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Nigeria

Establish Beneficial Ownership Registry (NG0020)

Overview

At-a-Glance

Action Plan: Nigeria Action Plan 2019-2021

Action Plan Cycle: 2019

Status: Active

Institutions

Lead Institution: Corporate Affairs Commission

Support Institution(s): Federal Ministry of Justice, Office of the Accountant-General of the Federation, Office of the Auditor-General of the Federation, Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), Federal Inland Revenue Service (FIRS), Economic and Financial Crimes Commission (EFCC), Ministry of Foreign Affairs, Independent Corrupt Practices and Other Related Offences Commission (ICPC), Nigeria Extractive Industries Transparency Initiative (NEITI), NFIU and National Assembly Committees on Anti-Corruption, Financial Crimes and Public Accounts, Code of Conduct Bureau, NPC. One Campaign, Publish What You Pay, Public and Private Development Centre, ANEEJ, PLSI, CISLAC, Association of Chief Compliance Officer, Association of Bureau de Change, Initiative for Collective Voice, Accountability and Progress, PTCIJ, CDD, Organized Private Sector, Youths in Africa Anti-corruption Network, MAN, MASIMA, WANGONeT, FENRAD, Centre for Health Equity and Justice (CEHEJ).

Policy Areas

Access to Information, Anti-Corruption, Beneficial Ownership, Capacity Building, E-Government, Legislation & Regulation, Legislative, Open Data, Private Sector

IRM Review

IRM Report: Nigeria Design Report 2019-2021

Starred: Pending IRM Review

Early Results: Pending IRM Review

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information

Potential Impact:

Implementation i

Completion: Pending IRM Review

Description

Brief description:
The establishment of a public register of beneficial owners of corporate entities will enable the relevant authorities mandated to curb corruption, identify natural persons who directly or indirectly own, control or enjoy the benefits of the corporate entity.

General problem:
Anonymous/shell companies constitute potential and real dangers to the economy and security of the countries where they operate. These companies deny the countries of valuable revenue through tax avoidance, mask links to corruption, money laundering, drug trafficking and terrorism financing. People use proxies and fronts to register companies and the legal owners are usually not those who control and benefit from the companies. Politically exposed persons also use their influence to confer advantages to themselves through such companies.

Specific OGP issue:
Corruption, Opacity in the utilization and management of public resources

Rationale for the commitment:
The identification of beneficial owners of corporate entities will discourage corruption and enable the government to trace and curb illicit financial flows, empowering citizens to be part of anti-corruption.

Main objective:
To put in place a system that enables openness, transparency and full disclosure of beneficial ownership information.

Anticipated impact:
Increase in valuable revenue through tax avoidance and reduction in money laundering, drug trafficking and terrorism financing.
Suggested impact – Reduced loses of public resources

See action plan for milestone activities

IRM Midterm Status Summary

6. Public register of beneficial owners of corporate entities

Main Objective

“To put in place a system that enables openness, transparency and full disclosure of beneficial ownership information.”

Milestones

  1. Re-engagement for the repeal and enactment of the new Companies and Allied Matters Act (CAMA) Bill and obtaining Presidential Assent
  2. Corporate Affairs Commission to also explore and pursue administrative directives to ensure establishment of a beneficial ownership register

3, Testing and Validation of Electronic Register of Beneficial Owners by stakeholders

  1. Deployment of Electronic Register of Beneficial Owners according to Open Ownership Standard
  2. Notice to corporate entities to submit information on beneficial owners as required by the law
  3. Capacity Building for law enforcement agencies, CSOs on the use of the beneficial owners register
  4. Public engagements on the existence and use on Electronic Register of Beneficial Owners

Editorial Note: For the complete text of this commitment, please see Nigeria’s action plan at https://www.opengovpartnership.org/documents/nigeria-action-plan-2019-2021/

Commitment Analysis

This commitment is carried forward from an unfilled commitment from Nigeria’s 2017–2019 national action plan on establishing the electronic and publicly available register for beneficial ownership of companies. The commitment was not fulfilled due to the lack of progress on amending the Companies and Allied Matters Act (CAMA) Bill.

This commitment sets clear goals and expected outcomes. It entails establishing the legal framework for setting up a public register for all legal entities (Electronic Register of Beneficial Owners) in Nigeria. Milestones include reengagement for the repeal and enactment of the new Companies and Allied Matters Act (CAMA) Bill and obtaining presidential assent. Other milestones include more technical but necessary steps for setting up the Electronic Register of Beneficial Owners, such as testing and validation of the register by stakeholders; the deployment of the Open Ownership Standard for publication of information; and notice to corporate entities to submit information on beneficial owners as required by the law. The commitment also entails CSO and public engagement with the register, but it does not outline how this would be achieved.

Due to its expected results for advancing the transparency of corporate beneficial ownership, this commitment is relevant to the OGP value of access to information. It also envisions capacity building and engagement activities that should ultimately lead to better disclosure and uptake of beneficial ownership information.

If fully implemented, this commitment could have a transformative potential impact on beneficial ownership disclosure in Nigeria, a measure that has been long advocated by civil society working on fighting corruption. At the time of writing, none of the country’s laws provide for publication of beneficial ownership information, and according to the Civil Society Legislative Advocacy Centre (CISLAC), amending the law is fundamental for achieving transparency on company ownership. [97] The Corporate Affairs Commission (CAC) prepared the draft bill for the Repeal and Re-Enactment of the Companies and Allied Matters Act (CAMA Amendment B), [98] which passed the Senate and House of Representatives but awaits presidential assent [99] – which was declined during the assembly in 2019. [100] This bill mandates beneficial ownership disclosure of legal entities, [101] using the United Kingdom’s concept of Persons with Significant Control (PSC) but with a lower threshold (5% for shares and voting rights as opposed to a 25% threshold in the United Kingdom). According to CAC, the 5% threshold has been set to capture the larger number of companies to be subject to disclosure. The law also gives CAC a new mandate to supervise and regulate, [102] and it strengthens sanctions for noncompliance and false information. [103] According to the director general of CAC, the new register is expected to be in place in the first quarter of 2021. [104]

The current register of companies, administered by the CAC, covers around 2 million companies. According to the CAC, the plan is to have a separate register for beneficial ownership, which would replicate some information from the company register and include the beneficial ownership data, which will be freely available open data. CAC plans to conduct some level of verification at the data collection stage. This verification process would examine the identity documents and cross-check them with the identity register. The plan is to have the beneficial ownership information updated annually. [105]

As part of the previous action plan, the country already launched a beneficial ownership register for extractive companies (NEITI register) in December 2019. It covers companies operating in oil, gas, and mineral sectors. This register, while encompassing only the extractive sector, has already been a significant tool for disclosing data on beneficial ownership. According to analysis conducted by Open Ownership, a UK-based civil society organization providing technical support, the register allows bulk download of data, making it possible to conduct systematic analysis of listed companies. A centralized register of all companies in the country would vastly expand the amount of data on corporate beneficial ownership and could potentially aid anti-corruption efforts. Research suggests that half of unknown entities or individuals own more than half of the choice properties in the nation’s capital. [106]

To ensure fulfilment of this commitment, CAC will need to continue to press ahead with efforts to develop directives and guidelines for setting up a register. To ensure that the register functions in accordance with the Beneficial Ownership Data Standard, the IRM recommends that CAC:

  • Establish a solid method for data collection and provide necessary training to its personnel; and
  • Ensure interoperability with other data standards, including the Open Contracting Data Standard and compliance with the Common Reporting Standard set by the OECD.

The experience of the newly set up NEITI register on extractives could be used to draw important lessons for the centralized electronic register, particularly when it comes to the quality of data and user engagement:

  • Similar to the NEITI register, it will be helpful if the register collects data on politically exposed persons (PEPs). This will allow users to investigate company connections to politically powerful people and detect potential conflicts of interest and political corruption risks. Inclusion of nationality, age, and PEP status in bulk downloads could greatly aid such analysis in a systematic way.
  • The register would greatly benefit from having unique identifiers for companies, as this will help users tell companies apart. For example, NEITI register only lists names, which can be confusing when entities have similar names or there are mistakes in data submission due to human error. Lack of unique identifiers could also hamper efforts to use the data in connection with other global datasets, such as the Open Ownership Register.
  • To enable tracing of the true beneficial owners in the register, the legal provisions should require the disclosure of a natural person as the beneficial owner (in line with legislation for all Nigerian companies) while retaining the requirement to disclose direct shareholders to enable traceability. [107]

Continued reform in this area will require sustained and concerted efforts by government agencies, civil society, and development partners providing much-needed financial and technical support. It will also benefit from sustained outreach to the private sector, especially in key industries like finance and real estate as key stakeholders of this reform. An institutional framework would be needed to ensure continued engagement of various actors. A dedicated thematic working group within the OGP process, coordinated by the OGP Secretariat and led by the CAC and a civil society counterpart, could be set up as a platform for ongoing dialogue and consultation.

[97]  Project Information Document/ Identification/Concept Stage (PID) , The World Bank, 3 March 2020, in. http://documents.worldbank.org/curated/en/460501583350881248/pdf/Project-Information-Document-PID-Nigeria-Beneficial-Ownership-Transparency-BOT-P173108.pdf , P. 3.
[98] Chidinma Nwagbara, “CAC discloses why it proposed law amendment,” Nairametrics, 9 January 2020, in https://nairametrics.com/2020/01/09/cac-discloses-why-it-proposed-law-amendment/
[99] The revised CAMA Act was given presidential assent in 2020, falling outside the scope of this report. See: https://www.premiumtimesng.com/news/headlines/365624-buhari-writes-senate-seeks-amendment-of-cama-law.html
[100] Chinedu Bassey (Civil Society Legislative Advocacy Centre), interview with IRM, 18 June 2020.
[101] Chidinma Nwagbara, “CAC discloses why it proposed law amendment,” Nairametrics, 9 January 2020, in https://nairametrics.com/2020/01/09/cac-discloses-why-it-proposed-law-amendment/
[102] Chidinma Nwagbara, “CAC discloses why it proposed law amendment,” Nairametrics, 9 January 2020, in https://nairametrics.com/2020/01/09/cac-discloses-why-it-proposed-law-amendment/
[103] “Is beneficial ownership transparency possible in Nigeria?” ANEEJ, 11 July 2017, in http://www.aneej.org/beneficial-ownership-transparency-possible-nigeria/
[104] Alhaji Garba Abubakar (Corporate Affairs Commission), interview with IRM, 7 July 2020.
[105] Alhaji Garba Abubakar (Corporate Affairs Commission), interview with IRM, 7 July 2020.
[106] “Is beneficial ownership transparency possible in Nigeria?” ANEEJ, 11 July 2017, in http://www.aneej.org/beneficial-ownership-transparency-possible-nigeria/

Commitments

  1. Participatory Budgeting

    NG0015, 2019, Anti-Corruption

  2. Implement Open Contracting and the Open Contracting Data Standard

    NG0016, 2019, Access to Information

  3. Transparent Tax Revenue Reporting

    NG0017, 2019, Legislation & Regulation

  4. Open Contracting and Licensing in Extractives

    NG0018, 2019, Access to Information

  5. Implement EITI Standard

    NG0019, 2019, Anti-Corruption

  6. Establish Beneficial Ownership Registry

    NG0020, 2019, Access to Information

  7. Strengthen Asset Recovery Legislation

    NG0021, 2019, Anti-Corruption

  8. Implement National Anti-Corruption Strategy

    NG0022, 2019, Anti-Corruption

  9. Improve Compliance with Freedom of Information Act with Focus on Records Management

    NG0023, 2019, Access to Information

  10. Improved Compliance with Mandatory Publication Provisions Requirement (FOIA)

    NG0024, 2019, Access to Information

  11. Implement Permanent Dialogue Mechanism

    NG0025, 2019, Dispute Resolution & Legal Assistance

  12. Aggregate Citizens' Feedback on Programs

    NG0026, 2019, E-Government

  13. Freedom of Association, Assembly, and Expression

    NG0027, 2019, Civic Space

  14. Enhance Participation of the Vulnerable

    NG0028, 2019, Capacity Building

  15. Implement New Computer Program in 6 Government Ministries to Improve Service Delivery

    NG0029, 2019, Capacity Building

  16. Legal Instrument to Strengthen SERVICOM

    NG0030, 2019, Legislation & Regulation

  17. Citizen Participation in Budget Cycle

    NG0001, 2017, Access to Information

  18. Open Contracting

    NG0002, 2017, Access to Information

  19. Extractive Sector Transparency

    NG0003, 2017, Access to Information

  20. Tax Reporting Standards

    NG0004, 2017, Fiscal Openness

  21. World Bank Doing Business Index

    NG0005, 2017, Infrastructure & Transport

  22. Beneficial Ownership Register

    NG0006, 2017, Anti-Corruption

  23. Anti-Corruption Informationi Sharing

    NG0007, 2017, Anti-Corruption

  24. Asset Recovery Legislation

    NG0008, 2017, Capacity Building

  25. Anti-Corruption Activity Coordination

    NG0009, 2017, Anti-Corruption

  26. FOIA Compliance for Annual Reporting

    NG0010, 2017, Access to Information

  27. FOIA Compliance for Disclosure

    NG0011, 2017, Access to Information

  28. Permanent Dialogue Mechanism

    NG0012, 2017, Fiscal Openness

  29. Joint Governmnet-Civil Society Legislation Review

    NG0013, 2017, Fiscal Openness

  30. Technology-Based Citizens' Feedback

    NG0014, 2017, E-Government

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