An Appraisal of Corporate Investment Mechanisms Under the Nigerian Law

Abstract

Undoubtedly, the economic situation of a country in addition to the line of business a company engages goes a long way to determine its corporate viability. When a company is in need of funds, it usually calls for public subscription of its shares, which funds it uses as capital. It then carries out its business and pays the profit in form of dividends to the investors who are known as the shareholders. Consequently, a dominant feature in developed economies is the simplified and flexible processes of incorporation and management of corporate entities which underscores the importance of creating an atmosphere that promotes ease of doing business and means of making strategic investments. It is for this reasons that the significance of the new Companies and Allied Matters Act, 2020 "(CAMA)" cannot be gain said. CAMA 2020 which repealed the Companies and Allied Matters Act 1990 introduced essential reforms in the regime of corporate investments which are geared towards whittling down regulatory hurdles in the corporate sector that will in turn boost local and foreign investments in Nigeria. It is noteworthy that a company is by law empowered to raise money for its undertakings, by either selling its shares or by direct debt finance, which is by approaching the financial institutions for loans to pursue its business plans mostly inform of debentures. The purpose
of this paper is to examine the nature of corporate securities and legal regime of the various corporate investment mechanisms under the Nigeria law with a view to ascertain the current practices under the new law. The paper found that despite the seeming reform by the new CAMA, the 100% automation of the Corporate Affairs Commission processes in company registration in the face of the constant network challenges, and the increment of the minimum share capital thresholds in registering companies are clog in the wheel of ease of doing business and hence this paper recommend the reduction of same. It uses the black letter approach, relying particularly on the relevant provisions of the Companies and Allied Matters Act CAMA 2020, the Investment and Securities Act 2007 and decided judicial authorities.