In our previous article, we discussed how the new Companies and Allied Matters Act (CAMA) affects entrepreneurs/business owners and established the fact that what you don’t know can actually kill you (or your business), as ignorance of the law is no excuse.
Now, we will share vital provisions of the amended CAMA that affect incorporated trustees. They are as follows:
- Suspension/Removal of Trustee(s) and Appointment of Interim Manager(s). By virtue of Section 839, the Corporate Affairs Commission (CAC) may upon the approval of the Minister, cause the suspension of the trustees of an association and appoint an interim manager or managers to manage the affairs of an association where it reasonably believes that:
- There is or there has been any misconduct or mismanagement in the administration of the association
- It is necessary or desirable for the purpose of:
- Protecting the property of the association
- Securing a proper application for the property of the association towards achieving the objects of the association, the purposes of the association of that property or of the property coming to the association.
- Public interest; or
- The affairs of the association are being run fraudulently
The trustees shall be suspended by an order of Court upon petition by the Commission or members consisting the one-fifth of the association after reasonable evidence has been given.
Please note that suspension shall not be for more than a period of 12 months from the date of the order or suspension.
- Subject to the constitution of the association, any instrument upon which the common seal (if any) of an association is affixed shall be binding on such association notwithstanding any defect or circumstance affecting the execution of such interest – Section 840.
- Subject to constitution, an association may now contract in the same form or manner as an individual – Section 841.
- By the provision of Section 842 and 843, upon receipt of a notice by the Commission from a bank which holds more than one account of an association which are dormant, the Commission has the power to dissolve such association and to direct the bank to transfer whatever amount is in the account to another association. Where the account ceases to be dormant before the transfer, or where certain requirements have been satisfied, the Commission shall revoke any direction made to the bank with respect to any account.
- Submission of bi-annual Statement of Affairs: Section 845 requires that associations submit to the Commission a bi-annual statement of affairs. Failure to comply makes each trustee liable to a penalty “for everyday during which the default continues in such amount as the Commission shall specify in its regulations”.
- Trustees of associations must keep accounting records. The records must disclose with reasonable accuracy the financial position of the association. The Commission will make regulations as to how the account records should be prepared, as well as determine the financial year of the association – Section 846.
- Submission of Annual Returns: Section 848 requires that associations submit annual returns, not earlier than 30th June and not later than 31st December of each year. Default makes the association liable to any penalty prescribed by the Commission.
- Merger- Section 849 provides for merger between two or more associations with similar aims and objects under such term and regulations as may be prescribed by the Commission.
More than ever, it has become of utmost importance for associations, religious bodies and NGOs to be compliant with filing their annual returns and keep their records up to date with CAC. Consequences are now far more stringent than before, so it is time to buckle up.
We shall very soon be announcing a free online class on how CAMA benefits you as a business owner or founder of an incorporated trustee and how not to violate the laws and rules of procedure laid down by the Act.
ALUKO ADEYEMI AND ASSOCIATES 
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