The sections, word for word
Every section on this subject, exactly as printed in the Official Gazette (Act No. 3 of 2020). The explanation follows beneath.
Section 27. Requirements with respect to the memorandum of a company
(1) The memorandum of association of every company shall state—
(a) the name of the company ;
(b) that the registered office of the company shall be situated in Nigeria ;
(c) the nature of the business or businesses which the company is authorised to carry on, or, if the company is not formed for the purpose of carrying on business, the nature of the object or objects for which it is established ;
(d) the restriction, if any, on the powers of the company ;
(e) that the company is a private or public company, as the case may be ; and (f ) that the liability of its members is limited by shares, by guarantee or unlimited, as the case may be.
(2) If the company has a share capital—
(a) the memorandum of association shall also state the amount of the minimum issued share capital which shall not be less than N100,000.00 in the case of a private company and N2,000,000.00, in the case of a public company, with which the company proposes to be registered, and the division thereof into shares of a fixed amount ; and
(b) each subscriber shall write opposite his name the number of shares he takes.
(3) A subscriber of the memorandum who holds the whole or any part of the shares subscribed by him in trust for any other person shall disclose that fact and the name of the beneficiary in the memorandum of association.
(4) The memorandum of association of a company limited by guarantee shall also state that—
(a) the income and property of the company shall be applied solely towards the promotion of its objects, and that no portion thereof shall be paid or transferred directly or indirectly to the members of the company except as permitted by, or under this Act ; and
(b) each member undertakes to contribute to the assets of the company in the event of its being wound up while he is a member or within one year after he ceases to be a member for payment of debts and liabilities of the company, and of the costs of winding-up, such amount as may be required not exceeding a specified amount and the total of which shall not be less than N100,000.
(5) The memorandum of association shall be signed by each subscriber in the presence of at least one witness who shall attest the signature.
(6) The memorandum shall be stamped as a deed.
What this means
Short answer
A private company must state minimum issued share capital of at least ₦100,000. A public company must state at least ₦2,000,000. The amount goes in the memorandum of association, divided into shares of a fixed amount, and each subscriber writes down the number of shares they take.
What section 27(2) says
If a company has share capital, section 27(2) of CAMA 2020 adds two requirements to what the memorandum of association must say. First, the memorandum states the minimum issued share capital the company proposes to register with. That figure cannot be less than ₦100,000 for a private company or ₦2,000,000 for a public company, and it is divided into shares of a fixed amount.
Second, each subscriber writes the number of shares they take opposite their name. The word minimum matters: these figures are floors. A company can register with more.
The minimums by company type
| Company type | Minimum | Section |
|---|---|---|
| Private company limited by shares | ₦100,000 | s. 27(2)(a) |
| Public company limited by shares | ₦2,000,000 | s. 27(2)(a) |
| Unlimited company with share capital | Not below the s. 27(2)(a) minimum | s. 25 |
| Company limited by guarantee | No shares. Members’ promises total at least ₦100,000 | s. 26(12) |
What you file at registration
Besides the memorandum, a company with share capital files a statement of initial issued share capital and initial shareholdings (section 37). It states the total number of shares the subscribers take on formation and their total nominal value. For each class of shares it gives the rights attached, the number of shares issued and their nominal value. It also shows how much is paid up, and how much is unpaid, on each share.
Section 37(4) says the fees the Commission charges for filing or increasing issued share capital are whatever the Minister specifies by regulation. Check the current fee schedule with the Corporate Affairs Commission before you file.
How to state your share capital
- Decide whether the company will be private or public (sections 22 and 24). Your choice sets the minimum.
- Choose a share capital at or above that minimum, and divide it into shares of a fixed amount.
- Have each subscriber write the number of shares they take opposite their name in the memorandum.
- Disclose any shares a subscriber holds in trust for someone else, with the name of the beneficiary (section 27(3)).
- Have each subscriber sign the memorandum in front of at least one witness, and stamp it as a deed (section 27(5) and (6)).
- File the memorandum with the application, including the statement of initial issued share capital and initial shareholdings (sections 36(4)(a) and 37).
Example, for illustration only
A private company registers with ₦100,000 divided into 100,000 shares of ₦1. Ada takes 60,000 shares and Emeka takes 40,000. Each writes those numbers opposite their name in the memorandum, and the statement of initial issued share capital shows the same figures.
Companies limited by guarantee
A company limited by guarantee has no share capital. Instead, each member promises to contribute if the company is wound up, and the members’ promises must total at least ₦100,000 (sections 26(12) and 27(4)(b)). If the total falls below that, every director and member who knows of the breach is liable to a penalty set by the Commission for each day it continues (section 26(14)).
Section 26 also says the Attorney-General of the Federation must authorise the memorandum of such a company before it is registered.
Changing share capital later
Registering with the minimum does not lock the figure in. Chapter 7 of the Act covers consolidating shares (section 125), increasing issued share capital (section 127) and reducing it. A reduction needs a special resolution and the court’s confirmation (sections 130 to 134). A private company that becomes public must also meet the share capital conditions in section 57.
Mistakes to avoid
- Treating the minimum as a ceiling. It is the lowest figure you may state.
- Stating share capital for a company limited by guarantee. It has none.
- Leaving out the beneficiary when a subscriber holds shares in trust. Section 27(3) requires the disclosure.
- Forgetting the witness and stamping. The memorandum must be signed in front of a witness and stamped as a deed.
Questions and answers
Is ₦100,000 the minimum share capital for a limited company in Nigeria?
For a private company limited by shares, yes. Section 27(2)(a) of CAMA 2020 sets the minimum issued share capital at ₦100,000.
What is the minimum share capital for a public limited company?
₦2,000,000, under the same section.
Can one person form a company with ₦100,000 share capital?
Yes. Section 18(2) allows one person to form a private company, and ₦100,000 is the minimum for a private company.
Does a business name need share capital?
No. A business name is registered under Part E of the Act, sections 811 to 822. It is not a company and has no share capital.
Can a company limited by guarantee issue shares?
No. Section 26(2) makes void any provision that divides the company’s undertaking into shares or interests.
How many shares must each founder take?
Section 27(2)(b) requires each subscriber to write the number of shares they take opposite their name. This section does not set a required split between founders.
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