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Central Bank of Nigeria Elevates Capital Requirements for Banks
March 29, 2024
The Central Bank of Nigeria (CBN) has announced a significant update to the financial regulatory framework, particularly affecting the capital requirements for commercial, merchant, and non-interest banks operating within the country. This move aims to fortify the banking sector against the backdrop of current macroeconomic challenges and enhance its capacity to propel national economic growth.
New Capital Thresholds Set
In a bid to ensure the banking institutions' resilience and solvency, the CBN has revised the minimum capital requirements as follows:
Commercial Banks: International operations must now hold a minimum of ₦500 Billion, national banks ₦200 Billion, and regional banks ₦50 Billion.
Merchant Banks: A standard of ₦50 Billion is set for national operations.
Non-Interest Banks: National banks are required to have ₦20 Billion, and regional banks ₦10 Billion.
Strategies for Compliance
Banks are encouraged to explore various avenues to meet these new standards, including the injection of fresh equity capital, pursuing mergers and acquisitions, or adjusting their licensing. The CBN has laid out clear pathways for both existing banks and new entrants to align with these changes.
Timelines and Guidelines
Existing banks are given a 24-month window, starting from April 1, 2024, to meet the revised capital requirements. Moreover, they are to strictly observe the minimum Capital Adequacy Ratio (CAR), with non-compliance necessitating immediate capital infusion. New banks or those in the proposal stage must ensure their capital meets the revised standards upon application post-April 1, 2024, with a grace period extending to March 31, 2026, for any pending applications.
Implementation and Oversight
All affected banking institutions are required to submit a comprehensive plan detailing their approach to achieving the new capital targets to the CBN’s Director, Banking Supervision Department, by April 30, 2024. The central bank will closely monitor compliance to ensure adherence within the specified timeline.
Ensuring Stability and Growth
This regulatory enhancement is part of the broader Banking Sector Recapitalization Programme 2024, which aspires to not only safeguard the Nigerian banking sector from economic fluctuations but also to bolster it in support of the country's journey toward becoming a US$1 trillion economy by 2030. The CBN emphasises that this initiative will not disrupt banking services and assures that depositors' interests will remain protected throughout this transition.
For further details on the recapitalization programme, the CBN directs stakeholders to the Frequently Asked Questions (FAQs) section on its website, www.cbn.gov.ng, where additional information on compliance, the economic impact, and protective measures for depositors and the economy at large is available.
About the Central Bank of Nigeria
The Central Bank of Nigeria is the nation's supreme financial regulation authority, responsible for maintaining financial stability and ensuring the integrity of the financial system.
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On the Ongoing Company Delistment by the Corporate Affairs Commission
A law talk educating entrepreneurs and business & company leaders on the need to stay up-to-date in the annual returns of their registered corporate entities (business names; LTD; Incorporated Trustees; etc.) in the light of a move by the corporate affairs commission to enforce the law on annual returns default and delistment according to the Companies and Allied Matters Act (CAMA 2020) in Nigeria.
CERTIFICATE OF OCCUPANCY (C of O) vs DEED OF ASSIGNMENT
A Certificate of Occupancy, commonly known as a C of O, is a government-issued document that provides a person, a group of individuals, or a corporation the right to possess and occupy a specific parcel of land for all purposes for a period of 99 years. Section 9 of the Land Use Act 1978 empowers the State Governor of Nigeria, where the land is located, to grant a certificate of occupancy.
The section stipulates, "it shall be lawful for the Governor if a person is entitled to a statutory right of occupancy; the issue of a Certificate shall be accompanied by proof of that right of occupancy." A distinctive characteristic of the Certificate of Occupancy is that it is the primary document issued for land, whether undeveloped or developed, that has not been previously recorded in the Land Registry. No Nigerian land can carry two Certificates of Occupancy simultaneously.
What is a Deed of Assignment?
A Deed of Assignment is a crucial legal document that records a land sale, transferring interest and title in real property from one party to another from the commencement date stated in the document.
Importance of Certificate of Occupancy
In Nigeria, a Certificate of Occupancy (C of O) serves as critical legal evidence of land title and ownership, with several significant implications:
Proof of Ownership: It is the most recognized form of evidence for land ownership in Nigeria, offering legal protection against disputes.
Security of Investment: It assures property owners that their investment is legally recognized and protected.
Access to Credit: Financial institutions often require a C of O for loans and mortgages.
Transfer of Ownership: A C of O validates the legitimacy of property sales or transfers.
Land Development: It is necessary for obtaining development permits and complying with land-use regulations.
Legal Protection: The C of O prevents unlawful encroachment and land disputes.
Value Appreciation: Properties with a C of O are often valued higher in the market.
Safeguarding Against Fraud: It helps prevent fraudulent land transactions.
Urban Planning: The government uses it for infrastructure development and urban planning.
Legal Compliance: Holding a C of O involves adhering to regulations and paying property taxes.
Importance of Deed of Assignment
Transfer of Ownership: It legally conveys property rights from the seller to the buyer.
Legal Validity: Without a proper Deed, property transfers may be invalid.
Proof of Title: It ensures the buyer acquires a valid and marketable title.
Protects Buyer's Interests: It includes warranties from the seller.
Financial Transactions: Lenders require a registered Deed for property loans.
Land Use and Development: Authorities need it for approving land development.
Legal Disputes: It is a critical document in property-related litigation.
Registration: Registration of the Deed provides public notice and legal status.
Tax Implications: It is necessary for tax compliance.
Succession Planning: It is used for transferring property to heirs or beneficiaries.
Differences Between a Certificate of Occupancy and Deed of Assignment
A C of O is granted by the State Governor, signifying a right to occupy land for 99 years from the date of issuance. In contrast, a Deed of Assignment transfers the seller's residual interest without reversionary interest and does not reset the 99-year term.
A Deed of Assignment establishes the seller's ownership, while a C of O certifies the holder's sole possession.
A Deed of Assignment cannot be revoked; however, the Governor's consent is necessary for its perfection. Conversely, a C of O can be revoked for public interest under Section 28 of the Land Use Act.
The Deed of Assignment is the preferred document when other interests are present on the property, rather than a C of O.
Details Found in a C of O
A Nigerian C of O typically includes:
Property details: Address, size, survey plan, and identification number.
Landowner's information: Name, contact details, and photograph.
Property usage: Intended use and any restrictions.
Title details: Title information and acquisition method.
Government approvals: Confirmation of approval and compliance.
Encumbrances: Any limitations on the property.
Duration: The validity period of the C of O.
Seal and signatures: Government seal and authorized signatures.
Serial number and date: Unique serial number and issuance date.
Purpose: Specified use (residential, commercial, etc.).
Special clauses: Any additional conditions.
Details Found in a Deed of Assignment
A Deed of Assignment includes:
Participants' details: Names, addresses, and status.
Transfer date: When the property was transferred.
Assignor's title: Legal right to sell.
Property description: Details, including fixtures.
Title history: Chain of ownership and documentation.
Document evidence: Verification of the property's documents.
Transaction amount: Sale price and acknowledgment of payment.
Transaction nature: Terms and seller's authority.
Signatures: Parties' and witnesses' signatures are required.
Survey plan: A detailed survey layout.
Lawyer's information: Details of the lawyer preparing the deed.
Governor's consent: Required signature and validation.
How to Obtain a C of O and a Deed of Assignment in Lagos State
Certificate of Occupancy
File an application at the Surveyor General's office for land information.
Purchase and submit the private certificate of occupancy application form along with required documents.
Await a 21-day public objection period following a published notice.
The Land Use Allocation Committee conducts a site inspection and reports.
The Certificate of Occupancy is drafted, approved, and executed by the Governor.
It is stamped by the Commissioner for Stamp Duties and registered at the Land Registry.
The registered Certificate of Occupancy is collected from the Land Use Allocation Committee office.
Deed of Assignment
Verify the property's status for clear title and no encumbrances.
Engage a legal professional to draft the Deed of Assignment.
Calculate and pay stamp duty for legal validation.
Sign the Deed by all parties in front of witnesses, then notarize.
Register the Deed at the Lagos State Land Registry.
Obtain certified copies of the registered Deed of Assignment.
Complete the property handover process.
Nigerian Corporate Red Alert: The Corporate Affairs Commission (CAC)Commences De-listing of Registered Entities/ Companies in Default
Corporate Affairs Commission Engages the Final Option to Enforce Compliance
The Commission is taking the step to remove companies owing 10 years and above in annual returns from their register.
Although this may be unsettling news for some, there is still a chance for affected companies to rectify their situation. By promptly paying and filing their outstanding annual returns, these companies can avoid de-listing or being struck out from the register and continue to operate without any disruptions.
We understand that unforeseen circumstances may have led to delays in fulfilling annual return obligations. Therefore, we encourage all affected companies to take immediate action and ensure their compliance by submitting up-to-date annual returns.
Here is the link to the CAC's strike-off list, batch 1.
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Ifeoluwakiisi Olanrewaju
Partner
Adeola Kolawole (Née Osilaja)
Principal Partner