THE UNVEILING OF A NEW TESTAMENT IN CAMA 2020: A NEED FOR THE CHURCH TO CALM DOWN (SECTION 839 CAMA 2020)

   INTRODUCTION

The Nigeria Constitution by virtue of Section 40 provides for the right to freedom of association, giving the religious bodies the power to establish churches and mosques without the need to register.

However, in a bid of creating a legal structure around the association, the religious bodies are advised to register under Part C of CAMA to enable them enjoy numerous benefits for growth and sustainability amidst the benefits are;

a.    They become a corporate body

b.    They enjoy perpetual succession

c.    They have an enhanced corporate image

d.    They can apply to the relevant government authority to be granted license as a place of worship

e.    They can access loan facility from financial institutions

f.     Protection of name

g.    They can open and operate a bank account with the registered name.

Furthermore, On the 7th of August 2020, President Muhammadu Buhari assented to the Companies and Allied Matters Act, 2020 (CAMA 2020), which in effect repeals the Companies and Allied Matters Act, 1990 (the “Repealed Act”). By popular opinion, the passage into law is a welcome development and both the 9th Assembly and the President are duly commended.

The new act however introduces a section that affects the Non-governmental organizations (Church Included) which has led to a call for amendment of the section by agitators with more aggressive rebuttal from the religious bodies, noting that the new section is a sneaky way of introducing the Unpopular NGO Bill into CAMA and seen as an uprising of the Antichrist against the church. 

It is worthy to note that the Act did not specifically mention church or any particular religion, the act aims at introducing long overdue reforms in the conduct of business of all classes which includes association, charitable organization such as Churches, Mosques, educational institutions, social clubs etc. 

 

THE SECTION 839 CAMA 2020

It is a well known fact that the guaranteed fundamental human right enshrined in the Nigerian constitution is not absolute, it’s still subject to certain checks and limitation that is reasonably justifiable in a democratic society in the interest of public safety, public order, public morality etc (See Section 45 of the 1999 Constitution as amended).

The introduction of Section 839 CAMA 2020 can be described as a form of check on the registration of Incorporated Trustees in Nigeria. The introduction of this new section is long overdue to reflect the international standard and practices as seen in other jurisdictions.

However, the misconception of the section can be traced to the faulty interpretation of the section by non-lawyers. A proper analogy is when a carpenter decides to sew Christmas cloth in a bid to impress the public, an utter colossal damage.

One of the misconceptions is the view that the Corporate Affairs Commission possess a sole arbitrary power to suspend at will the Trustees and appoint interim mangers. Another misconception is that the section is seen as a sign of end time through which the government would control churches.

 

THE ANALYSIS

Section 839 (1) empowers the Commission to suspend trustees of an association and appoint interim managers to manage the affairs of the association where it reasonably believes that-

(a) There is or has been misconduct or mismanagement in the administration of the association;

(b) it is necessary or desirable for the purpose of;

i. Protecting the property of the association

ii. Securing a proper application for the property of the association towards achieving the objects of the association, the purpose of the association of that property or of the property coming to the association,

iii. Public interest; or

(c) the affairs of the association are being run fraudulently.

This section provides for reasonably justifiable grounds in which the commission can validly suspend trustees of an association, a proper definition of no smoke without fire. If the law had ended with this section, we would have presumed that the decision to suspend rests solely on a commission controlled by the government.

However, subsection 2 of 839 provides that;

‘’The trustees shall be suspended by an order of Court upon the petition of the Commission or members consisting one-fifth of the association and the petitioners shall present all reasonable evidence or such evidence as requested by the Court in respect of the petition’’

This section gives a clear procedure on how trustees can be suspended thereby resolving the misconception that the commission possess a sole arbitrary power to suspend trustees. It’s crystal clear that the suspension of trustees of an association can only occur when a competent court of gives an order on same.

The section states the condition precedent upon which the order can be made;

a.    Petition from the commission

b.    Petition from 1/5^th of the members of the association

c.    Presentation of reasonable evidences

N.B: The petition must detail the infractions committed by the trustees which has been laid down in subsection 1.

Thus, the Registrar General of the commission can not  wake up on the wrong side of the bed and decide to suspend trustees of an association to calm his nerves. Subsection 2 curtails the power of the commission to suspend trustees of an association. Any action done without recourse to Subsection 2 would be null and void.

Consequently, subsection 3 of 839 further provides for the appointment of the interim managers and their functions which must be approved by the court. It’s crystal clear that the suspension of trustees and appointment of interim managers rests on the shoulder of the court and not the commission as generally misconstrued by the public.

 

WHY THE CHURCH NEED TO CALM DOWN??

The church is not the only one affected by the new enactment but all charitable organisation registered under this part of CAMA (Now Part F). Pastors are not trustees of the church, therefore the belief that the government wants to control the church is wrong, the replacement of the trustees won’t stop the church from holding on Sundays nor will they bring a Non-Christian to head the church and preach during our cross over night. 

I am surprised at the sudden blackish on the new enactment from prominent men of God when same laws exist in other jurisdiction, they have branches. We read the report from UK of the appointment of interim managers to replace the trustees of 2 prominent churches known in Nigeria on the allegation of mismanagement and misconduct.

I am of the opinion that if we (Churches) could abide by the charity laws in other jurisdictions similar to this section why the hypocritical attitude when same is introduced in Nigeria?? 

This new enactment has been in existence in other jurisdictions for years aimed at checking excess of charitable organization. The law is clear, once you submit to it you ought to abide by it. By registering under CAMA, you are bound by the law to comply with it.

The aim of the enactment is for transparency of the management of the association. It is worthy to note that the Section does not in any way suggest that churches are liable to pay taxes as argued by some agitators. The law is trite that Non-Profit organizations are not taxable.

However, where the charitable organization (Inclusive of Church) decides to diversify their fund into a commercial venture aimed at making profit, they would become liable to tax. The taxable income would be limited to the business aspect of the organization. 

 One of the greatest problem of the church today is lack of information, members are ready to take in everything said from the pulpit without recourse to verify the information. 

Are we scared of living by what we preach? Are we scared of transparency and accountability? if No, the Church need to calm down.

CONCLUSION

If the agitators of this section base their argument on lack of faith in the Judiciary to perform its role without bias, well taking into consideration recent happenings in the country I might pitch a tent with the agitators.

However, the aim of the article is to clear the misconstrued interpretation that the commission holds a sole arbitrary power to suspend and appoint new interim managers without fair hearing from the association. The presentation of the petition to the court is not an exparte application both sides will be heard before an order is made.

In my opinion the new enactment is a welcome development to the extent that the tenets of rule of law will be adhered to by the commission and the court. We all know that the government has done nothing but look away at the contravention of the application of income and property of the NGOs from time immemorial.

Will this section be used as a tool to witch hunt antagonist of the government??

Will this section be used to fish out the judas amidst the registered NGOs??

Will this section cause a change in the administration of NGOs (Churches Included)??

For the 1^st and 2^nd Question I a not a prophet that can see into the future and answer same but for the 3^rd Question Yes. Trustees will be kept on their toes now that the law is like a lamp aimed at revealing the skeleton in our cupboards.

Egbetola Sola is a budding business lawyer, based in Lagos, he is passionate about helping business owners maximize their opportunities using legal tools. He works as an In-House Counsel with an Investment Bank; Cowry Asset Management.

He is also a tech enthusiast with a commitment towards legal and tech innovations.

E-mail: solaegbetola@gmail.com

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WHY HIRE A LAWYER?

INTRODUCTION

The enthusiasm of starting a business oftentimes cloud the founders from seeing the need to hire/consult a lawyer. There is a popular saying that ‘an ounce of prevention is worth a pound of cure’ but some entrepreneurs are easily starry-eyed optimist ignoring any foreboding waiting till something bad happens before they consult a lawyer. 

Legal guidance in setting up of a business is of great importance in ensuring the success of the business.

''I have never met a successful business person who never had a brilliant lawyer''.... Olufemi Awoyemi (Founder and Chairman of Proshare Nigeria Limited)

An entrepreneur needs to be legally guided in every facet of his business from; incorporation procedure, regulatory compliance, trademark and copyright protection, insurance, raising capital, obtaining patent.

3 REASONS WHY START-UPS NEED LAWYER

1.   Legal Structure for the Entity

2.   Safeguard Intellectual Property

3.   Drafting and reviewing contractual agreements

1.   Legal Structures for the Business Entity

Start -Up founders sometimes make the mistake of taking on many roles in the setting up of their business. They want to act as the lawyer, accountant, marketing analyst, sales rep. etc, neglecting the availability of professional advice. A lawyer is knowledgeable in the legal issues which pertains to the right legal structure to adopt for business.

The notion of saving money and time by not contracting professionals for advice can far outweigh the possible expense of going astray when selecting the business structure for your firm. The dynamism of law makes it of utmost important to consult a lawyer who is abreast with the latest regulations and requirements necessary for the choosing of the right business structure.   

 The choice of the best business structure depends on factors such as; liability, taxation and record-keeping. The form of business under the law to be chosen from are;

a.    Sole Proprietorship

b.   General Partnership

c.    Corporation

These business options have their advantages and disadvantages, its best the lawyer relates the pros and cons

                   2.Safeguard Your Intellectual Property

Start-Up founders make the mistake of relegating the idea of having a good IP strategy for their business but focus on other aspect of their business. They are oblivion to the fact that the most important aspect of the business is the Intellectual Property which must be safeguarded and avoid the risk of third-party intellectual property issues.

Safeguarding your IP will mean different things to different start-ups the common aspects are protection of your software, Industrial designs or brands, patents, copyrights, trademarks. The less common IP related rights include, database rights, trade secrets etc.

A lawyer understands the fact that having an IP strategy that aligns with the ideation of the startup business is very crucial and it aims at ensuring the new venture has a solid foundation for future growth, expansion and investment.

His role is to ensure he identifies and register your idea, designs, technology or artwork under respective copyrights, trademarks, and patents. This will prevent the unlawful use or reproduction of the idea you have under IP, and where it’s discovered that someone copying your idea, the lawyer would push for legal steps against the violator.

 

3.   Drafting and Reviewing Contractual Agreement

One of the greatest pitfalls of startup founders is the Bartimaeus attitude while entering contractual agreement at the initial stage of the business mostly due to the enthusiasm of starting a business oftentimes cloud the founders from seeking for a second view on the contractual agreement before executing same.

Having a lawyer either draft or review your contract before it is executed ensures that your business’s best interests are protected. He will draft in the favour of his client, coupled with his expertise knowledge in the industry, he can offer advice on typical contract terms that would benefit the business.

Having a lawyer helping with the drafting and reviewing of contractual agreement, would pay far more and prevent lose of valuable property, or exposure to unnecessary business and financial risks, including costly lawsuits.

While some startup founders cultivate the habit of drafting contractual agreement by self, risking leaving out key terms that are necessary to make the contract enforceable. A template agreement found on the internet may be outdated or may not consider the laws of your state or the specifics of your transaction.

 

CONCLUSION

We all can agree that it’s best to seek legal advice and have safety net before you need it. The aim of the article is to lay emphasis on the fact that start-up founders need not learn the hard way by falling into unobvious traps in the early stages of their startups. In the words of JAMES CAAN, he posited that;

‘’ Regardless of the nature of your business, industry or sector, when it    comes to establishing a startup, you will come across legal issues’’

The aforementioned reasons are inexhaustive as we have other reasons why you need to hire a lawyer as a start-up founder. It is worthy to note that just like a lawyer can help form the business, it can help develop policies and guidelines on how the business can come to an end.

 

 

 

 

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