Four Compliance Obligations for CSOs in Nigeria

The issue of poor compliance of CSOs to existing civil society regulations can be attributed to many factors, including CSOs’ lack of the requisite knowledge and information about these regulations and how to go about such compliance.

For civil society organizations (CSOs), compliance with CAC regulations can be a daunting task due to the complexity of the rules and regulations. The Companies and Allied Matters Act (CAMA) of Nigeria provides the legal framework for the incorporation, regulation, and management of companies, including Corporate Social Organizations (CSOs).

For CSOs to remain in operation, they must comply with the following CAC requirements:

Incorporation:

According to Section 826 of the Companies and Allied Matters Act, all CSOs must be registered with the CAC and obtain a certificate of incorporation. NGOs may be established in their simplest form by –

(a) mere association of persons as is the case with Community-Based Organisations

(CBOs,) Age Group/Professional Interest Groups/Clubs and societies etc.); or

(b) by incorporation under the Company and Allied Matters Act 2020 (CAMA) as –

(i) incorporated trustees (PART F CAMA) or

(ii) Guarantee company under section 26 CAMA. 2020

The Regulatory framework for each varies. Traditionally the regulatory framework of registered companies entails more formalities than is the case for the Incorporated trustees. Further details can be assessed here. The name must be approved by the CAC before registration can be completed. The CAC has prescribed timelines within which various applications are attended to, as seen here, and has also set out various instructional videos to help with the process. If, however, there is a need to use one of its agents, there are provisions for that for a fee.

It is, however, important to note that registration may be declined if;

• The office of the Attorney General of the Federation does not authorize registration;
• The memorandum or Articles are inconsistent with CAMA, or the objects are illegal.
• Any of the subscribers to the memorandum is incompetent or disqualified;
• There is non-compliance with the requirement of any other law as to the registration and incorporation of a company;
• The proposed name conflicts with or is likely to conflict with an existing trademark or business name registered in Nigeria.

However, an affected person may give notice to the Commission requiring it to apply to the court for directions, and the Commission shall, within 21 days of receiving such notice, apply to the court for the directions.

Governance:

CSOs must have a clear governance structure, including a board of trustees, an executive team, and appropriate committees. The organization’s articles of association must outline the responsibilities of each member of the governance structure. A register of trustees reflecting the trustees present forename and surname, any former forename and surname, his usual residential address, his nationality, his business occupation, if any, particulars of any other directorships held by him, and the date of his birth must be maintained.

Financial Management, Transparency and Accountability, and Annual Returns:

CSOs must have effective financial management systems in place, including regular internal audits, clear financial reporting processes, and policies for the management of funds and assets. They must maintain accurate and up-to-date records of their activities, including financial statements, minutes of meetings, and other relevant documents. This information must be made available to the public upon request. The organization must also have transparent processes in place for receiving and addressing feedback and complaints.

A company limited by Guarantee, like every company, is required to keep accounting records to be kept at its registered office or other suitable places. Such records shall reflect the true financial position of the NGO and be sufficient to show and explain the company’s transactions. Note that this is not the financial reports made to Grantmakers or partners. The financial statements shall comprise the following –

• the balance sheet as of the last day of the year,
• an income and expenditure account for the year in lieu of a profit and loss account for a commercial company;
• notes on the accounts;
• the auditors’ reports;
• the directors’ report;
• a five-year financial summary.

NOTE: IF THE NGO QUALIFIES AS A SMALL COMPANY, EXEMPTIONS APPLY.

CSOs must also file annual returns with the CAC to update their status and provide information about their activities and financial performance. Where a CSO is already in existence but not sure of its status with the CAC, however, it can confirm here. After the name of the said organization is searched for, it will be confirmed whether or not it is active.

Comply with other regulations:

In addition to filing an annual return, CSOs must also comply with other applicable laws or regulations, which include filing tax with tax authorities, paying National Social Insurance of Staff, abiding by labor laws, etc., depending on their operations and activities. For feedback and questions on its operations to the CAC, you can send a mail to – spu@cac.gov.ng

By following these tips, CSOs can ensure they remain compliant with CAC requirements and avoid penalties or sanctions for non-compliance. CAC has also made available some resources on its procedures and regulations to help make a CSO compliant. In conclusion, the Corporate Affairs Commission has a far-reaching influence on civil society groups in Nigeria. It has established a system that is designed to provide oversight and ensure that these organizations are operating in a transparent, law-abiding manner. The CAC’s regulations provide a framework for the establishment, governance, and operation of these organizations and, ultimately, for the safety and protection of their members.