By Bassey Udo in Brussels, Belgium
Nigeria was the envy of most participating countries at the ongoing 10th EITI Global Conference in Brussels, as the Corporate Affairs Commission (CAC) made a presentation to highlight the progress the country is making in its implementation of the beneficial ownership policy in the extractive industries
The Registrar General of the CAC, Ishaq Magaji Hussain, said Nigeria, which, in 2019, emerged as the first African country to establish a public beneficial ownership register for the extractive sector, has made significant progress in the implementation of the policy, with visible impact on key sectors of the country’s economy.
Mr Hussain spoke as a panelist in an Opening Extractives programme on Wednesday organised as part of the ongoing EITI Global Conference.
Participating countries in the session, some of which made presentations during the panel discussions on the theme: “Beneficial Ownership Data in Practice” to highlight their progress in implementing the BO policy, included Argentina, Armenia, Columbia, Ghana, Liberia, Nigeria, Philippines, Senegal, South Africa, and Zambia.
Although representatives of the various countries reported various levels of progress in their implementation of the BO policy, they however agreed none has attained Nigeria’s success story.
Since establishing the BO register, Hussain said the CAC, which is the repository and sole custodian of BO information on the entire Nigerian economy, has since developed a central register it controls, but freely accessible to the general public.
He said the beneficial ownership register has now been adopted by the Federal Government as a policy to promote accountability and transparency among public entities, as the system has been structured to be integrated to public procurement and revenue services, as well as the law enforcement agencies, like the Nigerian Revenue Service (NRS), the Economic and Financial Crimes Commission(EFCC), Nigerian Financial Intelligence Unit (NFIU) and other public institutions.
“Beneficial Ownership goes beyond the use by government agencies for investigation. It’s for the general society. It has basically become a framework for transparency in all activities in the extractive industry and the central economy. It has become mandatory for anyone coming to register a company to disclose all information about the ultimate ownership behind the company.
“In the extractive industry, permits and licenses are given to an entity, not the individual. The reason the beneficial ownership information is kept at the central economy is because it changes every day. When changes occur, you will have the opportunity to know who are the real owners and the official owners of that particular license.
“At the point of incorporation you must disclose the ownership behind any company. No one can make changes without making reference to beneficial partnerships.The issue of the information is key to investors and the central economy.”
“We have a policy of filing annual returns every year. If any company, by chance, updates a record, or has reasons to change any record, it must file an update to the records annually. And failure to do so will have a major consequence where the company might become inactive. And once the company becomes inactive, it becomes a red flag in Nigeria.
“Shell companies are not allowed to operate in the country. Once the purpose of the company ceases to exist, the information must be filed to the CAC, which is Nigeria’s corporate registry. Consequently, that company must be wound up. So, the company has the option to either file a voluntary wind up or be compelled to do so,” he said.
Access to beneficial ownership information, the CAC boss noted, is not only beneficial internally for the country’s economy, but also for investors, particularly foreign investors and persons with significant control registers that use beneficial ownership data standard to gather structured data on beneficial owners of Nigerian companies.
To regulate the activities of all corporate entities in the country, he said the federal government in 2021 came up with the Companies and Allied Matters Act (CAMA), which provided a framework for the mandatory disclosure of beneficial ownership information on all entities.
Pursuant to the provisions of the Act, the CAC Registrar General said his organization came up with the persons with significant control (PSC) regulation, which required the supply of detailed information on who is the beneficial owner in a company either directly or indirectly, whether in a limited liability company or partnership.
He said even public companies which have 5% voting rights, are now guided by the regulation that the ownership of beyond 5% must be detailed, adding that the issue of verification of the identities of the beneficial owners, particularly as they relate to foreign ownership, has posed a major challenge.
To help resolve the challenge, Hussain said the Commission introduced embedding artificial intelligence in its processes to help in the verification of the identity of foreign investors, in view of the rising incidence of cross-border investments in the country.
“Before being given an operational license in the mining sector, or at the expiration of a license, investors are expected to fulfill some requirements and obligations, including filing information at the corporate registry.
He said between last year and today, the Commission struck off the BO register over 500,000 entities whose licenses and operational permits have not been updated with relevant information on their beneficial owners.
To avoid losing their operational licenses and permits, and consequently a stake in the stock exchange, as a result of being struck off the BO register, the Registrar General said other companies have strived to meet their obligations regularly, in terms of filing their required BO information.
Since January this year, he said the BO register at the central repository has been hit by over 90,000 verification requests from law enforcement agencies and another 17,000 from various investors worldwide.
“That’s to tell you how our BO system is working. If any company fails to meet up with its obligations, it will lose its entity and will lose its operational license,” he said.
During the session, the revised Opening Extractives Licensing Manual was formally unveiled.
While performing the unveiling, the Advocacy Manager, Open Ownership, Phoebe Williams, described the manual as a practical resource material for regulatory authorities responsible for the allocation and governance of extractive licenses and contracts.
He said the manual provides a step-by-step guide on how regulators can use beneficial ownership information in the screening, award, monitoring, renewal and transfer of extractive rights, including licenses, contracts, permits or concessions, including guidance on prioritizing applications for appropriate regulatory oversights, key screwing questions for identifying relevant risks red flags as well as steps for checking information that can provide a more complete picture of the owners behind companies applying for or holding extractive rights.
