The Manufacturers Association of Nigeria (MAN), has expressed concerns over the implementation of certain provisions of the Financial Reporting Council of Nigeria (FRCN) Amendment Act, 2023.
Director General, MAN, Mr. Segun Ajayi-Kadir, on Monday in Lagos, via a statement said the association’s concern was in relation to charges on non-listed entities.
Ajayi-Kadir said that these provisions, as currently implemented, posed significant challenges to the manufacturing companies, majority of whom were non-listed entities. He noted that these companies under the Act were categorised under the current definition of Public Interest Entities (PIEs).
“For instance, a new section 33 introduced under FRCN Amendment Act, 2023 mandates annual charges for non-listed entities, calculated as a percentage of their annual turnover.
“This is a maximum, being 0.05 per cent of the annual turnover for companies with turnover of more than N10 billion.
“For publicly quoted companies, the maximum payment earlier was N1 million per annum and that amount is now hiked to N25 million!
“Quite incredibly, for non-listed companies, who were previously excluded, there is no cap and it is linked to the turnover, irrespective of whether the company is profit- able or not,” he said.
The MAN DG said Section 33 Clause 3 of the FRCN Amendment Act, 2023, imposed heavy penalties on a person or an entity failing to pay annual dues with 10 percent of the annual due for every month of default cumulatively until payment.
He said that the strict penalties and possible conviction to imprisonment could be construed as having the nature of a criminal law.
He noted that generally, nonpayment of fees/dues typically results in other penalties or fines, adding that imprisonment provisions are applicable only in cases where non-payment is seen as an act of defiance or fraud.
“Section 34 of the Principle Act stipulates that proceeds of the Fund established under Section 33 of the Act are to be applied for the expenditures of the Council.
“This incentivises excessive generation of revenue and makes collection of the fees purely for administrative purposes.
“Criminalising non-payment of dues/fees, the utilisation of which is more administrative in nature, makes the FRNC Amendment Act, 2023 a draconian law with no choice left for the entities to contest the charge, but to comply and pay the dues,” he said.
Ajayi-Kadir added that the development was a direct assault on the government’s commitment to ease of doing business.
He said that its implementation at this difficult time for manufacturers and other businesses amounted to yet another form of aggravated tyranny of regulation.
According to him, investments of the productive sector of the economy will be negatively impacted if the continued implementation of this annual charge and the strenuous efforts of FRCN to execute the same are not halted.
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