INTRODUCTION
The Companies and Allied Matters Act, 2020 (CAMA 2020) stands as one of the most significant business legislations enacted in Nigeria in the past three decades. Signed into law by President Muhammadu Buhari in 2020, CAMA 2020 repealed and replaced the Companies and Allied Matters Act of 1990. While the 1990 Act had long been considered a major obstacle to business growth and expansion, the new legislation represents a pivotal reform—serving not only as a catalyst for business development but also as a positive influence on commercial litigation in Nigeria.
By introducing CAMA 2020, the Nigerian government aimed to modernize the regulatory framework, enhance the ease of doing business, and reduce bureaucratic bottlenecks. The Act brings renewed focus to commercial Litigation, corporate governance practices, with increased emphasis on principles such as transparency, accountability, and fairness in the management of both public and private companies. These reforms were introduced to address and mitigate abuses of corporate power by key stakeholders, which had led to several high-profile corporate scandals in the past. Hence, this article explores the implication and impacts of the Act on commercial litigation in Nigeria, evaluating how the changes in corporate structuring, regulatory compliance, dispute resolution mechanisms, and stakeholders’ rights have influenced the trajectory and nature of commercial disputes. Again, it critically examines how the specific provisions of CAMA 2020 have shaped the contours of commercial litigation in Nigeria. It considers not only the substantive legal changes but also the procedural and practical implications for litigants, lawyers, and the courts.
IMPACTS OF CAMA 2020 ON COMMERCIAL LITIGATION IN NIGERIA
Before its repeal, the Companies and Allied Matters Act (CAMA) 1990 governed corporate affairs in Nigeria but never Commercial Litigation. It established the Corporate Affairs Commission (CAC) and provided for the incorporation of companies, registration of business names, and the incorporation of trustees for certain communities, associations, and bodies. However, over time, the Act became inadequate and ineffective, allowing room for various corporate malpractices. This was largely due to the evolving nature of corporate law and the changing business landscape in Nigeria.[1] The Companies and Allied Matters Act 1990 (CAMA 1990) was not the sole governing law for commercial litigation in Nigeria. While CAMA 1990 did play a significant role in setting the framework for company law and corporate governance, it was not the sole source of law for all commercial litigation. CAMA 2020 is a key piece of legislation that regulates companies, limited liability partnerships and partnerships in Nigeria. It provides the legal framework for their incorporation, management and dissolution. However, commercial litigation in Nigeria draws from a broader legal framework including common law, civil procedure rules, and other statutes.[2] Furthermore, CAMA 2020 has simplified procedures for incorporating private and small businesses, making it easier to establish companies. This ease of incorporation can lead to a greater number of businesses, potentially increasing the volume of commercial disputes.
- Pre-Action Notice and Restriction on Execution
The Act requires any individual intending to sue the Corporate Affairs Commission (CAC) to first serve a written notice to the Commission, providing a 30-day window before instituting legal action[3]. This requirement is aimed at giving the CAC an opportunity to resolve disputes amicably, thereby reducing unnecessary litigation. An agreed party can only institute an action against the Commission on the sole condition that he must have fulfilled the provision of Section 17.
- Strengthening Corporate Governance and its Effect on Litigation
It is important to say that the key reforms and impacts of CAMA 2020 on Commercial Litigation Nigeria include the recognition of a one-person company[4], restrictions on multiple directorships[5], and enhanced disclosure of persons with significant control.[6] These are aimed at improving transparency and accountability. Companies are now more likely to face litigation for breaches of fiduciary duties due to enhanced director responsibilities[7]. Cases such as Kabo Air Ltd v. Mohammed[8] have highlighted Courts’ willingness to hold directors accountable for lapses in governance.
- Recognition of Technology and Electronic Processes
CAMA 2020 permits virtual general meetings for private companies[9] and enables digital filings with Corporate Affairs Commission (CAC).[10] It should be mentioned that in this novel provision, the caveat for holding virtual general meetings is that it must be conducted in accordance with the Articles of Association of the company.[11] There are now cases where shareholders challenge the validity of virtual meetings, arguing inadequate notice or procedural irregularities. Issues relating to admissibility of electronic records have been guided by Evidence Act 2011.[12]
- Introduction of Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs)
The Act introduces LLPs and LPs into Nigeria legal framework. Under the repealed Act, partnerships were not recognized as corporate bodies with distinct legal personality. However, the Act has introduced the business structure of limited liability partnership, which is vested with a distinct legal personality separate from the partners. Sections 746 – 764 of the Act extensively provides the framework for this business structure. This business structure, though recently introduced in Nigeria, is common to other jurisdictions like the United Kingdom and the United States of America. The Act also introduced the Limited Partnership structure. Sections 765- 810 extensively provide for the business structure of this partnership and the obligations and liabilities of the partners. These forms raise novel legal issues in litigation, especially regarding liability sharing and dissolution, akin to what is seen in jurisdiction like the UK and India.[13]
- Minority Protection and Derivative Actions
CAMA 2020 makes provision for derivative actions, enabling minority shareholders to bring suits on behalf of the company under certain conditions. This has empowered minority shareholders to seek redress for wrongs done to the company by insiders. Nigerian courts, in various cases[14] recognize minority rights but the statutory codification under CAMA 2020 strengthens this further.
- Business Rescue Reforms and Insolvency Practice
Sections 434–548 introduce voluntary arrangements, administration, and netting provisions in insolvency proceedings. Section 705, which is one of the new provisions of the Act, provides that only lawyers and accountants with five years’ post-qualification experience, who are either member of the Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN) or any other professional body recognized by the Commission, are qualified to practice as insolvency practitioners in Nigeria. The is ostensibly to ensure competence and professionalism. Creditors now litigate to enforce or challenge voluntary arrangements and administrator decisions. The judiciary must increasingly interpret concepts such as moratoriums and creditor hierarchies.
- Corporate Compliance and Regulatory Disputes
CAMA 2020 mandates disclosure of beneficial ownership[15] and imposes stricter annual reporting obligations. Non-compliance has become a ground for regulatory sanctions and internal shareholder disputes. Courts now entertain suits challenging CAC actions, which creates a growing body of administrative litigation.
- Impact on Procedural Aspects of Litigation
With an emphasis on corporate recordkeeping and digital filings, litigation now relies heavily on the accuracy and availability of corporate records. Courts demand strict proof of compliance, often scrutinizing CAC filings, minutes of meetings, and board resolutions. False filings may expose directors to criminal or civil liability under Sections 92 and 549.
- Merger of Associations
CAMA 2020 permits the merger of associations with similar goals, subject to CAC regulations.[16] Section 831 also empowers the CAC to treat such associations as a single entity, particularly where they share trustees. These provisions enhance transparency, regulation, and effective supervision.
- Disclosure of Significant Control
Notably, the Act mandates individuals with significant control over a company to notify the company within seven days. The company, in turn, must inform the CAC within 30 days of receiving such disclosure.[17]
- Exemption for Foreign Companies
Section 80 changes the procedure for exemption of foreign companies from registration. They must now apply to the Minister of Trade and notify the CAC within 30 days upon receiving the exemption. Failure to notify or to file annual reports will attract penalties.
- Company Secretary
CAMA 2020 makes the appointment of a company secretary optional for small companies,[18] which are defined under Section 394 as private companies with an annual turnover under ₦120 million, no foreign members, and other criteria. This eases regulatory burdens for small businesses.
- Increased Investor Confidence:
By demonstrating a commitment to good governance, companies attract more investors and are less likely to face shareholder lawsuits or other legal actions.
- Stronger Judicial Remedies:
CAMA 2020 also enhances, providing them with better avenues for recourse in cases of corporate judicial remedies for minority shareholders mismanagement or oppression.[19]
- Reduced Conflicts of Interest:
CAMA 2020, with its provisions on shadow directors[20] and multiple directorships,[21] helps prevent conflicts of interest, which are a major source of legal disputes. By ensuring individuals are transparent about their interests and act in the best interests of the company, the risk of lawsuits arising from such conflicts is reduced.
Conclusion
It is obvious that CAMA 2020’s impact on litigation in Nigeria is multifaceted, affecting various aspects of business recovery and dispute resolution. It goes without saying that, it streamlines the incorporation process, clarifies key terms, enhances investors protection which can reduce dispute which can facilitate quicker resolution.[22] It introduces provisions for business rescue, such as voluntary arrangements and administration, aiming to reduce litigation by preventing bankruptcies and facilitating debt restructuring. The Act also strengthens corporate governance, potentially leading to fewer shareholder disputes and more transparent business practices. CAMA 2020 introduces new mechanisms for companies to restructure their operations and settle debts, including voluntary arrangements and administration. This allows businesses to negotiate with creditors and avoid the costly and time-consuming process of liquidation, potentially reducing litigation.
The Act grants the Corporate Affairs Commission (CAC) broader powers to oversee corporate governance and enforce compliance, potentially leading to fewer cases of non-compliance that would otherwise result in litigation. The Act also encourages the establishment of specialized commercial courts or tribunals to handle corporate and commercial law matters more efficiently, potentially leading to quicker resolution of disputes and reducing the backlog of litigation. The Act provides for the restoration of companies that have been struck off the register, offering an avenue for recovery and potentially reducing the need for protracted litigation. CAMA 2020 introduces a revised penalty regime for violations of the Act, which could potentially reduce the likelihood of litigation by deterring violations and ensuring more efficient enforcement.
[1] Ayotebi, O. M.‘CAMA 2020: A Look at Nigeria’s New Corporate Governance Regime’ <Cama%202020_%20A%20Look%20at%20Nigeria’s%20New%20Corporate%20Governance%20Regime.html> Accessed 23 May, 2025
[2] ibid
[3] Companies and Allied Matters Act, 2020, Section 17
[4] Ibid, Section 18(2)
[5] Ibid., Section 307
[6] Ibid., Section 119
[7] Ibid., Sections 305-312 (Directors’ duties and liabilities).
[8] Kabo Air Ltd v. Mohammed (2014) LPELR-23614(CA).
[9] CAMA 2020, Section 240(2).
[10] Ibid., Sections 861-863 (Electronic filings and digital signatures)
[11] Ibid., Section 240(2)
[12] Evidence Act 2011, Section 84- Admissibility of electronic records
[13] See Anupam Sanghi, “The LLP Law in India: A Comparative Study,” Indian Bar Review, 2021
[14] Yalaju-Amaye v. A.R.E.C Ltd (1990) 4 NWLR (Pt.145) 422.
[15] CAMA 2020, Section 119 – Disclosure of persons with significant control
[16] Ibid., Section 849 CAMA 2020
[17] Ibid., Section 119 CAMA 2020
[18] Ibid., Section 330 Cama 2020
[19] Ibid., Section 343
[20] Ibid., Section 270(1)
[21] Ibid., Section 275(1)
[22] https://www.resolutionlawng.com/analysing-the-impact-of-cama-2020-provisions-on- smes/#:~:text=The%20Act%20offers%20novel%20options,undertakings%20as%20a%20going%20concern.