Nigeria: CAC Issues New Guidelines for Bank Recapitalisation

The Corporate Affairs Commission (CAC) has issued new guidelines to assist Deposit Money Banks in their ongoing recapitalisation efforts. This move is in accordance with the powers granted to the CAC under Section 8 (1) (e) of the Companies and Allied Matters Act No. 3 of 2020.

In a statement signed by its management and posted on its Facebook account on Friday, the commission urged banks to adhere to the new policy immediately.

The guidelines are intended to streamline proper filing for new incorporations, increases in share capitals, mergers, and the upgrade or downgrade of licence authorisations.

For new incorporations, the CAC requires applicants to submit several documents, including:

• An approved name reservation or availability
• Approval-in-principle from the sector regulator
• A duly completed online incorporation form
• Payment of stamp duty and filing fees appropriate for the category of license authorisation

The CAC promises that a certificate of incorporation will be issued within 24 hours for applications that meet all the requirements, which are outlined in the commission’s operations checklists available on its website.

For banking institutions seeking to increase their share capital through private placements, rights issues, or subscription offers, the CAC requires:

• A duly signed company resolution
• A return of allotment and other statutory declarations by directors verifying that the issued share capital is fully paid-up
• A notice stating that regulatory approval is required
• An affidavit from a director of the company confirming the necessity of regulatory approval 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 the increase and the requirement of regulatory approval
• Filing of regulatory approval and the issuance of a certificate of increase

According to the commission, under this category, the notice of regulatory approval must be filed in accordance with Section 127 (3), (4) & (5) of CAMA. Annual returns and information on persons with significant control must be up-to-date, and the certificate of increase will be issued within 24 hours of filing the regulatory approval.

For small and medium banking institutions seeking to merge, the CAC requires:

• Duly signed special resolutions for merger by each of the merging companies
• A scheme of merger duly approved by the Securities and Exchange Commission
• A certified true copy of the court order authorising the extraordinary general meeting of each of the merging companies
• Evidence of publication of the court-ordered meeting in two newspapers and the Federal Gazette
• A certified true copy of the court order sanctioning the scheme of merger

All enquiries and complaints regarding these guidelines and applications submitted in pursuit of the recapitalisation exercise should be addressed to bankrecapitalization@cac.gov.ng or via phone at +234 816 920 9551.

This follows a directive from the Central Bank of Nigeria in March 2024, requiring all banks to increase their capital base for improved productivity. The apex bank has directed commercial banks with international authorisation to raise their capital base to N500bn and national banks to N200bn. Commercial banks with national licences must meet a N200bn threshold, while those with regional authorisation are expected to achieve a N50bn capital floor.

The process has commenced with banks issuing public offers and rights issues to meet the two-year target.