Beneficial Ownership Register (NG0006)

• Nigeria Spearheads Open Government in Africa, Takes Steps to Stop US$15.7B of Illicit Flow through Financial Systems (August 1, 2020)

• Lessons from Reformers: Nigeria Enshrines Beneficial Ownership Transparency in Federal Law (April 1, 2020)

• Nigeria's Push for Beneficial Ownership Transparency in Procurement and in the Extractives Sector (May 1, 2019)

Nigeria is committing to establishing a register that will make it possible to identify the natural persons who directly or indirectly own, control or enjoy the benefits of the corporate entity.

6. To establish a public central register of beneficial owners of companies

Language of the commitment as it appears in the action plan:

“Nigeria commits to establish a register that will make it possible to identify the natural persons who directly or indirectly own, control or enjoy the benefits of the corporate entity.”

Milestones:

6.1. CAC to commence consultations, workshops and process of establishment of Register of Beneficial Ownership.

6.2. Capacity building on Beneficial Ownership for public officials, civil society and investigative journalists.

6.3. Establishment of Beneficial Register designed according to open data standards.

6.4. Regular update of the Register using innovative technology.

6.5. Dissemination of Information on Beneficial Ownership.

6.6. Establish clear rules on beneficial ownership, constitute coordinating committee with CAC and NEITI as lead organisations.

Start Date: January 2017 End Date: December 2019

Action plan is available here:

Context and Objectives

This commitment aims to enhance civic participation through access to beneficial ownership information via a register using open data standards.

In Nigeria, a lack of due diligence requirements relating to beneficial ownership has been linked to money laundering, drug trafficking, terrorism and corruption. [68] According to Kolawole Banwo (CISLAC), people use proxies and fronts to register companies and the legal owners are usually not those who control and benefit from the companies. There is a lot of political interference in economic and commercial decisions, and officials use their position to further enrich themselves through procurement processes or acquisition of assets and properties. [69] Banwo believes this information should be public, since what ensures transparency is public scrutiny. [70] Nigeria has an extended history of engagement with the Financial Action Task Force (FATF) [71] and the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA). This engagement has remedied some of the legal and institutional gaps relating to anti-money laundering and counter-financing of terrorism. [72]

But the law, as set out in the Companies and Allied Matters Act, Cap 59, 1990 (CAMA), does not provide for the systematic identification of beneficial owners, nor the establishment of a publicly-accessible beneficial ownership register. For example, section 94 of CAMA allows a public company to require a member of that company to disclose the capacity in which he holds company shares and if he holds them otherwise as a beneficial owner. Section 95 addresses the notification of substantial, not beneficial, ownership. These provisions reflect a concern with concentration and control, rather than with transparency and accountability. They have not prevented false fronts in the company register maintained by the Corporate Affairs Commission (CAC) [73] and allegations of grand corruption continue to surface. For example, in 2015, the media reported that 15 ex-governors who had won Senate seats in the country’s elections had misappropriated and laundered N 172 billion. [74] In 2016, the Panama Papers revealed that 106 Nigerians and firms owned companies and assets in offshore tax havens. [75]

In May 2016, President Buhari recognized the Nigerian Extractive Industries Transparency Initiative (NEITI) and their efforts to implement beneficial ownership disclosure in the extractive industries (the NEITI published its roadmap in this regard in December 2016, see Commitment 3) [76] and announced that a disclosure requirement would be extended to other sectors. [77]

Commitment 6 is relevant to three OGP values (access to information, civic participation and technology and innovation for transparency and accountability). A beneficial ownership register designed according to open data standards, along with the creation of clear rules and dissemination of information on beneficial ownership, should advance access to information and technology and innovation for transparency and accountability. Robust consultations and workshops on establishing the register would promote civic participation.

Overall, the commitment is specific enough to be verifiable, although Milestones 6.1, 6.2, and 6.5 lack important detail. Milestone 6.1 does not expressly state that consultation will occur with civil society, and the “capacity building” envisaged by Milestone 6.2 is vague. Milestone 6.5 does not specify how beneficial ownership information will be disseminated to the public, but this is important given the technical nature of the information. Milestone 6.4 could be more measurable by specifying how regularly the register would be updated.

Civil society stakeholders are of the view that the commitment will have a transformative impact. [78] Nigeria should achieve beneficial ownership reforms given President Buhari’s political support, alongside the institutional and technical capacity of the CAC, the Bureau of Public Procurement, and the Central Bank of Nigeria. [79] However, although Milestone 6.6 mentions the need for “clear rules” on beneficial ownership, failure to mention legislative reforms, specifically of the CAMA, lowers the commitment’s potential impact to “moderate.”

Next Steps

This commitment covers a critical policy area for the country. Future commitments in this area could include:

• A specific timeline and strategy for legislative reform; this is instrumental to realize the ambition of this policy area. A clear analysis of gaps in the current legal framework would be helpful to identify the adjustments needed to enable beneficial ownership reforms in Nigeria;
• Consider articulating a strategy for public agency coordination and engagement, particularly relevant agencies like the CAC, BPP, and Central Bank of Nigeria. Their involvement and collaboration are key to deliver implementation in this policy aim; and
• Set concrete targets to update the register and promote the register’s use.

6. To establish a Public Central Register of Beneficial Owners of companies

Language of the commitment as it appears in the action plan:

“Nigeria commits to establish a register that will make it possible to identify the natural persons who directly or indirectly own, control or enjoy the benefits of the corporate entity.”

Milestones:

6.1 CAC to commence consultations, workshops and process of establishment of Register of Beneficial Ownership.

6.2 Capacity building on Beneficial Ownership for public officials, civil society and investigative journalists.

6.3 Establishment of Beneficial Register designed according to open data standards.

6.4 Regular update of the Register using innovative technology.

6.5 Dissemination of Information on Beneficial Ownership.

6.6 Establish clear rules on beneficial ownership, constitute coordinating committee with CAC and NEITI as lead organisations.

This commitment aimed to enhance civic participation by providing beneficial ownership information through a register designed in accordance with open data standards.

Implementation of this commitment was limited, as a considerable amount of its deliverables depended on the development of the beneficial ownership register. ^[69] The government has not yet established the Register of Beneficial Owners for Corporate Entities. However, the Corporate Affairs Commission (CAC) collaborated with the Nigeria Extractive Industries Transparency Initiative and Mining Cadastral Office to develop and deploy the Beneficial Ownership Register for Companies in the Extractive Sector. ^[70] The establishment of the extractive-sector register under Commitment Three allows citizens to access information about owners of companies that was previously unavailable.

Milestones related to public sensitization, government training, and establishing guidelines were partially implemented. CAC partnered with the CSO, Open Ownership, through a study tour to the United Kingdom’s Company House. CAC subsequently redesigned its annual returns form to capture beneficial ownership information. ^[71] Importantly, the government repealed and replaced the Companies and Allied Matters Act (CAMA) to provide a legal backing for beneficial ownership information disclosure. The bill's passage was briefly delayed due to concerns from the Office of the Attorney General of the Federation. ^[72] However, the concerns were addressed, and the bill was resubmitted and signed in 2020, falling outside the implementation period. ^[73]

This commitment marginally changed beneficial ownership practices. The Government of Nigeria made important steps toward a strong legal framework to support beneficial ownership disclosure. However, the fact that the registry has not been created means that citizens do not yet have access to beneficial ownership information. The passage of the new CAMA Act and continuation of this commitment in the next action plan will allow the government to make substantial progress toward beneficial ownership transparency in Nigeria.