The Corporate Affairs Commission has set up a committee to render advisory services to SMEs so as to prevent unnecessary company liquidations. The committee known as business rescue advisory committee will work to position the commission to discharge its functions in insolvency practice.
The committee is to render expert advice to companies in various fields and such advice will be rendered to those companies that voluntarily submit to the process. Its major task is to rescue companies facing liquidation. It is made up of experts in human resources, finance, law, audit, business management and ICT.
While the Commission will try to rescue companies facing liquidation through the advisory committee, it notes that there will be no bail out for any of such companies. In a situation that rescue efforts fail, the company will be wound down in an orderly manner.
According to the CAC “Business rescue is a concept that allows for the suspension of bankruptcy proceedings and appointment of business rescue practitioner whose primary responsibility is to try and resuscitate the company”.
The commission further noted that this measure is a proactive one aimed at reducing the incidences of job losses in the economy and revenue losses to governments emanating from failed enterprises.
Nigeria currently have well over 35 million registered businesses; 34 million of which are said to be MSMEs. Some of these companies undergo liquidations due to various factors ranging from insolvency, poor succession planning, Board and management issues, technical obstacles, product failures and marketing headaches. The committee by the CAC is seen as a positive measure to help many of these companies overcome their challenges and continue to render viable inputs to the economy.