continuous trainings and conferences for substantive and aspirants Insolvency Professionals and judicial officers alike.
The New CAMA in sections 706 empowers the CAC ("the Commission") with authority to confer recognition on a professional body where such a body regulates the practice of a profession, maintains and enforces rules for securing that its members are (a) permitted to act as IPs; (b) fit and proper persons; and (c) meet acceptable requirements as to education, practical training and experience as well as revoke such recognition where the professional body no longer upholds the foregoing requirements in the eyes of the Commission50.
It is pertinent to note that whilst the new Law gives recognition to the role of certain professional bodies now or in the future, it does not give them the power to authorize persons to act as IP notwithstanding the misleading use of the word authorization in Section 705 (c) under the condition in relation to certification by a recognized professional body (RPB). The power to authorize rests solely in the Corporate Affairs Commission.
The above clarification speaks to some misapprehension which has arisen in relation to the express recognition of BRIPAN as a RPB51: there is nothing unusual about recognition of professional bodies and allowing them to wholly or partly participate in regulation of a certain sector. As earlier mentioned, the UK model of insolvency recognizes sever (7) professional bodies comprising essentially of the Insolvency Professional Association (IPA)52 and legal and accounting professional associations: they are given the powers to authorize their professional members to act as IP provided they scale through the educational and professional standards of their professional body. The South African framework on the other hand initially recognized three (3) professional bodies for purpose of certification and authorization to practice as BRP53 and has as at 2018 extended this to 12 RPBs54. However, the UK model is not the same as the Nigerian model which is more similar to the South African model, as we shall analyze further below.
Furthermore, it is not unusual for various statutes to recognize certain professional and self-regulatory bodies whilst dealing with regulation of a sector or profession55. Indeed, typically, many history of regulation show a progression from self-regulation to statutory regulation and onboarding of SROs by a regulator: this has been the case in the area of Advertising with the APCON Act56, capital market with the Investments & Securities Act, legal profession with a plethora of statutes recognizing participation of the professional bodies in the government's path of regulation of a profession.
There are those whose school of thought is to compare and conclude that the provisions of Sections 705 and 706 CAMA on recognition and authorization are similar but more stringent than those provided for in Section 391 (4) of the UK IA. The argument is that to extent that the CAC assumes similar functions as the UK Secretary of States (as both receive applications for individual recognition and authorization, and applications for recognition of the "professional bodies57") the role is similar if not identical. Because, the Commission in Nigeria is also saddled with dual portfolio - to wit; a) conferring recognition on a professional body and receiving applications for authorization to act as Insolvency Practitioners58; b) granting an application for authorisation duly made in accordance with the provisions of the Act where the individual Applicant is fit and proper and complies with the Section 705 requirements59.
But the issue is that the UK framework creates two alternative sources of authorization whilst the Nigerian model does not create a double source of authorization but only a single one by and through the CAC.
This misapprehension of the model of regulation through a single -and not a double -point of authorization adopted by Nigeria has led to an erroneous interpretation on the issue of authorization and recognition such that a school of thought seeks to interpret this to mean that there are two levels of authorizations and finds an artificial contrast or inconsistency as the case may be between S705 (1)(c) of the New Act (which used the word "authorisation" in relation to membership in the RPB) and S707 (1)(c) which also requires authorization by CAC on the condition that an application for authorisation to act as an IP shall be "accompanied by a certificate of membership issued by BRIPAN or any other professional body approved by the Commission".
A combined and harmonious -rather than an isolated- reading of these sections benchmarked further against the provision of Section 708(2)(b) shows very clearly that conditions for qualifications and recognition are cumulative but authorization only lies in the CAC: a RPB member and particularly a member of BRIPAN only has an automatic recognition but does not have an automatic authorization. He or she must satisfy all the other cumulative conditions clearly outlined by Sections 705 (cumulative individual qualification requirements), 706 (CAC recognized body, and for the moment BRIPAN), 707 (individual authorization for Section 705 compliant applicant who pays prescribed fees) and 708(2) (confirmation of basis of individual authorization being a Section 705 compliant applicant and a fit and proper person).
As it is always the argument that adoption of foreign practices or provisions in legislations should be adapted to suit the peculiarities of the local terrain, it may be argued that the model adopted by Nigeria is unique to Nigeria such that all of the provisions under reference allow only a single point of authorization to practice60. The goal apparently may be to curtail quackery and defalcation, particularly since certain professions (Legal & Accounting) and one professional body (BRIPAN) are duly recognized by the law.
Finally, it is important to point out that the Commission's power to authorize, refuse or withdraw an authorisation to practice as IP is not final nor absolute but accommodates a process of appeal and review of the Commission's decision by the Federal High Court. Consequently, upon notification of the affected party in writing (with reasons thereof) within seven days of such refusal or withdrawal of authorisation, the affected person retains its rights to apply to the Federal High Court within 21 days of receipt of notification by the Commission for a review of the Commission's decision and the Court, upon hearing the summons, may refuse or grant the summons on such terms as it deems fit61. An Appeal from the decision of the Federal High Court lies to the Court of Appeal which is the final arbiter in relation to refusal or withdrawal of authorisation.
It is safe to conclude that despite some of the shortcomings identified above, the provisions of the CAMA 2020 relating to regulation of IPs is a welcome development and one that is long overdue in the Nigerian Insolvency Jurisprudence.
Chapter 26 of CAMA has dealt extensively with a substantive and not a miscellany issue of regulation of the Insolvency Profession notwithstanding the header of Chapter 26 and offers tremendous opportunities to complement the practice of insolvency with sound professionalism.
A lot of work remains to be done now that the regulatory stage has been set, particularly with the absence of transitional provisions.
It is expected that BRIPAN and other professional bodies would engage the Government and the Corporate Affairs Commission to ensure a smooth transition into a more structured environment which would give confidence to investors and boost ease of doing business in Nigeria.
1. Partner and Head of Insolvency and Training/Special Projects Practice Groups, PUNUKA Attorneys & Solicitors
2. Associate and Member Insolvency Practice Group, PUNUKA Attorneys & Solicitors
3. This paper acknowledges that the Act is yet to be officially enforceable, same not having yet been published in Government Official Gazette.
4. (Cited as Cap. C20, LFN 2004)
5. It is to be noted however that the assenting of this legislation into law has also not been devoid of controversy. Recently, the social media has been agog with rumours of nepotism and abuse of government power in relation to same: see at https://newswirengr.com/2020/08/16/state-theft-cronyism-and-civil-right-violations-inside-the-hidden-horrors-of-the-cama-2020-bill/
6. S.98 CAMA 2020
7. S.223(12) CAMA 2020
8. S.330 CAMA 2020
9. S.434-549; 718-721 CAMA 2020
10. S.849 CAMA 2020
11. Please see Punuka Attorneys & Solicitors update on the New CAMA at https://punuka.com/get-to-know-the-new-companies-and-allied-matters-actcama-2020/
12. Before now, insolvency practice and regulation in Nigeria has been as result of self-policing with the Business Recovery & Insolvency Professionals Association of Nigeria (BRIPAN), a Self-Regulatory Organization founded in 1994 as IPAN (Insolvency Professionals Association of Nigeria) and as Company Limited by Guarantee for education and professional purpose only, and not for profit making.
13. Part XIII Insolvency Practitioners and their Qualification
14. See for instance S 387 (Receivership), and Section 509 (Liquidation) of CAMA 2004
15. S390 (2) (a) of CAMA 2004
16. Conviction for an offence involving fraud, dishonesty or corruption. Please see additionally Ss. 254 and 506 CAMA
17. No director or auditor of the company can be appointed, being an insider of the company.
18. See Osawe v Registrar, Trade Unions (1985) 1 NWLR [Pt.4] 755.
19. The UK enacted a new Corporate Insolvency and Governance Act on the 26th June, 2020 in respect to the COVID 19 pandemic which incorporates new restructuring provisions and options in some parts of the IA 1986 and provides for a more debtor friendly regime and new standalone moratorium scheme amongst other reforms
20. See Sections 582 and 868 CAMA 2020 on definition of an official receiver
21. Please see Sections 419 and 567 CAMA 2004
22. Please see S6 of the Bankruptcy Act B2, LFN 2004. Note however that there is an extant Bankruptcy and Insolvency Bill (BIB) yet to be passed but seeking to repeal the Bankruptcy Act, with provisions relating to individual insolvency, some aspects of corporate insolvency, rehabilitation of an insolvent debtor, the creation of the office of supervisor of insolvency, cross-border insolvency recognition and enforcement, as well as other connected matters
23. Whether under the existing or incoming law
24. Albeit Section 667 CAMA 2020 dealing with duties of sheriffs in relation to execution on goods and notice of appointment of administrator/liquidator may lead to an arguable contention that such an attempt at harmonious interpretation remains a bit odd.
25. https://www.uncitral.org/pdf/english/texts/insolven/1997-Model-Law-Insol-2013-Guide-Enactment-e.pdf; UNCITRAL Model Law was incorporated into UK law, with only minor amendments, by the Cross-Border Insolvency Regulations 2006 SI 2006/1030 (CBIR)
26. Particularly when in any case, the new Insolvency framework remains territorial and does not incorporate any rules on resolution on cross border insolvency proceedings.
28. Please see S553 New CAMA. See also S35 of the UK Inslovency Act.
29. Please see Section 390(1)&(2) of outgoing law and Section 553 (1) and (2) of Incoming law and the Common Law jurisprudence in this regard
30. Hubert Picarda, the Law relating to receivers, managers and administrators, 3rd Ed. p 131
31. Section 42(2)(b) UK IA 1986
32. Please see Section 29(2)(b) UK IA 1986 as amended
33. Please see Schedule 1 of Part XIX UK IA 1986
34. Please see S452 (4) of the New CAMA
35. Please see S6 AMCON (Amendment) Act 2015
36. S390 (1) of CAMA 2004
37. See Section 506 CAMA 2020
38. Section 705 CAMA 2020
39. Please compare Section 390(1) UK IA
40. See also section 391 UK IA. There are 7 recognized professional bodies in UK which include the Law Society, Solicitors Regulatory Authority, Insolvency Practitioners Association and various Chartered Accountants professional bodies
41. See section 392 and 393
42. Please see S705 (1) (d)
43. Section 868 being the Interpretation Section of CAMA 2020 defines an IP by reference to membership in the legal or accounting profession. It is our view that the substantive and specific provisions of Sections 705 to 707 will prevail against the broad definition. Secondly, it can be argued that the interpretation section does not deal with what qualifies such a professional to act as an IP under the new law.
44. By deferring to education and certification by recognized professional bodies who naturally have high standards of ethics, professional rules of practice and disciplinary mechanisms for defalcation and yet paradoxically insisting on an independent and potentially arbitrary exercise of discretion by CAC before authorization is given. Contrast the UK regime which defers to authorization given by recognized professional bodies or alternatively the Secretary of State based on an examination, without prejudice to overall oversight of the Secretary of State.
45. Although the word "or" or "and" is missing in Section 705 (a), (b), and (c) Section 706(2) (b) puts this interpretation beyond dispute as it repeats these conditions cumulatively as sine qua none for authorization by CAC.
46. Please see Chapter 6 of the Companies Act (No. 71 of 2008) which came into effect In May 2011.
47. Section 869 is a statement of repeal of all previous laws with immediate effect howsoever that it seeks to preserve various instruments, orders or resolutions made before the Commencement of the new Law. It however has no real transitional provisions to deal with various issues, and particularly in terms of IP regulations
48. Please see section 869, 630
49. BRIPAN is a non-profit organization and a body of professionals involved in business recovery and insolvency practice, founded on 17 June 1994. It has the objective of promoting best practices for its members handling financially troubled individuals and businesses and its services include- Training, Advisory and Consultancy; https://www.insol.org/ma-profile/7
50. S706 (1, 2 & 4) of the New CAMA
51.There has been a recent buzz on social media regarding so many perceived misgivings against the new CAMA and alleged conversion of CAC into a monster of a regulator. BRIPAN was also alleged to have been a private and seemingly profit oriented organization that was smuggled into the Act to as it were "fleece" the masses alongside.. Please see https://twitter.com/haroldwrites/status/1293610910435680258?s=08.
52. It is pertinent to note that BRIPAN was initially incorporated as a non profit organization and a Company Ltd by Gte known as IPAN, taking a cue from the name of the UK IPA which was formed in 1961, became incorporated in 1973 and gained statutory recognition under the UK IA 1986. Please see https://en.wikipedia.org/wiki/Insolvency_Practitioners_Association
53. They include the South African Rescue & Insolvency Practitioners Association (SARIPA) and the Turnaround Management Association (TMA-SA)
55. Idigbe A. MBA Thesis on The Role of Resources and Organisation in Determination of Advertising Policy 1997 ESUT
56. In Nigeria, growth of advertising was firstly policed by the following associations NPAN (Newspapers Proprietors Association of Nigeria), and the then AAPN (Association of Advertising Practitioners of Nigeria). These two major associations in the late 70's assisted with the setting up of standards in the industry and influenced government in statutory regulation giving birth to the Advertising Practitioners Council of Nigeria (APCON) and the Advertising Practitioners (Registration, etc) Decree no. 55 of 1988 under which APCON the regulator was created. The composition of this regulator is made up of a representation of these professional bodies.
57. S391A of the UK Insolvency Act. Further, authorisation under S 390(a) of the UK Insolvency Act is accorded by virtue of being a member of a professional body recognised under section 391(1) and being permitted to act as an insolvency practitioner for all purposes by or under the rules of that body, or (b)by holding an authorisation granted by the Department of Enterprise, Trade and Investment in Northern Ireland under Article 352 of the Insolvency (Northern Ireland) Order 1989
58. See S706 (1) & S707 (1) of the New CAMA
59. Moreover, the power to authorize is conversely the power to withdraw subject to due process See S 708 (1-5) of CAMA 2020
60. It is to be noted as currently constituted, there is no recognition of in the law for persons qualified to practice in other jurisdictions (foreign IPs) except with satisfaction of the conditions laid down in CAMA. In any event, there is also no provision made by the new law for Cross Border Insolvency Rules
61. See S709 (1) CAMA 2020
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