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THE ECONOMIC IMPACTS AND PROSPECTS OF CAMA LAW 2020 ON SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Small and medium-sized enterprises (SMEs) or small and medium-sized businesses (SMBs) are companies with fewer than 500 employees. International entities such as the World Bank, the European Union, the United Nations, and the World Trade Organization use the abbreviation “SME” (WTO). SMEs have been shown to boost a country’s economic growth. The Corporate Affairs Commission is a recognized government organization that regulates and manages them (CAC).

The Nigerian Corporate Affairs Commission (CAC) was founded in 1990 by the Companies and Allied Matters Act No. 1 (CAMA) 1990, as modified, presently known as Act Cap C20 of the Nigerian Federation Laws.

As a means of strengthening the economy and solving challenges, the Nigerian government is looking to small and medium-sized businesses and entrepreneurs (Latinwo and Ayozie, 2010). Small scale industries make up a large share of all registered companies in Nigeria, and they have been around for a long time (Ayozie, 2006).

Regardless of the outstanding work done by SMEs in Nigeria, there are various constraints that work against their effective and seamless operation, the most significant of which being government laws, the expense of setting up and registering a firm under the CAC.

There has been uneasiness and commotion over the Company and Allied Matters Act since President Muhammadu Buhari signed the revised CAMA Law 2020 on August 7th, 2020.

The repealed Act was long overdue for a reform after three decades of provisions that had become obsolete due to the dynamic nature of global commerce. The new Act is meant to provide relief to businesses and make conducting business easier.

“Single member and shareholder firms – S.18(2) of the new CAMA now makes it possible to incorporate a private company with only one (1) member or shareholder,” according to the new law.

“Exemption from appointing Auditors – Small companies or corporations with a single shareholder are no longer required to appoint auditors to audit the company’s financial records at the annual general meeting. S.402 of the new CAMA allows for an exemption in certain situations.

“Exemption from the appointment of a company secretary – For private enterprises, the appointment of a company secretary is currently optional. The employment of a company secretary is only required for public businesses, according to S. 330 (1) of the new CAMA.”

“Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs) – Formation” Limited Liability Partnerships (LLPs) and Limited Partnerships (LPs) are introduced in the new CAMA (LPs). This combines a partnership’s organizational flexibility and tax status with a company’s members’ restricted liability.”

“Reduction of Filing Fees for Charge Registration – Under S. 223 (12) of the new Act, the total filing fees payable to the CAC have been decreased to 0.35 percent of the charge’s value.

STATEMENT OF PROBLEM

The unpleasant rules, costs of starting up and managing SMEs in Nigeria have an impact on the smooth operation of enterprises in the country. CAC-created government regulations stifle the production and expansion of SMEs in the country.

Following worries that the CAMA 1990 was becoming outdated, Buhari wrote to the Senate in November 2019 requesting that the Act be repealed or re-enacted. The revisions were designed to encourage investments that will help small firms and startups grow, while also lowering costs and reducing regulatory burdens. It also brings major benefits to businesses by cutting red tape and making regulatory compliance easier. This study is founded on this concept, and it aims to look into the economic repercussions and future possibilities of the.

OBJECTIVES OF THE STUDY

The primary goal of this research is to look at the economic impact and future possibilities of Nigeria’s CAMA Law 2020 on SMEs. The following are some of the study’s other goals:

Considering how the CAMA Law 2020 affects the performance of SMEs.

Considering the impact of the CAMA Law 2020 on Nigeria’s economy.

Identifying the potential impact of the CAMA Law 2020 on Nigeria’s economic growth.

RESEARCH QUESTIONS

The study is guided by the following research questions:

What influence has CAMA Law 2020 had on SMEs’ performance?
What are the advantages of the CAMA Law 2020 for Nigeria’s economy?
What are the implications of the CAMA Law 2020 on Nigeria’s economy?

RESEARCH HYPOTHESIS

The research was designed to examine the following null hypothesis:

H01: CAMA Law 2020 has no substantial beneficial link with the performance of SMEs in Nigeria.

 

H02: The CAMA Law 2020 has no substantial beneficial association with Nigeria’s economic growth.

SIGNIFICANCE OF THE STUDY

Government policymakers, students, researchers, students’ affairs practitioners, and all the various bodies that come into play when talking about CAMA Law 2020 and SMEs in the country would benefit greatly from an understanding of the role SMEs play in the economic growth of any country, as well as the essence of the CAMA Law 2020 enabling an environment where they thrive well. The study’s findings will assist company owners and businesses, as well as the government, in strategizing and reconstructing policies in order to efficiently implement the CAMA Law 2020. It will also exert pressure.

individuals to find out more about the amazing potential that the CAMA Law 2020 will bring to the business world.

SCOPE OF THE STUDY

The study’s goal is to examine the economic effects and prospects of Nigeria’s CAMA Law 2020 on SMEs. This study will look at the many ways in which the recently signed CAMA Law 2020 will improve the performance of SMEs.

DEFINITION OF TERMS

CAMA 2020: This word refers to the Company and Allied Matters Act 2020 in this study.

Small and medium-sized businesses (SMEs) are businesses that are under the size of a corporation (SMEs)

Impact: to have a significant and immediate effect on something or someone.

Prospects: Something that is predicted or certain to happen in the future is referred to as a prospect.

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