CAMA 2020 and Sector Regulators: Legal Rules for Company Financial Statements

A company’s financial statements are shaped by more than accounting standards. The Companies and Allied Matters Act (CAMA) 2020 tells the directors what records to keep, what to prepare, who must receive it and by when, and industry regulators add their own reporting rules for banks, insurers, pension funds and listed companies. This topic sets out those legal requirements and the bodies that enforce them.

The topic is tested as recall and short application. In the diets reviewed for this page it appears in May Diet, 2023, where Question 2(b) gave 5 marks for five matters that CAMA 2020 requires in a directors’ report. It also supports every later question that asks which law or regulator applies to a particular entity. Read the regulatory framework topic first.

The next topic covers the reporting frameworks of specialised, not-for-profit and public sector entities.

Accounting records

Section 374 requires every company to keep accounting records: records sufficient to show and explain the company’s transactions. They must disclose with reasonable accuracy, at any time, the financial position of the company. They must enable the directors to make sure the financial statements comply with the Act on form and content. The records must contain:

• day-to-day entries of all sums of money received and spent, and the matters they relate to; and
• a record of the assets and liabilities of the company.

A company that deals in goods must also keep statements of the inventory it holds at the end of each year, the records of the inventory counts from which those statements were prepared, and, except for goods sold in ordinary retail trade, statements of goods bought and sold that identify the goods and the buyers and sellers in enough detail.

The records are kept at the company’s registered office or at another place in Nigeria the directors choose. Officers of the company must be able to inspect them at all times. They are usually kept for at least six years from the date they were made.

Preparing the financial statements

Section 377 makes the directors responsible for preparing financial statements for each year of the company. At their first meeting after incorporation they must fix the company’s accounting year end. The financial statements include:

• a statement of accounting policies;
• the statement of financial position (the balance sheet);
• the statement of profit or loss and other comprehensive income (the profit and loss account);
• notes to the accounts;
• the auditors’ report and the directors’ report;
• a value added statement for the year;
• a five-year financial summary; and
• group financial statements, where the company is a holding company.

A public company must also present a statement of changes in equity and display its audited accounts on its website. Other matters follow from the accounting standards that apply. The next topics in this course explain the value added statement and the five-year summary.

Form, content and standards

Section 378 requires the statements to comply with the First Schedule to the Act on form and content, and with the accounting standards issued by the FRC, provided those standards do not conflict with the Act or the First Schedule. In practice the standards are International Financial Reporting Standards (IFRS), adopted as described in the previous topic.

True and fair view

The statement of financial position must give a true and fair view of the state of affairs of the company at the year end, and the profit and loss account a true and fair view of the profit or loss for the year. This requirement is of overriding importance. Two consequences follow.

1. If more information is needed for the statements to give a true and fair view, it must be provided.
2. If, because of a special circumstance, complying with an accounting requirement would stop the statements giving a true and fair view, the directors must depart from that requirement so far as necessary. A note to the accounts must then disclose the particulars of the departure, the reasons for it and its effects.

Loans to directors and officers

The Act generally prohibits a company from making a loan to a director, or guaranteeing a loan to a director. There are two exceptions. A loan may be made to a director to enable the director to perform duties as an officer, subject to approval at a general meeting.

A company whose ordinary business includes lending money, or guaranteeing loans made by others, may lend or guarantee in the ordinary course.

Where a loan has been made, the accounts must disclose:

• the amount owed for principal and interest at the start and end of the year
• the maximum owed during the year
• any interest that fell due and is unpaid
• any provision for failure or expected failure to repay

Where a guarantee has been given, the accounts must disclose the amount the company is liable for under it at the start and end of the year, the maximum it may become liable for, and any amount paid or liability incurred in meeting the guarantee. For loans to officers, the company discloses the total outstanding at the year end and the number of officers concerned.

The duty does not apply to a very small aggregate per officer, or to loans a recognised bank makes to its own officers.

The directors’ report

Section 385 requires a directors’ report for every company in respect of each year. It states the matters in section 385 and in Part I of the Fourth Schedule to the Act. The report must contain:

1. a fair view of the development of the business of the company and its subsidiaries in the year, and of their position at the end of it;
2. the amount, if any, the directors recommend as dividend and the amount they propose to carry to reserves;
3. the names of the persons who were directors at any time during the year;
4. the financial activities of the company and its subsidiaries during the year, and any significant change in them;
5. significant changes in the fixed assets of the company in the year;
6. the difference between the market value of land and its amount in the statement of financial position, where the directors consider the difference significant enough to bring to the attention of members or debenture holders;
7. the directors’ interests in the company’s shares and debentures;
8. important events affecting the company since the year end;
9. likely future developments in the business;
10. the company’s activities in research and development;
11. the names of the distributors of the company’s products; and
12. donations and gifts made for any purpose.

The Fourth Schedule adds matters about employees, such as the employment, training and advancement of disabled persons and the health, safety and welfare of employees. Any five of the items above earn full marks when a question asks for five.

Approval, delivery and the general meeting

The balance sheet, and every copy laid before the company in general meeting or delivered to the Corporate Affairs Commission (CAC), must be signed on behalf of the board by two directors. The board approves the statements, and for a public company the chief executive officer and chief financial officer also certify them.

The company must send a copy of the statements to every member, every debenture holder and every other person entitled to them, not less than 21 days before the meeting at which they are laid. The directors must lay the statements before the general meeting not later than 18 months after incorporation for the first time, and afterwards at least once a year.

The statements laid must be made up to a date not more than nine months before the meeting, so in practice the meeting is held within nine months of the year end. A copy of the balance sheet, the profit and loss account and the notes goes to the CAC with the annual return. Any member or debenture holder may demand a copy of the latest statements.

The statutory audit committee

A public company must have a statutory audit committee (section 404). It has five members: three representatives of the shareholders and two non-executive directors. Every member must be financially literate and understand internal control. Its functions include examining the auditors’ report and making recommendations to the meeting, and making recommendations to the board on the appointment, removal and pay of the external auditors.

The committee reviews the statements, and the approval stays with the board.

Sector regulators

Alongside CAMA 2020, regulators set reporting requirements for entities in their sectors. Where a regulator’s rule differs from an accounting standard, the entity follows the regulator’s rule for regulatory purposes and discloses the difference in the way the regulator requires.

The ideas in more depth

Small companies

A company that meets the conditions in section 394(3) is a small company: a private company with turnover of not more than ₦120 million, net assets of not more than ₦60 million, no member who is not a Nigerian or who represents the public sector, and directors holding at least 51% of its equity shares.

A small company that complies with section 394 is exempt from some filing requirements and from the requirement to appoint an auditor. It still keeps accounting records and prepares financial statements.

Why the Act and the standards do not clash

CAMA 2020 sets the legal skeleton: records, duties, deadlines and audit. Accounting standards supply the recognition and measurement rules. Section 378 joins them by requiring compliance with FRC standards unless a standard conflicts with the Act, which is why the standard-setting framework in the first topic matters to the legal one here.

Sources and references

• Companies and Allied Matters Act 2020, Chapter 14: sections 374, 375, 377, 378, 385, 386, 387, 388 and 394, section 404 on audit committees and section 405 on certification.
• Financial Reporting Council of Nigeria Act 2011, as amended by the Amendment Act 2023.
• Investments and Securities Act 2025; Nigerian Insurance Industry Reform Act 2025; Pension Reform Act 2014; CBN Act 2007; Banks and Other Financial Institutions Act 2020; Nigeria Deposit Insurance Corporation Act 2023; Nigeria Tax Act 2025.

These points are stated as at 5 November 2026.

Worked examples

1. Latest date to lay. Statements must be laid not later than nine months after the year end. Nine months after 31 December 2026 is 30 September 2027.
2. Check the planned meeting. 29 September 2027 is before 30 September 2027, so the date is acceptable.
3. Latest date to send. Copies go out not less than 21 days before the meeting. 29 September 2027 less 21 days is 8 September 2027.

1. Compare with the required content. The draft contains items 1, 3 and 9 and part of item 2 from the list above.
2. Item 2 is incomplete. The report must also state the dividend the directors recommend. The draft gives only the transfer to reserves.
3. Other omissions. The draft leaves out the financial activities of the company and its subsidiaries and any significant change in them, significant changes in fixed assets, the directors’ interests in shares and debentures, important events since the year end, research and development, the names of distributors, and donations and gifts.
4. Answer. Any five: the recommended dividend, financial activities, changes in fixed assets, directors’ interests in shares, events since the year end, research and development, distributors, donations.

How to answer in the exam

• State or list. One short line per item. A question asking for five directors’ report matters gave 5 marks, so 1 mark each; write six and stop.
• Explain. Give the rule and the reason. For the true and fair override, give the condition (a special circumstance), the action (depart so far as necessary) and the disclosure (particulars, reasons, effects).
• Describe regulators. Name the regulator, the statute and one reporting duty. Two marks a regulator usually need the body and the duty.
• Dates. Show the working: year end plus nine months; meeting date less 21 days.

Common mistakes in the exam

• Quoting the wrong deadlines. Copies go out 21 days before the meeting and the statements are laid within nine months of the year end.
• Confusing the first meeting rule of 18 months after incorporation with the yearly nine-month rule.
• Leaving the dividend recommendation out of the directors’ report.
• Saying the audit committee approves the statements. The board approves them.
• Calling the Insurance Act 2003 or the Investments and Securities Act 2007 current law. Both have been repealed.
• Saying a small company keeps no accounting records. The exemption concerns the audit and some filings.

Quick revision

• Records: section 374; kept in Nigeria, open to officers, usually six years.
• Statements: section 377, form and content section 378, true and fair view overrides.
• Directors’ report: section 385 and the Fourth Schedule.
• Signing by two directors; copies 21 days before the meeting; laid within nine months; first meeting within 18 months of incorporation.
• Audit committee: public companies, three shareholder representatives and two non-executive directors.
• Regulators: CBN and NDIC (banks), NAICOM (insurers), PenCom (pensions), SEC and NGX (capital market), FRC (standards).

Practice questions

These are original questions written in the style of the Institute’s exams. Try each one before you open the answer. Section A is a recall check, because the paper itself is written.

Recall check: multiple choice

Section B style: written questions

A further written question

Model answers

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