Efficiency and transparency are fundamental pillars of the ease of doing business in Nigeria initiative as recognized by Executive Order No.1 of 18 May 2017 (the “Executive Order”)¹. In a bid to enhance administrative efficiency and transparency in the Nigerian business environment, the Executive Order mandated all Ministries, Departments, and Agencies (“MDAs”) to publish an extensive list of requirements needed to obtain or access the products and services they provide as they relate to doing business in Nigeria. Such publications are to include the fees and timelines for the processing of the products or services.

In line with the Executive Order, the Federal Ministry of Justice (“FMoJ”) in 2021 issued the Guidelines for the Issuance of the Attorney-General of the Federation’s (AGF’s) Authority for the Registration of Companies Limited by Guarantee (the “Guidelines”) ². The Guidelines draw strength from the provision of section 26(4) of the Companies and Allied Matters Act, 2020 which requires the consent of the AGF before the Memorandum of Association of a Company Limited by Guarantee (“Ltd/Gte”) can be registered.

The Guidelines set a uniform process for obtaining the AGF’s authorisation to reduce the time it takes and to address issues associated with processing applications for the AGF’s approval³. It also seeks to ensure synergy between the FMoJ and the Corporate Affairs Commission (CAC) in this respect.

Obtaining the AGF’s Authority: Pre and Post the CAMA 2020

A Company Limited by Guarantee is a company incorporated with the liability of its members limited by guarantee to such an amount, as the members undertake to contribute to the assets of the company in the event of the company being wound up⁴.

The AGF’s authority has always been a prerequisite for the registration of a Ltd/Gte. However, the CAMA 2020 introduced a timeline for the AGF to issue or withhold his consent. The AGF is required to issue or withhold his consent within 30 days of receiving the incorporation documents⁵. Where the AGF’s approval is not given within the stipulated time, the promoters of the company can proceed to publish a notice on the proposed incorporation in three (3) national newspapers, inviting objections to the incorporation of the company within twenty-eight (28) days⁶. Where no objection is received, the CAC can proceed to register the company without the AGF’s authorisation⁷.

Under the repealed CAMA 1990, there was no alternative for promoters of Ltd/Gte where the AGF’s consent was unduly withheld, and they had to wait for the response of the AGF to proceed with the incorporation of a Ltd/Gte. This could take as long as eight (8) months in some cases.

Key Provisions in the Guidelines

The issuance of the Guidelines is the first attempt at the codification of the thought process of the AGF and the staff of his office in facilitating the grant/denial of the approval to register a Ltd/Gte. The codification of the process enhances transparency as it serves as a notice to the public and particularly, the promoters of Ltd/Gte on what is required from them in seeking the AGF’s authorization.

The Guidelines in addition to the modification introduced by CAMA 2020 collectively allow for simple and more efficient registration of a Ltd/Gte. Key provisions that help to enhance the efficient exercise of this administrative power and aid transparency include:

a. The objects of the Ltd/Gte must be specifically related to the activities the promoters seek to promote and an application for incorporation would be denied where:

i. The memorandum of association contains inconsistent objects, purports to regulate other bodies, and contains the functions of an MDA of the Federal Government ⁸.

ii. The objects authorize the company to participate in political campaigns or donate to or sponsor a candidate in an election ⁹.

iii. The object borders on national security and instigates crisis or hatred¹⁰.

iv. The object of the company should not seek to professionalize a trade or issue proficiency certificates¹¹.

b. Where an academy is seeking to be registered as a Ltd/Gte, it must provide a letter of no objection from the MDA that regulates its industry¹².

c. A corporate entity involved in the incorporation of a Ltd/Gte must be represented by a natural person.

d. A research institute seeking to register as a Ltd/Gte must obtain a letter of no objection from a statutory research institute or from an MDA, where the research is closely related to the function of that MDA ¹³.

e. Where the research institute proposes to conduct training, a letter of no objection should be obtained from the statutory regulator on the subject matter of the training and the National Board for Technical Education.

f. Where the training borders on security and data management, the approval of the Office of the National Security Adviser must be obtained.
g. Where the Ltd/Gte is to operate extra-territorially, the promoters are expected to provide a written declaration to comply with the law of the country they are to operate in¹⁴.

Non-compliance with the provisions of the guidelines will result in the AGF declining the application for incorporation of a Ltd/Gte.
Conclusion

Over the years, the power vested in the AGF to treat applications for the registration of Ltd/Gte has been considered as one the AGF exercised at his sole discretion. The issuance of the Guidelines is a move to institutionalize the AGF’s role in the incorporation process and to lay down the specific requirements for the process. This helps ensure a transparent exercise of this power by the AGF and the staff of his office.

Also, the Guidelines serve as an advance notice to the promoters of Ltd/Gtes of the requirements for the issuance of the AGF’s authority. This notice helps to cut down the typical back and forth that occurred when the requirements were not codified and saves time that would have been spent requesting additional documents. The rules that are applied in the exercise of the AGF’s power are laid out for all concerned. The issuance of the Guidelines is a step forward for transparency and efficiency in the operations of MDAs.

1. Preamble to the Guidelines
2. Although the Guideline was issued in 2021, it was only released to the public in July 2023
3. Section 1 of the Guidelines
4. Section 21(b) CAMA 2020;
5. Section 26(5) CAMA 2020
6. Section 26(7) CAMA 2020
7. Section 26(10) CAMA 2020
8. Section 4 of the Guidelines
9. Section 6 of the Guidelines
10. Section 6(3) of the Guidelines
11. Section 6(4) of the Guidelines
12. Section 7(2) of the Guidelines
13. Section 9(5) of the Guidelines
14. Section 3(4) of the Guidelines