Establish Beneficial Ownership Registry (NG0020)

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

• Faces of Open Government: Alhaji Garba Abubakar (September 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)

• Leveraging OGP for a Transparent COVID-19 Response in Africa (November 1, 2020)

• 2020 Annual ReportEnhancing Corporate Accountability in Nigeria (March 23, 2021)

• Establish Beneficial Ownership Registry (August 1, 2020)

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

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

4. Deployment of Electronic Register of Beneficial Owners according to Open Ownership Standard
5. Notice to corporate entities to submit information on beneficial owners as required by the law
6. Capacity Building for law enforcement agencies, CSOs on the use of the beneficial owners register
7. 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.