The Manufacturers Association of Nigeria (MAN) has expressed grave concerns over implementation of certain provisions of the Financial Reporting Council of Nigeria (Amendment) act, particularly those relating to charges on non-listed entities.

Director-General, MAN, Segun Ajayi-Kadir, said the provisions, as currently implemented, pose challenges to the manufacturing firms, majority of whom are non-listed entities and categori-sed under current defini- tion of Public Interest Entities (PIEs) of the said Act.

He said 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 (maximum being 0.05 per cent of the annual turnover for companies with turnover of more than N10 billion).

“For publicly quoted firms, the maximum payment earlier was N1 million per year. Now, that amount has been hiked to a shocking N25 million. Incredibly, for non-listed companies, who were previously excluded, there is no cap and it is linked to the turnover, irrespective if the company is profitable or not.

“The FRCN Amendment Act, 2023, Section 33 Clause 3, imposes heavy penalties on a person or an entity failing to pay annual dues with 10 per cent of the annual due for every month of default cumulatively until payment, liable to sanctions prescribed by the Council for any default of its agents, officer or personnel engaged in the financial reporting process for failure to comply with the provision of the act and in case of chief executive officer to a penalty as may be prescribed by the Council, or on conviction to imprisonment not exceeding six months.”

“The strict penalties and possible conviction to imprisonment could be construed as having the nature of a criminal law. Generally, non-payment of fees typically results in other penalties or fines and imprisonment provisions are applicable only in cases where non-payment is seen as an act of defiance or fraud.”

He regretted that a section of the Act states that proceeds of the fund is to be applied for the expenditures of the Council, which he said incentivises excessive generation of revenue and makes collection of the fees purely for administrative purposes. “Criminalising non-payment of dues, the utilisation of which is more administrative in nature, makes the Act a draconian law with no choice left for the entities to contest the charge, but to comply and pay the dues.”

He further said that this is a direct assault on the government’s commitment to ease of doing business. Adding that asides reservations against its application to private companies; the astronomical increase for listed companies; the excessive charge on non-listed companies turnover, particularly for loss making companies; the commencement of implementation at this difficult time for manufacturers and other businesses amounts to yet another form of aggravated tyranny of regulation.

He lamented that investments will be negatively impacted if this draconian law is not halted and implored the FRCN to be mindful of the potential negative impact of its continued administration of the fees on businesses and put it on hold.

“As the umbrella body for manufacturers, we admonish the FRCN to await the enactments of the tax reform laws and realign its operations with the relevant provisions.”

Calling on the federal government to intervene in a bid to prevent unpleasant consequences of this annual fee, he said this will bring relief to anxious and long suffering manufacturers and other business owners.