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.

Commitment 6. Public register of beneficial owners of corporate entities

● Verifiable: Yes

● Does it have an open government lens? Yes

● Potential Impact: Transformative

● Completion: Substantial

● Did it open government? Major

Context and Objectives

With this commitment, Nigeria sought ‘to put in place a system that enables openness, transparency and full disclosure of beneficial ownership information.’ [94] The establishment of a public register of the beneficial owners of corporate entities will enable relevant authorities mandated to curb corruption to identify natural persons who directly or indirectly own, control, or enjoy the benefits of a corporate entity. The register is considered a key tool to reduce anonymous or shell companies being used to deny the country of valuable revenue through tax avoidance, corruption, money laundering, drug trafficking, and terrorism financing. This is particularly important in Nigeria, being that it is the largest economy in Africa by nominal GDP. Foundations for this reform were laid during Nigeria’s first action plan. The commitment has been continued under the third action plan. The World Bank’s Multi-Donor Trust Fund helped fund the development of this public register.

Did It Open Government? Major

Beneficial Ownership Transparency Legal Framework

The repeal and enactment of the new Companies and Allied Matters Act (CAMA) in 2020 was a significant shift in the legal framework governing transparency in beneficial ownership of corporate entities (Milestone 1). CAMA lowered the threshold for shares and voting rights to capture a larger number of companies for disclosure. It also empowered the Corporate Affairs Commission (CAC) to supervise, regulate, and impose sanctions for noncompliance and false information. [95] All companies registering with CAC from January 2021 onwards were required to include beneficial ownership information. All registered companies are required to include beneficial ownership information in their annual financial returns or when there was a change (Milestone 5). [96] The Act also called on CAC to establish a register of beneficial owners (Milestone 2). [97] Companies can now be registered online, and all applications must include information on all beneficial owners and their corresponding national identification numbers, to ensure verifiability. [98]

After the implementation period, in 2022, CAC validated and published Persons with Significant Control Regulations to guide the implementation of beneficial ownership transparency. [99] The regulations addressed integral issues, such as specifying that a beneficial owner must be a natural person and that the register must be public. CAC worked with Open Ownership and Global Financial Integrity to ensure the draft regulations were compliant with international best practices, such as the Open Ownership Principals and Financial Action Task Force recommendations. [100] The regulations were also drafted with the intention of serving as a sample template for other countries to adapt to their context. The regulations specify processes to ensure that beneficial ownership data is verifiable and, importantly, impose sanctions for noncompliance. [101] Open Ownership has also reviewed web forms to ensure that the data collected is comprehensive and verifiable. [102]

In Abuja and Lagos, CAC and Open Ownership held consultations with lawyers and civil society working in the field to explain the draft regulations and CAC’s beneficial ownership transparency efforts. [103] CISLAC reports that public sector and anti-corruption agencies received training on the use of beneficial ownership data in September 2020 (Milestone 6). [104] CISLAC also held consultations with civil society, media, public institutions, and the private sector on CAMA and the expected public register. [105] In mid-2021, CAC hosted focus groups with government officials, civil society, and the private sector to determine how progress can be sustained. [106]

Public Register of Beneficial Owners

CAC has developed but not yet publicly launched an economy-wide standalone portal of beneficial owners (Milestone 4). [107] The portal is expected to be launched in April 2023 at https://bor.cac.gov.ng. CAC publicly presented the portal after the implementation period in November 2022. Data in the portal will align with International Beneficial Ownership Data Standards and be formatted for exchange with external applications and the Global Beneficial Ownership Register. [108] It is expected to include data from the over four million companies registered with CAC. [109] CAC has shared the latest version of the portal with CSOs like ANEEJ, CentreLSD, and Open Ownership for review (Milestone 3). [110] Open Ownership confirmed that the portal will be searchable by entity name, number, or an individual’s name and that users will be able to view the historical information of a company’s beneficial owners. CAC is working to make the portal useful by ensuring that data can be bulk downloaded and is compatible with analysis tools. [111]

Several challenges have contributed to the portal’s delayed launch. One such obstacle is the slow bureaucratic process tied to the World Bank’s disbursement of the Multi-Donor Trust Fund. [112] Moreover, the low reporting threshold of 5% ensures comprehensive data is collected but increases CAC’s administrative burden. [113] A lack of funds for the digitization of legal records of entities registered before the portal’s deployment has also been noted as a specific challenge. [114]

As an interim measure, CAC added beneficial ownership information, when available, to their public portal of registered companies in January 2021. [115] This portal allows the public to search by company name and view individuals with significant control and their percentage of interest in the company for a small fee. The portal currently provides information on around 350,000 companies. [116] Nigeria Extractive Industry Transparency Initiative (NEITI) has continued to maintain its beneficial ownership portal for the extractives industry. Although the portal only contains the information of around 180 companies. [117] The forthcoming standalone beneficial ownership register is expected to include information from the current CAC company portal while also adding value through the ability to download and manipulate the beneficial ownership data. The CAC company portal will remain online as a resource for users primarily interested in obtaining company name and address information. It has not yet been decided whether the NEITI portal will be combined with the economy-wide register. [118]

Use of Beneficial Ownership Data for Public Accountability

CAMA and its regulations have made it possible for government entities to collect beneficial ownership information. Both the Central Bank of Nigeria and the Nigerian Upstream Petroleum Regulatory Commission have mandated the disclosure of beneficial ownership information for entities under their jurisdiction. [119] The Mining Cadastre Office has used beneficial ownership data collected through license applications to identify companies seeking to avoid debts by applying for new licenses. The Mining Office has increased domestic revenue mobilization by compelling the payment of debts before approving new applications. [120]

CSOs are already building tools and working with available data to hold government officials accountable. At the time of writing, CSOs Directorio Legislativo and BudgIT were developing a web platform that cross-references data from NEITI, CAC’s company registry, extractives licenses, and politically exposed persons. This portal will flag concerns in the mining, oil, and gas award process and is planned to become available by May 2023. [121] In December 2022, CSO Dataphyte launched the Anfani platform, which connects federal and state procurement with beneficial ownership data. This platform is designed to enable journalists, civil society, and the public to ‘follow the money’ and investigate connections and discover mismanagement. [122] CSO Policy Alert is using datasets, including beneficial ownership data from NEITI and CAC, to investigate individuals who own assets in the extractives sector and companies who work with the Nigerian National Petroleum Corporation. Specifically, Policy Alert is raising red flags through the #WetinWeGain campaign, which seeks to hold extractive companies in the oil-rich Niger Delta Region to account. [123] In April 2023, Publish What You Pay launched their ‘disclose the deal’ campaign. The campaign will use the beneficial ownership register to investigate extractives industry contracts, particularly in regard to requirements under the 2021 Petroleum Industry Act. [124] BudgIT Nigeria Country Director Gabriel Okeowo stated that, if implemented as expected, the beneficial ownership register will have a significant impact by enabling journalists, civil society, and the public to hold the government accountable for optimal spending of public resources. [125]

Looking Ahead

Nigeria’s hard-fought journey towards beneficial ownership transparency has benefited from high-level political and financial support. The president of Nigeria; minister of State, Budget and National Planning; minister of Finance, Budget and National Planning; and leadership in the CAC have all put their weight behind this reform. Nigeria’s progress thus far was recognized at the 2021 OGP Global Summit with an OGP Impact Award. [126] However, the full impact of Nigeria’s efforts will become evident following the launch, maintenance, and use of the beneficial ownership register, which is included as a commitment in the third action plan. [127]

A key next step is to educate law enforcement, judicial bodies, journalists, civil society, banks, the private sector, and others on how to use beneficial ownership data to combat corruption. There remains significant work to do to inform government officials and the public on the nature of beneficial ownership information and its use. [128] CAC and civil society partners will have ongoing work to ensure data is verified, interoperable, and authenticated. [129] Additionally, CAC’s ability to impose sanctions on companies that do not disclose or provide incorrect beneficial owners information will be integral to a strong transparency regime. It is also crucial that the Government of Nigeria be willing and able to respond when journalists or the public bring questionable business practices to light.