CAC Releases New Rules for Bank Recapitalization

CAC has released new rules for bank recapitalization to strengthen Deposit Money Banks in Nigeria. 

These CAC bank recapitalization rules are to simplify the process of new incorporations, capital increase, mergers and license change, to comply with Companies and Allied Matters Act 2020.

Key Requirements for New Incorporations

Banks that want to incorporate must provide the following documents; approved name reservation, preliminary regulatory approval, completed online incorporation form and payment of required fees. 

CAC will issue certificates of incorporation within 24 hours for compliant applications.

Capital Increase Requirements

For banks that want to increase their capital through private placement or rights issue, CAC requires them to submit company resolution and return of allotment. 

Banks must also submit an affidavit that regulatory approval is required for the increase and amended memorandum of association to reflect the new capital. 

CAC stresses that all submissions must comply with specific provisions of the Companies and Allied Matters Act.

Mergers and Special Resolutions

Small to medium sized banks that want to merge must submit a signed special resolution from each entity. 

Merger plan must also get approval from the Securities and Exchange Commission and a certified court order authorizing the EGM of the merging banks.

Compliance with CBN Directives

CAC’s new rules are in line with the Central Bank of Nigeria (CBN) directive of March 2024 which requires banks to increase their capital. 

Commercial banks with international licenses must increase their capital to ₦500 billion while national banks must increase to ₦200 billion. 

This is part of the overall strategy to strengthen Nigerian banks against economic shocks.

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Implementation Timeline

CBN has given banks 2 years to meet the new capital requirement and CAC’s rules provide the framework for compliance. 

Banks have started issuing public offer and rights issues to achieve the required capital, showing a proactive approach to the recapitalization.

Conclusion 

CAC has done it again! This is a big step for Nigeria’s banking industry. 

By providing rules for new incorporations, capital increase and mergers, CAC is creating a stronger financial landscape. 

Banks must comply with CAC and CBN rules to stay stable and grow.

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