The Central Bank of Nigeria (CenBank) has stunned Nigeria with its revocation of BDC licenses.
The recent revocation of the operational licenses of some 4,173 Bureau De Change (BDC) companies by the Central Bank of Nigeria has sent shock waves through the financial sector and the general commercial sector in Nigeria. Following the action of Nigeria’s apex Bank and Regulator, the Corporate Affairs Commission (which is in charge of business regulation in Nigeria) has issued a directive published on its website on the 10th of July, 2024, requiring the affected companies to change their names and the objects of their operations within three months of face dissolution from the Commission.
In this article, we scrutinize what this means for the affected BDCs, potential legal implications and advise how businesses can navigate the new directive.
A background to the CAC’s Order Mandating Bureau De Change operatives to change company objects
On the 1st of March, 2024, the Central Bank of Nigeria issued a press release, announcing the revocation of the operating licenses of some 4,173 Bureau De Change operators in Nigeria. The CenBank acted under the powers conferred on it by the Banks and Other Financial Institutions Act, 2020 and the Revised Operational Guidelines for Bureau De Change 2015. Following this, the Corporate Affairs Commission exercised its powers under Section 8 of the Companies and Allied Matters Act and has instructed the affected Bureau De Change companies to amend their company names and change their objects within three months. If the affected Bureau De Change companies fail to comply with the directive, the Corporate Affairs Commission will cancel their certificates of incorporation and dissolve the entities.
What this means for affected Bureau De Change Operators
Immediate Compliance: The affected BDCs will have to comply with the CAC’s directive within the stipulated timeframe. Given that the CAC has exercised its statutory powers, the affected BDCs have to comply with that directive as it is now a Regulatory Compliance requirement. The affected BDCs must initiate the necessary post-incorporation processes with the Corporate Affairs Commission and take these legal/administrative steps:
- File necessary documentation with the Corporate Affairs Commission
- Amend their Companies’ Memorandum and Articles of Association to reflect the directive changing their objects.
- Obtain new permits for whatever business sector they intend to enter into, if required.
Business Operations: Obviously, the new directive from the Corporate Affairs Commission will invariably affect the business operations of the affected BDCs, as their business models are disrupted. They have to pivot away from the BDC model they operate as a mandatory requirement or they risk complete dissolution by the Corporate Affairs Commission. If this happens, they risk losing their Bank accounts, company names (which can then be re-registered by other interested individuals or corporations who have interest in those names), branding and overall goodwill amassed over time.
Legal Implications for affected Bureau De Change Operators
- Regulatory Penalties: BDCs that fail to comply with the CAC’s directive will risk facing regulatory sanctions from the Commission, particularly fines. In recent times, the CAC has taken a bigger interest in imposing penalties on corporate entities in Nigeria for regulatory non-compliance, and this means that they might come up with a directive to impose daily or overall penalties for the entities that fail to comply with its directives. These monetary penalties would be just one among other penalties imposed by the CAC, like dissolution of the companies and delisting them from the Corporate Register of companies.
- Corporate Restructuring: The CAC’s directives will automatically lead to corporate restructuring among the companies that will comply with the Commission’s After all, the operators of these entities incorporated them to provide Bureau De Change services to the general public while interfacing with Nigeria’s Banking institutions. These companies now have to undergo a broad corporate restructuring which involves changing their objects, among others.
Challenges to the Affected BDCs
Doing business in Nigeria is tough, no doubt about it. Meeting regulatory requirements to avoid sanctions can be as tough, if not tougher sometimes, as seemingly simple regulatory directives can completely alter a business sector or change narratives, for good or bad. Our regulators are also not known for their communications efforts either; in this case this simply means that the Corporate Affairs Commission, asides publishing this directive on their website and other social media channels, may likely not communicate directly to the affected entities. This will simply mean that some of the affected companies may not be aware of the Commission’s directives…that is, until the CAC imposes its sanctions by dissolving the companies and delisting them from the Corporate Register. This will now leave the affected companies scrambling for cover as they try to comply.
To that effect we are advising the CAC to extend its deadline, communicate directly with the companies involved by reaching out to them through their contact details (which the CAC has in its database), and ensuring all affected BDCs receive the information. The CenBank also has the details of these corporations and can liaise with the CAC by providing information so the CAC can directly reach out to the affected corporations. This is just our recommendation, though, and nothing more.
How Kabbiz Global Nominees Limited Can Help
At Kabbiz Global Nominees Limited, we are Nigeria’s foremost providers of business registration, corporate governance and regulatory compliance services. We can advise you appropriately and help you realign your business objectives, alongside restructure your business as you pivot.
Contact Kabbiz Global Nominees Limited for professional assistance with your business name registration. We invite you to email us at [email protected] for assistance.
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