CAC Sets New Guidelines For Bank Recapitalisation, Mergers

The Corporate Affairs Commission (CAC) has unveiled new guidelines to support Deposit Money Banks (DMBs) in Nigeria as they undergo recapitalisation.

This initiative, announced recently via the commission’s official Facebook page, underlines the need for immediate compliance, in accordance with Section 8 (1) (e) of the Companies and Allied Matters Act No. 3 of 2020.

The guidelines cover procedures for new incorporations, share capital increases, mergers, and adjustments in license authorisation.

For new incorporations, banks must submit an approved name reservation, approval-in-principle from the sector regulator, and completed online forms, along with stamp duty and filing fees.

The CAC assures that certificates of incorporation will be issued within 24 hours for applications meeting all requirements.

Banks aiming to increase their share capital through private placements, rights issues, or subscription offers must provide a company resolution, return of allotment, and a director’s affidavit confirming the need for regulatory approval.

Other requirements include an amended memorandum of association, payment of necessary fees, and filing of regulatory approval notices, all of which must comply with Section 127 of CAMA. Certificates of increase will also be issued within 24 hours of filing the necessary documentation.

For small and medium-sized banking institutions planning to merge, the CAC mandates the submission of a special resolution for merger, a scheme of merger approved by the Securities and Exchange Commission (SEC), court orders authorising Extraordinary General Meetings, and evidence of publication in newspapers and the Federal Gazette. Queries and complaints regarding these guidelines can be directed to bankrecapitalization@cac.gov.ng or the provided contact number.

This development follows the Central Bank of Nigeria’s directive in March 2024, requiring banks to increase their capital base to enhance productivity. Commercial banks with international authorisation must raise their capital to N500 billion, while those with national licenses need to meet a N200 billion threshold. Banks with regional authorisation are expected to reach a N50 billion capital floor. The recapitalisation process is actively underway, with banks issuing public offers and rights issues to meet the two-year deadline.