CAC to banks: Submit regulatory approval for merger plans, recapitalisation exercise

The Corporate Affairs Commission (CAC) has issued guidelines for recapitalisation of banks and other financial institutions.

CAC, in a statement on Friday, said the directive is pursuant to its powers under Section 8 (1) (e) of the companies and allied matters Act (CAMA) No. 3 of 2020.

Recapitalisation is the process of infusing funds into banks to enable them to meet the mandatory capital adequacy set by a central bank.

On March 28, the Central Bank of Nigeria (CBN) announced an upward review of the minimum capital requirements for commercial, merchant and non-interest banks.

CBN said the increase was necessary due to prevailing macroeconomic challenges and headwinds occasioned by external and domestic shocks.

In the guidelines, CAC said for new incorporation, financial institutions or banks must submit an approved name reservation or availability, their approval-in-principle from the sector regulator, a duly completed online incorporation form, and a payment of stamp duty and filing fees for the category of licence authorisation.

“Certificate of incorporation shall be issued within 24 hours for applications that satisfy all requirements for incorporation of companies prescribed in the Commission’s Operations Checklists available at www.cac.gov.ng/resources,” the commission said.

For an increase in share capital (options – private placements, rights issue and/or offer for subscription), CAC required a duly signed company resolution, return of allotment, a statutory declaration by directors verifying that the issued share capital is fully paid- up, and a notice of the fact that regulatory approval is required.

Other documents to be submitted are 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, 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 issuance of a certificate of increase.

According to CAC, a notice of the fact that regulatory approval is required and must be filed by the provisions of Section 127 (3), (4) & (5) of CAMA, an annual returns and information on persons with significant control, must be filed up-to-date, and a certificate of increase shall be issued within 24 hours of filing of regulatory approval.

In terms of the scheme of merger approved by the Securities and Exchange Commission (SEC), CAC said a duly signed special resolution for merger by each of the merging companies is required.

“Certified true copy (CTC) of Court order authorizing Extraordinary General Meeting (EGM) of each of the merging companies; Evidence of publication of Court ordered meeting in two newspapers and the Federal Gazette and a CTC of court order sanctioning the scheme of merger,” the commission said.

CAC also said an annual return and information on persons with significant control must be filed up-to-date; while for upgrade and downgrade of licence authorisation, no consequential filing is required.