The Corporate Affairs Commission (CAC), through the PSC (Persons with Significant Control) Regulations signed into law in November 2022, mandated every company to reveal their corporate shareholders’ identity in their company portfolio. The directive gave rise to the advent of PSC Regulations 2022, which provides in a literal interpretation that all members of the company must reveal their identity and not utilize their corporate veil to perpetrate financial misappropriations and/or money laundry.
According to Regulation 14 of the PSC Regulations and Section 868 of CAMA, a PSC (Persons with Significant Control), also known as a beneficial owner, means:
“The natural person(s) who ultimately owns or controls a company or limited liability partnership or the natural person on whose behalf a transaction is being conducted, and includes those natural persons who exercise ultimate effective control over a legal person or arrangement or, be a person who meets any of the following conditions in relation to a company or limited liability partnership –
- holds at least 5% of the issued shares in a company or interest in a LLP either directly or indirectly,
- exercises at least 5% of the voting rights in a company or LLP directly or indirectly;
- holds a right directly or indirectly, to appoint or remove majority of the directors of the company or partners of the LLP;
- exercises significant influence or control, directly or indirectly, over the company or LLP; or
- having the right to exercise, or actually exercises significant influence or control over the activities of a trust or firm whether or not it is a legal entity, but would itself satisfy any of the first four conditions if it were an individual.”
Once any natural person meets the above criteria, he/she automatically qualifies as a PSC. In simple terms, a PSC is a “natural person, who has ultimate (actual) ownership and control over a corporate entity, and not necessarily the legal owner (artificial person), or the person(s) entitled on paper to do so”. The implication of this is that only natural persons (i.e. individuals), who ultimately own or control corporate entities, are required to be disclosed to the CAC as PSCs.
Furthermore, where some, or all of a company’s shareholders, or ultimate beneficial owners are corporate entities, such entities are also required to present for filing as PSC in the company, the details of individual(s)/natural person(s), who ultimately control/or own the corporate entity, at the CAC.
It is pertinent to note that, the PSC Regulations allows corporate entities to present for filing as PSC, details of persons who are not members of the Company.
The implication of the foregoing is that Companies or LLPs may nominate individuals who are not beneficial owners, solely for the purpose of filing at the CAC, and the particulars of such nominated persons shall be inscribed in a separate register maintained for that purpose.
Hence, any individual that beneficially and/or directly owns not less than 5% of the shares of a company is automatically a PSC. The CAC recently commenced the application of PSC on their Portal, and now requires every registered entity to update its PSC status on the CAC portal. Where a Company is a PSC in another Company, that PSC must nominate an individual that would represent it on the CAC’s PSC Register. For instance, if ABCD Limited has two shareholders: AB Limited with 50% and CD Limited with another 50%, each of AB Limited and CD Limited must list the name of the individual taking ultimate benefit or exercising significant control over the shares. AB Ltd. And CD Limited cannot be PSCs by themselves.
In compliance with the PSC Regulations and Section 119(3) of CAMA 2020, which mandates the CAC to maintain a register of PSCs, known as the Beneficial Ownership Register (“the Register”), the CAC, in May 2023, launched an online Register, accessible online at “https://bor.cac.gov.ng/”. Through the Register, members of the public and government agencies can access, and generate reports on the information of PSCs.
The general public is hereby encouraged to visit the website and ascertain their PSC status and do the needful before the Commission’s enforcement of sanctions contained in the regulation.
NB: The information contained in this article does not culminate into a legal advice/opinion. Please contact us if you require any further information or assistance.
