The Corporate Affairs Commission (CAC): Functions, Powers, and Legal Status

Every business in Nigeria, whether a small sole proprietorship operating a provision store in Onitsha or a multinational company listed on the Nigerian Exchange Group, must pass through the same door before it can be said to exist in the eyes of the law. That door is the Corporate Affairs Commission. It is impossible to study Nigerian company law seriously without understanding what the CAC is, what it does, how it is constituted, and what powers it wields. This article addresses each of those questions in turn.

The Establishment of the CAC

Before 1990, the registration and administration of companies in Nigeria was handled by the Corporate Affairs Division of the Federal Ministry of Commerce and Tourism. The system was widely regarded as inefficient, opaque, and ill-suited to the demands of a growing economy.¹ The Companies and Allied Matters Act 1990 changed this fundamentally by creating an autonomous regulatory body with dedicated statutory powers and a clear mandate.²

The Commission continues to exist under the Companies and Allied Matters Act 2020, which is the current governing legislation. Section 1(1) of CAMA 2020 provides:

“There is hereby established under this Act, a body to be known as the Corporate Affairs Commission.”³

The Act goes on to set out the legal attributes that define the Commission’s status: it has perpetual succession and a common seal, is capable of suing and being sued in its corporate name, and is capable of acquiring, holding, or disposing of any property, movable or immovable, for the purpose of carrying out its functions.⁴ Its headquarters is situated in the Federal Capital Territory, Abuja, and the Act requires that an office of the Commission be established in each State of the Federation.⁵

Understanding the legal nature of the Commission as a body corporate is important. Like a registered company, the CAC is a legal person separate from the individual human beings who manage it. It owns property in its own name, not in the names of its board members or staff. It can be a party to litigation. And it continues in existence despite changes in its leadership or composition. This mirrors the attributes of corporate personality discussed in our article on corporate personality in Nigerian law, and demonstrates that the concept of separate legal personality applies not only to companies but also to statutory bodies created by Act of Parliament.

The Composition of the Commission

The Commission is governed by a board, the composition of which reflects the breadth of its regulatory responsibilities. Section 2 of CAMA 2020 provides that the Commission shall consist of the following members: a chairman, appointed by the President on the recommendation of the Minister, being a person whose ability, experience, or specialised knowledge of corporate, industrial, commercial, financial, or economic matters makes them capable of making outstanding contributions to the Commission’s work; one representative of the business community appointed on the recommendation of the Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture; one representative of the Institute of Chartered Accountants of Nigeria; one representative of the Nigerian Bar Association; one representative of the Manufacturers Association of Nigeria; one representative of the Securities and Exchange Commission; and the Registrar-General of the Commission, who serves as an ex-officio member.⁶

Members of the Commission other than the Registrar-General are part-time members.⁷ A member appointed under section 2 holds office for three years and is eligible for reappointment for one further term.⁸ The Minister may, with the approval of the President, remove any member from office if satisfied that it is not in the interest of the Commission for that member to continue.⁹

The Registrar-General

The chief executive and accounting officer of the Commission is the Registrar-General. Section 9(1) of CAMA 2020 sets out strict qualification requirements: the Registrar-General must be qualified to practise as a legal practitioner in Nigeria, must have been so qualified for at least ten years, and must in addition have had experience in company law practice or administration.¹⁰

The significance of these requirements is worth noting. By mandating that the chief executive be a lawyer of at least ten years’ standing with company law experience, the legislature has ensured that the person exercising the Commission’s most sensitive regulatory functions has the professional grounding to do so competently and accountably. The Registrar-General is also the registrar of business names under Part B of CAMA 2020.¹¹

The Functions of the Commission

The functions of the Corporate Affairs Commission are set out principally in section 7 of CAMA 2020. They are broad and touch every aspect of corporate life from birth to death. Understanding them gives a student a clear picture of the Commission’s role as both a registry and a regulator.

Administration and Enforcement of CAMA

The Commission is responsible for the administration and enforcement of the provisions of CAMA 2020.¹² This is the Commission’s most fundamental function: it must ensure that the statutory requirements for the formation, management, and winding up of companies are actually applied and observed. In the exercise of this regulatory function, the CAC issued the Companies Regulations 2021, a statutory instrument that provides a detailed framework for the implementation of CAMA 2020.¹³

Registration and Incorporation

The Commission registers and incorporates companies under Part A of CAMA 2020, business names under Part B, and incorporated trustees under Part C.¹⁴ This registration function is what most people associate with the CAC: the vetting of proposed business names to prevent duplication or misleading identities, the examination of incorporation documents, and the issuance of the certificate of incorporation that brings a company into legal existence.

The conditions that must be satisfied before the Commission will issue a certificate of incorporation are examined in our article on the conditions precedent to registration of a limited liability company. Once those conditions are met and the certificate is issued, the company becomes a body corporate from the date stated in the certificate, a legal consequence examined further in our article on the effect of a certificate of incorporation.

Registry Management

The Commission establishes and maintains a companies registry, with offices in each State of the Federation.¹⁵ This registry is a public record. Any person may conduct a search of the registry to establish whether a company exists, what its registered particulars are, who its directors are, and what documents it has filed. This transparency function is central to the Commission’s role in supporting a well-functioning commercial environment, because parties dealing with companies need to be able to verify their legal existence and standing before entering into significant transactions.

Investigation of Company Affairs

The Commission has power to conduct investigations into the affairs of any company where the interests of the shareholders and the public so demand.¹⁶ This investigative function distinguishes the CAC from a mere registry. It is not simply a body that receives and files documents; it is a regulator with the capacity to probe corporate conduct where there is reason to believe that something has gone wrong.

Section 316 of CAMA 2020 empowers the Commission to appoint one or more inspectors to investigate the affairs of a company and to report the result of the investigation in such manner as the Commission may direct.¹⁷ Where an inspector is appointed, the officers and agents of the company are under a duty to produce documents, attend before the inspector, and give all assistance in connection with the investigation that they are reasonably able to give.¹⁸

Striking Off Defunct Companies

Section 692 of CAMA 2020 empowers the Commission to strike off the register any company that it has reasonable cause to believe is not carrying on business or is not in operation.¹⁹ The Commission must first send a letter to the company and, if it receives no satisfactory reply, publish a notice in the official gazette. If the company still does not respond or demonstrate that it is active, the Commission may strike its name off the register and the company is dissolved.²⁰ This power allows the Commission to keep the register clean and accurate, removing the dead wood of companies that exist on paper but have ceased to function in practice.

Accreditation of Professionals

The Commission accredits the professionals who are authorised to transact business with it on behalf of clients in relation to Part A of CAMA 2020 (companies). Only legal practitioners, chartered accountants, and chartered secretaries who have been accredited by the Commission may file company incorporation documents, prepare and file annual returns, and conduct searches on behalf of clients.²¹ In relation to Parts B and C of CAMA 2020 (business names and incorporated trustees), any person, whether or not a professional, may be accredited to transact business with the Commission.²²

This accreditation regime serves a quality-control function. By limiting the persons who may file company documents to trained professionals, the legislature has sought to reduce errors, improve compliance, and ensure that the persons dealing with the Commission understand the legal requirements they are helping their clients to meet.

Annual Returns and Compliance Monitoring

Beyond registration, the Commission has ongoing compliance monitoring functions. Section 417 of CAMA 2020 requires every company to submit annual returns in the prescribed form to the Commission.²³ Annual returns must contain specified information about the company’s directors, members, share capital, and registered office. They keep the register current and allow the Commission and the public to track the ongoing existence and status of registered companies.

Section 425 of CAMA 2020 provides that where a company fails to comply with the obligation to file annual returns, the company and every director or officer of the company are liable to a penalty as prescribed by the Commission.²⁴ In November 2023, the Commission announced that it would begin enforcing penalties not only against defaulting companies but also personally against their directors and officers, a development that significantly raised the stakes of non-compliance.²⁵

The CAC and the Securities and Exchange Commission

It is important for students to understand that the CAC does not stand alone in the regulation of corporate activity in Nigeria. Part XVII of CAMA 2020 and the Investment and Securities Act 2007 vest significant regulatory functions in the Securities and Exchange Commission (SEC), particularly in relation to public companies. SEC regulates public offers and sales of securities, mergers and acquisitions, unit trust schemes, and insider trading.²⁶

The division of functions is broadly as follows: the CAC administers all parts of CAMA 2020 except the provisions relating to public offers, mergers, and securities regulation, which are administered by the SEC. Where a public company wishes to make a public offer of its shares, for example, it must comply not only with CAMA 2020 as administered by the CAC, but also with the Investment and Securities Act and the SEC’s regulations.²⁷ The relationship between these two bodies is therefore complementary rather than competitive, each operating within its own defined sphere.

Judicial Control of the Commission

Though the CAC is a powerful regulatory body, it is not above the law. Its decisions and actions are subject to review by the courts. In King v Registrar of Companies,²⁸ the court held that the Registrar must properly exercise his discretion in the registration process and must not be influenced by extraneous factors. Where the Registrar refuses to register a company that has complied with all statutory requirements, a court may issue an order of mandamus compelling him to do so.²⁹ In Abakaliki LGC v Abakaliki Rice Mills Owners Enterprises,³⁰ the court confirmed that the certificate of incorporation issued by the Registrar-General constitutes rebuttable proof that the company is duly registered, and a person asserting otherwise must prove their assertion.

These cases illustrate an important principle: the CAC exercises statutory functions, and the courts will ensure that it exercises them lawfully and within the limits of its powers. A company or individual aggrieved by a decision of the Commission has recourse to the courts, and the Commission must act in accordance with the law just as any other party must.

Why the CAC Matters to Every Nigerian Law Student

The CAC touches every area of company law. It is the body to which the memorandum and articles of association are submitted for registration, as discussed in our articles on the memorandum of association and the articles of association. It is the body before which promoters comply with the conditions for registration, as discussed in our article on conditions precedent to registration. It maintains the register from which a company’s existence is confirmed. It investigates corporate wrongdoing. And it strikes off companies that have ceased to function.

No company law problem question, examination answer, or client advice can be complete without an understanding of the Commission’s role. It is the institutional backbone of Nigerian company law, and understanding how it works is as fundamental as understanding the substantive rules that govern the companies it registers.

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Footnotes

¹ SC Udemezue, ‘A Compendium of the Historical, Legal and Institutional Framework for Company Law and Corporate Governance in Nigeria’ (2021) 8(2) NAU Journal of Commercial and Property Law 79, 85.

² Companies and Allied Matters Act 1990 (CAMA 1990), s 1; J Olakunle Orojo, Company Law and Practice in Nigeria (4th edn, Mbeyi & Associates 1992) 20.

³ Companies and Allied Matters Act 2020 (CAMA 2020), s 1(1).

⁴ CAMA 2020, s 1(1)(a)–(c).

⁵ CAMA 2020, s 1(3).

⁶ CAMA 2020, s 2(1)(a)–(h).

⁷ CAMA 2020, s 4(3).

⁸ CAMA 2020, s 4(1).

⁹ CAMA 2020, s 4(2).

¹⁰ CAMA 2020, s 9(1)(a)–(c).

¹¹ CAMA 2020, s 9(3).

¹² CAMA 2020, s 7(a).

¹³ Companies Regulations 2021 (CR 2021); Cliffe Dekker Hofmeyr, ‘What is the legislation that governs companies in Nigeria?’ (CDH Africa Corporate Guide, 2024).

¹⁴ CAMA 2020, s 7(b); Parts A, B and C.

¹⁵ CAMA 2020, ss 7(c) and 1(3).

¹⁶ CAMA 2020, s 7(d).

¹⁷ CAMA 2020, s 316(1).

¹⁸ CAMA 2020, s 318(1).

¹⁹ CAMA 2020, s 692(1).

²⁰ CAMA 2020, s 692(2)–(3).

²¹ CAMA 2020, s 863(1).

²² ibid, s 863(2).

²³ CAMA 2020, s 417.

²⁴ CAMA 2020, s 425.

²⁵ Corporate Affairs Commission, Public Notice on Enforcement of Penalties for Failure to File Annual Returns (CAC, November 2023).

²⁶ Investment and Securities Act 2007, ss 13–15; CAMA 2020, Part XVII.

²⁷ Orojo (n 2) 22; Udemezue (n 1) 90.

²⁸ King v Registrar of Companies (unreported, High Court of Lagos).

²⁹ Okafor v Registrar of Companies (unreported); see also British Leyland International (Nig) v Registrar of Companies (unreported), cited in Isochukwu, ‘Company Law 1.4 Incorporation and Pre-Incorporation Contracts’ (Isochukwu Blog, 29 December 2017).

³⁰ Abakaliki LGC v Abakaliki Rice Mills Owners Enterprises (unreported), cited in Isochukwu (n 29).