Increasing and reducing share capital under CAMA 2020

(1) Where, after the commencement of this Act, a memorandum delivered to the Commission under section 36 states that the association to be registered is to be registered with shares, the amount of the share capital stated in the memorandum to be registered shall not be less than the minimum issued share capital.

(2) No company having a share capital shall, after the commencement of this Act, be registered with a share capital less than the minimum issued share capital.

(3) Where, at the commencement of this Act, the issued share capital of an existing company is less than the minimum issued share capital, the company shall, not later than six months after the commencement of this Act, issue shares to an amount not less than the minimum issued share capital.

(4) Subject to subsection (3), where a company is registered with shares, its issued capital shall not at any time be less than the minimum issued share capital.

(5) Where a company to which subsections (3) and (4) apply fails to comply with the applicable subsection, the company is—

(a) liable to such fine as the Commission may prescribe by regulation ; and

(b) in addition, liable to a daily default fine as the Commission shall specify by regulation for every day during which the default continues.

Open section 124 on its own page

A company having a share capital may in general meeting and not otherwise, alter the conditions of its memorandum to—

(a) consolidate and divide all or any part of its share capital into shares of larger amount than its existing shares ; and

(b) subdivide its shares or any of them, into shares of smaller amount than is fixed by the memorandum, but in the subdivision the proportion between the amount paid and the amount unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived.

Open section 125 on its own page

(1) If a company having a share capital has—

(a) consolidated and divided its share capital into shares of larger amount than its existing shares, or

(b) subdivided its shares or any of them,the company shall within one month after so doing, give notice of it to the Commission specifying, the shares consolidated, divided, or subdivided.

(2) If default is made in complying with this section, the company and every officer of the company are liable to such fine as the Commission may prescribe by regulation, for every day during which the default continues.

Open section 126 on its own page

(1) A company having a share capital, may in general meeting and not otherwise, increase its issued share capital by the allotment of new shares of such amount as it considers expedient.

(2) Where a company increased its share capital, it shall, within 15 days after the passing of the resolution authorising the increase, give to the Commission notice of the increase and the Commission shall record the increase.

(3) Where, in connection with the increase of shares, any approval is required to be obtained under any enactment other than this Act, the company shall give notice of that fact to the Commission within 15 days after the passing of the resolution authorising the increase, together with an affidavit sworn to by a director of the company to that effect, and upon receipt of the notice and affidavit by the Commission, the period of 15 days stated in subsection (2) is deemed extended, for a period terminating no later than 10 days after receipt of the approval is required to be obtained by the company under an enactment other than this Act.

(4) If the company has not obtained the required approval under an enactment other than this Act within 48 days of the date on which it notified the Commission under subsection (3), the company shall file another notice and affidavit to that effect with the Commission, and shall do so for every successive period of 48 days that elapses after the date on which it first notified the Commission under subsection (3).

(5) If the Company fails to obtain the approval that is required to be obtained under an enactment other than this Act within nine months from the date on which it first notified the Commission under subsection (3), the resolution increasing the company’s issued share capital becomes null and void.

(6) The notice to be given under this section includes the particulars prescribed with respect to the classes of shares affected and the condition subject to which the new shares have been or are to be issued and the notice shall be accompanied by a printed copy of the resolution authorising the increase.

(7) If default is made in complying with the provisions of this section, the company in default is liable to such fine as the Commission may prescribe by regulation for every day during which the default continues.

(8) Where a company increases its share capital, it shall be by an ordinary resolution and shall amend its memorandum and articles of association to reflect the new issued share capital.

Open section 127 on its own page

(1) Where a company allots new shares, thereby increasing its issued share capital, the increase shall not take effect unless—

(a) at least 25% of the share capital including the increase has been paid up ; and

(b) the directors have delivered to the Commission a statutory declaration verifying that fact.

(2) Where a company fails to comply with the applicable subsection, it shall be liable to such fine as the Commission may prescribe by regulation for every day during which the default continues.

Open section 128 on its own page

If an unlimited company resolves to be re-registered as a limited company under this Act, it may—

(a) increase the nominal amount of its issued share capital by increasing the nominal amount of each of its shares, but subject to the condition that no part of the increased issued capital shall be capable of being called up except in the event and for the purpose of the company being wound up ; or

(b) provide that a specified portion of its uncalled share capital shall not be capable of being called up except in the event and for the purposes of the company being wound up.

Open section 129 on its own page

(1) Except as authorised by this Act, a company having a share capital shall not reduce its issued share capital.

(2) For the purposes of this section and other sections relating to reduction of share capital, any issue of share capital shall include the share premium account and any capital redemption reserve account of a company, and ‘‘issued share capital’’ shall be construed accordingly.

Open section 130 on its own page

(1) Subject to confirmation by the Court, a company having share capital may, if so authorised by its articles, by special resolution reduce its share capital in any way.

(2) In particular, and without prejudice to subsection (1), the company may—

(a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up,

(b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets, or

(c) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is in excess of the company’s wants, and the company may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

(3) A special resolution under this section shall in this Act be referred to as “a resolution for reducing share capital”.

Open section 131 on its own page

(1) Where a company has passed a resolution for reducing share capital, it may apply to the court for an order confirming the reduction.

(2) If the proposed reduction of share capital involves either—

(a) diminution of liability in respect of unpaid share capital ; or

(b) subject to subsection (6), the payment to a shareholder of any paid-up share capital, and in any other case if the Court so directs, subsection (3), (4) and (5) shall have effect.

(3) Every creditor of the company who, at the date fixed by the court, is entitled to any debt or claim which, if that date were the commencement of the winding-up of the company, would be admissible in proof against the company, is entitled to object to the reduction of capital.

(4) The Court shall settle a list of creditors entitled to object, and for that purpose—

(a) shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of the debts or claims ; and

(b) may publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction of capital.

(5) If a creditor entered on the list whose debt or claim is not discharged or has not been determined does not consent to the reduction, the Court may, if it deems fit, dispense with the consent of that creditor, on the company securing payment of his debt or claim by appropriating (as the Court may direct) the following amount if the company—

(a) admits the full amount of the debt or claim or, though not admitting it, is willing to provide for the full amount of the debt or claim ; or

(b) does not admit, and is not willing to provide for, the full amount of the debt or claim, or if the amount is contingent or not ascertained, then an amount fixed by the court after the like enquiry and adjudication as if the company were being wound up by the Court.

(6) If a proposed reduction of share capital involves either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, the Court may, if having regard to any special circumstance of the case it considers proper to do so, direct that subsections (3) - (5) shall not apply as regards any class or classes of creditors.

Open section 132 on its own page

(1) The Court, if satisfied—

(a) with respect to every creditor of the company who under section 132 is entitled to object to the reduction of capital, that either—

(i) his consent to the reduction has been obtained, or

(ii) his debt or claim has been discharged or determined or secured ; and

(b) that the share capital does not by this reduction fall below the minimum issued share capital, may make an order confirming the reduction on such terms and conditions as it deems fit.

(2) Where the Court so orders, it may also—

(a) if for any special reason it considers it proper to do so, make an order directing that the company shall, during such period (commencing on or at any time after the date of the order) as is specified in the order, add to its name as its last words “and reduced” ; and

(b) make an order requiring the company to publish (as the court directs) the reasons for reduction of capital or such other information in regard to it as the court considers expedient with a view to giving proper information to the public and (if the court deems fit) the causes which led to the reduction.

(3) Where the company is ordered to add to its name the words, “and reduced”, those words shall, until the expiration of the period specified in the order, be deemed to be part of the company’s name.

Open section 133 on its own page

(1) The Commission, on delivery to it the order of the court confirming the reduction of a company’s share capital, and minutes of the meeting of the company (approved by the Court) showing, with respect to the company’s share capital as altered by the order—

(a) the amount of the share capital ;

(b) the number of shares into which it is to be divided, and the amount of each share ; and

(c) the amount (if any) at the date of the registration deemed to be paid up on each share, shall register the order and minutes.

(2) On the registration of the order and minutes, the resolution for reducing share capital as confirmed by the order so registered shall take effect.

(3) A notice of the registration shall be published in such manner as the Court may direct.

(4) The Commission shall certify the registration of the order and minutes, and the certificate—

(a) may be either signed by the Registrar-General or authenticated by its official seal ; and

(b) shall be prima facie evidence that all the requirements of this Act with respect to the reduction of share capital have been complied with, and that the company’s share capital is as stated in the minutes.

(5) The minutes, when registered, is deemed substituted for the corresponding part of the company’s memorandum, and valid and alterable as if it had been originally contained in it.

(6) The substitution of such minutes for part of the company’s memorandum shall be deemed an alteration of the memorandum.

Open section 134 on its own page

(1) Where a company’s share capital is reduced, a member of the company (past or present) is not liable in respect of any share to any call or contribution exceeding in amount the difference (if any) between the amount of the share as fixed by the minutes and the amount paid on the share or the reduced amount (if any), which is deemed to have been paid on it, as the case may be.

(2) Subsections (3) and (4) shall apply if—

(a) a creditor entitled in respect of a debt or claim, to object to the reduction of share capital, by reason of his ignorance of the proceedings for reduction of share capital, or of their nature and effect with respect to his claim, is not entered on the list of creditors ; and

(b) after the reduction of capital, the company is unable (within the meaning of section 572) to pay the amount of the creditor’s debt or claim.

(3) Every person who was a member of the company at the date of the registration of the order for reduction and minutes, is liable to contribute for the payment of the debt or claim in question an amount not exceeding that which he would have been liable to contribute if the company had commenced to be wound up on the day before that date.

(4) If the company is wound up, the Court, on application of the creditor in question and proof of ignorance referred to in subsection (2) ( deems fit, settle a list of persons so liable to contribute, and make and enforce calls and orders on the contributories settled on the list, as if they were ordinary contributories in a winding-up.

(5) Nothing in this section affect the rights of the contributories among themselves.

Open section 135 on its own page

If an officer of the company—

(a) wilfully conceals the name of a creditor entitled to object to the reduction of capital,

(b) wilfully misrepresents the nature or amount of the debt or claim of any creditor, or

(c) aids, abets or is privy to any concealment or misrepresentation, he commits an offence and is liable on conviction to such fines as the Commission shall specify by regulation.

Open section 136 on its own page

(1) Where the net assets of a public company are half or less of its called-up share capital, the directors shall, not later than 30 days from the earliest day on which that fact is known to a director of the company, duly convene an extraordinary general meeting of the company, for a day not later than 60 days from that day for the purpose of considering whether any, and if so, what steps should be taken to deal with the situation.

(2) If there is a failure to convene an extraordinary general meeting as required by subsection (1), each of the directors of the company who—

(a) allows the failure, or

(b) after the expiry of the period during which that meeting should have been convened, allows the failure to continue, is liable to such fines as the Commission shall specify by regulation.

(3) Nothing in this section authorises the consideration, at a meeting convened in pursuance of subsection (1), of any matter which could have been considered at that meeting apart from this section.

Open section 137 on its own page