Recently, there were widespread complaints of freezing of associates’ accounts in some banks without the owners’ knowledge or authorization. The banks, had reportedly, claimed that their actions were based on instructions from the Central Bank of Nigeria to do so to accounts of organisations not registered with the Corporate Affairs Commission (CAC). While this is not aimed at interrogating the propriety or otherwise of the actions of the banks, it is pertinent to state categorically that things that will discourage people from embracing seamless banking habits at a time like this should be discouraged. It will be a manifest absurdity in a 21st century world to compel people to start burying their cash and other valuables in their backyards as a way of saving them because of stringent policies and rules.
Corporate Affairs Commission (CAC) is one of the federal government agencies in-charge of registration, management and dissolution of corporate entities in Nigeria. There are other government agencies that can register or create corporate entities in the country. But, specifically for the Corporate Affairs Commission, there are three corporate entities it registers which are companies, business names and incorporated trustees for associations, societies, religious institutions and not-for-profit organisations. However, by Companies and Allied Matters Act (CAMA) that created and governs the CAC, there are some business names that need not to be registered. It is legal and lawful to operate business names and any incorporated trustees for associations, societies, religious institutions, clubs, fora, groups, committees, charities, foundations, not-for-profit organisations and non-governmental organisations without registering them with or at the Corporate Affairs Commission (CAC). It is not mandatory to register them, although the benefits of registration are enormous. However, unlike business names and incorporated trustees, it is mandatory to register companies, including foreign companies, unless the President of Nigeria issues an exemption.
The types of business names that need not to be registered for them to be legal and lawful, are the business name of a firm that is if the business name consists of the true surnames of all partners without any addition other than the true forenames of the individual partners or the initials of such forenames; the business name of an individual, if the business name consists of his true surname without any addition other than his true forenames or the initials and the business name owned by any corporation (whether registered with the CAC or not), if the business name consists of its corporate name without any addition.
The above cited examples will not be required to be registered, even where there are other additions to the names, so far as some conditions precedent and subsequent, are observed. Such conditions are not like rocket science. They are simple to be fulfilled under the guide of a professional or an experienced person.
The law, also, gives room for groups of persons to exist without being a corporate body. However, if the persons appointed as the Trustees that managers of a group, wish to register their group as a corporate body, the CAC will allow such, provided there is a written authority from the group. It is understood that in exercise of the freedom of association enshrined in the Constitution of Nigeria, people are free to associate and form groups. No one needs the consent of CAC to associate and form groups, unless one wants such group to become a corporate body.
Nigerian laws recognize unincorporated Bodies as well as incorporated Bodies. The Incorporated bodies or entities are bodies that have sought and obtained registration with government or any approved agency of government and have become corporate bodies. The unincorporated bodies also known as corporation aggregate, are opposite of the incorporated bodies, they are lawful although not registered as a single corporate entity under any law in Nigeria.
Flowing from these explanations, it is clear that CAC is not the only government agency for creation and registration of corporate bodies and not all types of business must be registered with or created by the CAC or any government agency for them to operate. So, it is ridiculous if it was true for the CBN to order that all accounts of such entities not registered with the CAC be frozen without their knowledge.
Written by TONY OKAFOR
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