The Manufacturers Association of Nigeria has expressed serious concern over the substantial increase in annual charges imposed on private companies by the Financial Reporting Council of Nigeria under the recently amended FRCN Act.
MAN describes these charges as “astronomical,” particularly affecting listed companies and imposing excessive fees on non-listed companies, including those operating at a loss.
In a statement on Sunday,
the Director-General of MAN, Segun Ajayi-Kadir,
expressed grave concerns over the FRCN Amendment Act, particularly its impact on non-listed companies.
He warns that the Act poses a significant threat to Nigeria’s struggling manufacturing sector, as the majority of these firms are non-listed entities now classified as Public Interest Entities (PIEs) under the new Act.
“For publicly quoted companies, the maximum payment earlier was N1m per annum. Now, that amount has been hiked to N25m! 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 profitable or not,” Ajayi-Kadir stated.
Section 33 of the amended Act mandates an annual charge on non-listed companies, pegged at a percentage of their yearly turnover.
Ajayi-Kadir emphasized that the new charges imposed place an undue financial burden on manufacturers, especially those already struggling with economic challenges.
“Criminalising non-payment of fees, the utilisation of which is more administrative in nature, makes the FRCN Amendment Act, 2023, a draconian law with no choice left for the entities but to comply and pay,” the MAN DG said.
The amended FRCN Act imposes strict penalties on defaulters, including a monthly fine of 10% on unpaid fees and potential imprisonment for company executives.
MAN has condemned these provisions as overly harsh and detrimental to businesses.
“The strict penalties and possible conviction to imprisonment could be construed as having the nature of a criminal law. Generally, non-payment of fees or dues typically results in other penalties or fines, while imprisonment provisions are applicable only in cases where non-payment is seen as an act of defiance or fraud,” he added.
He urged the government to intervene and halt the implementation of the charges, calling on the FRCN to align its policies with ongoing tax reforms.
“This will bring relief to anxious and long-suffering manufacturers and other business owners. Quite importantly, it will boost our commitment to ease of doing business and align with the broader objectives of the fiscal policy and tax reforms agenda of President Tinubu,” he stated.
