Published On September 6, 2024 In Benue, Nigeria
By Inyima Nicholas Sunday, A Writer | Website: INTERNETISGOOD
CAC Has Threatened To Shut Down Unregistered PoS Businesses As Deadline Expires
The Corporate Affairs Commission (CAC) has announced that it will take drastic actions, including shutting down Point of Sale (PoS) businesses that have failed to register their operations by the September 5, 2024 deadline. This move comes after the Commission noted inadequate compliance with its directive, with some operators potentially engaging in “unwholesome activities” by refusing to adhere to the registration requirements.
The CAC had earlier given PoS agents of major fintechs in Nigeria, including OPay, Palmpay, and Moniepoint, a deadline of July 7, 2024, to register their businesses. This directive was later extended by 60 days to September 5, 2024, with a warning that any operator who failed to meet the new deadline would face prosecution and risk losing their business.
Inadequate Compliance with Registration Directive
In a public notice released on Friday, the CAC stated that it has commenced the process of deploying a comprehensive enforcement and sanction framework that may include not only possible shutdown but also other severe legal consequences for unregistered PoS businesses.
The Commission noted that the registration is in line with the legal requirements and the directives of the Central Bank of Nigeria (CBN), as well as Section 863, Subsection 1 of the Companies and Allied Matters Act (CAMA) 2020 and the 2013 CBN guidelines on agent banking.
Fintech Operators Challenge Registration Directive in Court
The fintech business owners, under the aegis of the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), have challenged the CAC’s registration directive in court. They insist that the mandatory registration is illegal and violates the provision of the Companies and Allied Matters Act, Laws of the Federation of Nigeria, 2004, which “explicitly states that the commission has no jurisdiction over individuals not operating as a company”[1][7][8].
According to the national general secretary of AMMBAN, Oluwasegun Elegbede, the matter is already in court, and the court has scheduled a hearing for September. He added that “the court will have to intervene in the interpretation of the quoted section of the CAMA if individuals operating as a sub-agent (likened to a bank branch) must register with CAC”.
Safeguarding Businesses and Strengthening the Economy
The Registrar-General of the CAC, Hussaini Magaji, has stated that the registrations are aimed at safeguarding the businesses of fintechs and customers, as well as strengthening the economy.
The directive on registration of PoS businesses came against the backdrop of frequent fraud incidents involving POS terminals and plans by the Central Bank of Nigeria (CBN) to stop trading in cryptocurrency or any virtual currency.
According to a report by the Nigeria Inter-Bank Settlement System (NIBSS) Plc, POS terminals accounted for 26.37% of fraud incidents in 2023.
Conclusion
The Corporate Affairs Commission’s decision to shut down unregistered PoS businesses highlights the importance of compliance with regulatory requirements in the fintech industry. While the CAC aims to safeguard businesses and strengthen the economy, the fintech operators’ challenge in court suggests a need for further dialogue and clarification on the scope and legality of the registration directive.
As the deadline has now expired, it remains to be seen how the CAC will enforce its shutdown measures and whether the court will intervene in the interpretation of the relevant sections of the CAMA. The outcome of this situation will have significant implications for the future of the PoS industry in Nigeria.
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