The Corporate Affairs Commission (CAC) has issued a firm six-week ultimatum to all unregistered businesses operating within Nigeria to formalize their status with the Commission. Failure to comply with this directive will result in prosecution, potentially leading to jail terms for defaulting entities.

This decisive action, announced in a public notice titled “PUBLIC NOTICE: CARRYING ON BUSINESS IN NIGERIA UNDER AN UNREGISTERED NAME OR ACRONYM,” comes against the backdrop of the recent devastating collapse of the fraudulent cryptocurrency investment scheme, “CBEX.” This scheme reportedly defrauded Nigerian investors of an estimated N1.3 trillion, highlighting the critical need for regulatory oversight and public vigilance.

The Economic and Financial Crimes Commission (EFCC) had earlier clarified that while ST Technologies International Limited, the entity behind CBEX, was indeed registered with the CAC, it lacked the necessary authorization from the Securities and Exchange Commission (SEC) to function as an investment platform. This distinction underscores the importance of businesses not only being registered but also possessing the specific licenses required for their particular operations.

In its statement, the CAC unequivocally stated that conducting business in Nigeria as a company, limited liability partnership, limited partnership, or under a business name without proper registration constitutes a criminal offense under Section 863 of the Companies and Allied Matters Act (CAMA), 2020. Furthermore, operating under a name or acronym different from the registered one is also a violation of the Act.

The Commission further emphasized the mandatory requirement outlined in Section 729 of CAMA, which mandates every registered company to prominently display its registered name and registration number at all its business locations. This information must also be clearly stated on all official publications, including letterheads, signage, and all forms of marketing and publicity materials.

The CAC did not mince words regarding the consequences of non-compliance. The statement explicitly warned that failure to adhere to business registration requirements could lead to prosecution and a conviction carrying a penalty of up to two years of imprisonment.

Highlighting the severity of the matter, the CAC drew attention to Section 862 (1) of CAMA, which stipulates that any individual who knowingly makes a false statement in any document required under the Act, including official publications, commits an offense. Upon conviction, such individuals face a two-year jail term in addition to a daily fine imposed on the company for each day the offense persists.

Given these legal provisions, the CAC has firmly directed all companies, limited liability partnerships, limited partnerships, and business name proprietors to ensure full compliance with the stipulations of CAMA within the stipulated six-week timeframe from the date of the notice. The Commission stressed that any failure to comply will trigger enforcement actions, including prosecution of the defaulting parties.

Stakeholders and the general public are encouraged to visit the official CAC website at http://www.cac.gov.ng for further information and updates on the registration process.

Background Context:

The CAC's intensified focus on business registration follows closely on the heels of the CBEX cryptocurrency scam. The EFCC had previously clarified that possessing a Special Control Unit Against Money Laundering (SCUML) certificate does not grant an entity the legal right to operate as an investment platform in Nigeria.

In a statement released earlier, the EFCC explained that while ST Technologies (distinct from CBEX) is registered with SCUML in accordance with Section 17 of the Money Laundering (Prevention and Prohibition) Act, 2022, this registration solely pertains to anti-money laundering compliance and does not authorize the company to offer investment services to the public.

Adding to the regulatory efforts, the House of Representatives had recently cautioned public figures, celebrities, and influencers against promoting unregistered investment platforms, recognizing the potential for such endorsements to mislead the public and contribute to fraudulent schemes like CBEX.

The CAC's latest directive underscores a concerted effort by regulatory bodies in Nigeria to enhance accountability, protect the public from fraudulent activities, and ensure that all businesses operate within the bounds of the law. The six-week window serves as a crucial period for unregistered entities to regularize their operations and avoid the severe penalties outlined by the Commission.