CAC Orders 4,173 BDCs to Change Names or Face Dissolution

The Corporate Affairs Commission (CAC) of Nigeria has issued a directive to 4,173 Bureau De Change (BDC) companies whose licenses were recently revoked by the Central Bank of Nigeria (CBN). These companies are required to change their names within three months or face the cancellation of their certificates of incorporation and subsequent dissolution. This directive was communicated through a notice issued on Wednesday by the CAC, emphasizing the urgency for shareholders and directors of the affected companies to take immediate action. Details of the affected companies have been made available on the CAC’s website for confirmation.

The CAC’s authority to enforce this name change is derived from Section 8 of the Companies and Allied Matters Act 2020 (CAMA). The Commission cited this legal framework in its notice, stating:

“Following the revocation of the operational licenses of 4,173 Bureau De Change companies by the Central Bank of Nigeria vide a Federal Republic of Nigeria Official Gazette (Vol. 111) No. 37 of February 2024 for non-compliance with Regulatory Standards, the Corporate Affairs Commission in exercise of its powers under section 8(1)(e) of the Companies and Allied Matters Act, 2020 advises these companies to within three months from the date of this publication, change names and objects. Failure to change the names and objects within the stipulated time frame shall result in cancellation of certificate of incorporation and dissolution. It is to be noted that it is unlawful for a company whose certificate has been deemed dissolved to carry on business.”

This notice from the CAC comes in the wake of a significant regulatory action by the CBN. The CBN recently revoked the operational licenses of more than 4,173 BDC operators. This action was taken due to the failure of these companies to comply with specific regulatory guidelines. The CBN’s decision was reported by Nairametrics, which detailed the reasons behind the revocation.

The affected BDCs failed to meet several compliance requirements set by the CBN. These requirements included the payment of necessary fees, such as license renewal fees, within the stipulated period. Additionally, the BDCs were required to render returns in accordance with CBN guidelines and to adhere to directives and circulars issued by the CBN. Compliance with Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and Counter-Proliferation Financing (CPF) regulations were particularly emphasized.

CBN’s spokesperson, Sidi Hakama, elaborated on the regulatory grounds for the revocation, noting that the bank acted under the authority granted by the Bank and Other Financial Institutions Act (BOFIA) 2020, Act No. 5, and the Revised Operational Guidelines for Bureaux De Change 2015 (the Guidelines). The revocation reflects the CBN’s commitment to enforcing stringent regulatory standards to maintain the integrity of the financial system.

The BDC sector in Nigeria plays a crucial role in the country’s financial ecosystem, providing currency exchange services to individuals and businesses. However, the sector has faced ongoing challenges related to regulatory compliance and operational standards. The recent crackdown by the CBN and the subsequent directive by the CAC underscore the importance of maintaining rigorous oversight to ensure that BDC operators adhere to established guidelines.

The implications of the CAC’s notice are significant. Companies that fail to comply with the directive to change their names within the specified timeframe will face dissolution. This legal consequence highlights the serious nature of regulatory compliance in the financial sector. The requirement to change names and objects is not merely a bureaucratic formality but a necessary step to align with the legal and regulatory framework governing corporate entities in Nigeria.

For the affected BDCs, the process of changing names will involve a series of administrative steps. These steps include submitting the necessary documentation to the CAC, updating their corporate records, and ensuring that all legal requirements are met. The CAC’s directive also places a responsibility on the shareholders and directors of these companies to take proactive measures to comply with the new regulations.

The broader context of this regulatory action is rooted in the need to enhance the transparency and accountability of the BDC sector. The CBN’s focus on AML, CFT, and CPF regulations reflects global concerns about financial crimes and the need to safeguard the financial system from illicit activities. By enforcing these regulations, the CBN aims to create a more secure and stable financial environment in Nigeria.

The revocation of licenses and the subsequent directive from the CAC also have economic implications. The BDC sector contributes to the overall economic activity by facilitating foreign exchange transactions. The disruption caused by the revocation of licenses may have short-term impacts on the availability of currency exchange services. However, in the long run, the enforcement of regulatory standards is expected to strengthen the sector and enhance its credibility.

In conclusion, the CAC’s directive to the 4,173 BDC companies to change their names within three months is a critical regulatory measure aimed at ensuring compliance with legal and operational standards. The revocation of licenses by the CBN highlights the ongoing challenges in the BDC sector and the need for stringent oversight. The affected companies must take immediate action to comply with the directive to avoid dissolution. This regulatory action underscores the importance of maintaining high standards of transparency, accountability, and compliance in Nigeria’s financial sector. As the BDC sector undergoes this period of adjustment, the focus remains on building a more robust and credible financial system that can support Nigeria’s economic growth and development.

Source: Materials provided by Nairametrics. Content edited for style and length.