This week, Nigeria will launch the Beneficial Ownership Register in the extractive industries in line with the global Extractive Industries Transparency Initiative standards.
But, we have a responsibility to reassure Nigerians the register will be more about the benefits the country is going derive against the companies that have been “cheating” government and Nigerians in their operations. It will also help to check money laundering, drug financing, and illicit financial flows. If the government is able to check all these things, it will definitely impact positively on the lives of citizens.Again, not all businesses use anonymous ownership structure or engage in bad business practices. We must see the Register in a more inclusive way. The more inclusive we see the Register, the more the government will get more support.
It is not a perfect Register to address all the problems in the system. It is good to strive for perfection. But, we should not make the perfect the enemy of the good. In as much we will continue to improve, let us start with what we can do and see how we can improve and build on it.The case for Beneficial Ownership Register for the extractive industries cannot be over-emphasised.
If $15-18 billion of the $80 billion is lost to illicit financial flows in Nigeria, one can imagine what that can do to our economy in terms of infrastructure and development. Nigeria has a commitment with the EITI to ensure revenue transparency in its extractive industries, particularly on what companies pay and what government receives from the exploitation of its natural resources. This has led to several reforms in the industry
As part of that plan, the government said by January 1, 2020, Nigeria was going to have a register of the beneficial owners of all the companies operating in the extractive sector. This is a register that will be beyond companies producing or not. It will cover all companies engaged in businesses in the extractive sector.
On December 12, NEITI will unveil the portal on Beneficial Ownership Register in the extractive industries on its website. So, the NEITI register will only serve as a pilot of what Nigeria will ultimately have a beneficial ownership register.One of the major obstacles to beneficial ownership today is that there no law that expressly mandates the disclosure of beneficial owners of companies.
Where there is no law, there is no crime. But, this is a challenge government has to deal with as the Beneficial Ownership Register comes to stay. The Attorney-General said Section 26 of the old CAMA, which authorizes him to vet and authorize the registration of every memorandum and articles of association of every company limited by guarantee must be maintained.
What CAC has done is to group businesses into sectors. Companies have been grouped according to the sectors that are contributing to the economy. Nigeria is the 70th member of the OGP, and also aspiring to become a member of the Financial Action Task Force for which it has already undergone Mutual Evaluation in September 2019.
A Beneficial owner is a natural person who ultimately owns or controls a legal entity or arrangement such as a company or a trust or foundation. The Beneficial Ownership tool kit provides guides for the content of such legislation. General Data Protection and Privacy issues are factored in such legislations.
The company is then required to mandatorily open and maintain the Beneficial Ownership Register at the same place with the Register of members. Despite this challenges, the CAC still provides information on substantial ownership of beneficial ownership and directorship information to law enforcement agencies and other regulators to check illicit financial transactions and other forms of business malpractices.