CAC sets new regulations for banking sector recapitalisation

Business a.m.

The Corporate Affairs Commission (CAC) has issued new guidelines for deposit money banks (DMBs) to help them navigate the ongoing recapitalisation process.

The move comes in response to the recent directive from the Central Bank of Nigeria (CBN) requiring DMBs to raise additional capital, as part of the CBN’s strategy to ensure the banking sector is sufficiently capitalised to support the growth of Nigeria’s $1 trillion economy.

The  CBN, had in March 2024, directed  all banking institutions to increase their capital base for improved productivity, with international banks expected to raise capital to N500 billion, national banks to N200 billion, and regional banks to N50 billion.

In light of this, the CAC said the new directive is pursuant to its powers under Section 8 (1) (e) of the Companies and Allied Matters Act No. 3 of 2020, stressing immediate adherence to the policy.

In light of the CBN’s recapitalisation directive, the CAC has released new requirements for banking entities seeking incorporation, designed to support the regulatory framework and ensure compliance with financial regulations.

For new incorporations, the CAC stated that intending applicants must submit necessary requirements including, “An approved name reservation or availability, approval-in-principle from sector regulator, duly completed on-line incorporation form and payment of stamp duty and filing fees for the category of licence authorisation.”

The CAC specified that for existing DMBs, annual returns and information on persons with significant control must be filed up-to-date, and the certificate of increase will be issued within 24 hours of regulatory approval. This move ensures DMBs maintain up-to-date records with the CAC, a critical component of the regulatory process, and also ensures prompt processing of documentation following regulatory approval.

The CAC further stipulated that for small and medium banking institutions seeking to merge, both merging companies must submit a duly signed special resolution for the merger. This requirement ensures that both entities have approved the merger at the highest corporate level, following corporate governance best practices and adhering to regulations governing mergers and acquisitions in the financial sector.

The commission stated further: “Other requirements are “the scheme of merger duly approved by the Securities and Exchange Commission.

“A certified true copy of court order authorising Extraordinary General Meeting of each of the merging companies. Evidence of publication of court ordered meetings in two newspapers and the Federal Gazette and a CTC of Court order sanctioning the Scheme of Merger.

“All enquiries and complaints on these guidelines and applications submitted in pursuance of the recapitalisation exercise should be addressed to bankrecapitalization@cac.gov.ng or call +234 816 920 9551.”

The  commission stated that for applications that satisfy all requirements for incorporation of companies as per the Commission’s operations checklists, a certificate of incorporation will be issued within 24 hours, streamlining the process and ensuring efficiency.

Also, it noted that banking institutions seeking to increase their share capital through private placements, rights issues and/or offers for a subscription must submit a duly signed company resolution, return of allotment and other statutory declaration by directors verifying that the issued share capital is fully paid- up.

Other requirements, according to the CAC include, “Notice of the fact that regulatory approval is required, an affidavit deposed to by a director of the company to the effect that regulatory approval is required for the increase, an amended memorandum of association reflecting the new share capital.

Other requirements include: Payment of stamp duties and filing fees, issuance of a letter acknowledging notice of increase and requirement of regulatory approval, filing of regulatory approval and the issuance of a certificate of increase.

Under this category, the commission warned that the notice of the fact that regulatory approval is required must be filed in accordance with the provisions of Section 127 (3), (4) & (5) of CAMA.