Transferring shares, transmission and share buybacks under CAMA 2020

(1) The transfer of a company’s shares shall be by instrument of transfer and except as expressly provided in the articles, transfer of shares shall be without restrictions, and instruments of transfer shall include electronic instrument of transfer.

(2) Notwithstanding anything in the articles of a company, a company shall not register a transfer of shares in the company, unless a proper instrument of transfer has been delivered to the company : Provided that nothing in this section shall prejudice any power of the company to register as shareholder, any person to whom the right to any share in the company has been transmitted by operation of law.

(3) The instrument of transfer of any share shall be executed by or on behalf of the transferor and transferee, and the transferor is deemed to remain a holder of the share until the name of the transferee is entered in the register of members in respect of the share.

(4) Subject to any restrictions of a company’s articles as may be applicable, any member may transfer all or any of his shares by instrument in writing in any usual or common form or any other form which the directors may approve.

Open section 175 on its own page

(1) On the application of the transferor of any share or interest in a company, the company shall enter, in its register of members, the name of the transferee in the same conditions as if the application for the entry were made by the transferee, and register of transfer includes electronic register of transfer.

(2) Until the name of the transferee is entered in the register of members in respect of the transferred shares, the transferor is, so far as it concerns the company, deemed to remain the holder of the shares.

(3) The company may refuse to register the transfer of a share (not being a fully paid share) to a person of whom they do not approve, and may also refuse to register the transfer of a share on which the company has a lien.

(4) The company may refuse to recognise any instrument of transfer unless—

(a) a fee, as the company may determine, is paid to the company in respect of the instrument ;

(b) the instrument of transfer is accompanied by the certificate of the shares to which it relates and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer ; and

(c) the instrument of transfer is in respect of only one class of shares.

Open section 176 on its own page

(1) If a company refuses to register a transfer of any share, it shall, within two months after the date on which the transfer was lodged with it, send notice of the refusal to the transferee.

(2) If default is made in complying with this section, the company and each officer of the company is liable to such penalty as the Commission shall specify in the regulation.

Open section 177 on its own page

A transfer of the share or other interest of a deceased member of a company made by his personal representative is, although the personal representative is not himself a member of the company, as valid as if he had been such a member at the time of the execution of the instrument of transfer.

Open section 178 on its own page

(1) In case of the death of a member, the survivor or survivors where the deceased was a joint holder, or the legal personal representative of the deceased where he was a sole holder, is the only person recognised by the company as having any title to his interest in the shares, but nothing in this section shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by him with other persons.

(2) Any person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as may be required by the directors and subject to this section, elect either to be registered himself as holder of the share, or to have a person nominated by him registered as the transferee of the share, but the company shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by that member before his death or bankruptcy, as the case may be.

(3) If the person becoming entitled elects to be registered himself, he shall deliver or send to the company a notice in writing signed by him stating that he so elects, and if he elects to have another person registered, he shall testify his election by executing to that person a transfer of the share in the prescribed form.

(4) All the limitations, restrictions and provisions of this Act and the company’s articles relating to the rights to transfer and the registration of transfers of share, are applicable to any such notice or transfer as mentioned in subsection (3) as if the death or bankruptcy of the member had not occurred and the notice or transfer were a transfer signed by that member.

(5) A person becoming entitled to a share by reason of the death or bankruptcy of the holder, is entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he is not, unless the articles otherwise provide, before being registered as a member in respect of the share, entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company : Provided that the directors may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within 90 days, the directors may thereafter withhold payment of all dividends, bonuses or other money payable in respect of the share until the requirements of the notice have been complied with.

Open section 179 on its own page

(1) Any person claiming to be interested in any share, dividend or interest on them, may protect his interest by serving on the company concerned a notice of his interest.

(2) The company shall enter, on the register of members, the fact that such notice has been served and shall not register any transfer or make any payment or return in respect of the shares contrary to the terms of the notice until the expiration of 42 days’ notice to the claimant to the proposed transfer or payment.

(3) In the event of any default by the company in complying with this section, the company shall compensate any person injured by the default.

Open section 180 on its own page

(1) When the holder of any share of a company wishes to transfer to any person only a part of the shares represented by one or more certificates, the instrument of transfer together with the relevant certificates shall be delivered to the company with a request that the instrument of transfer be recognised and registered and a certificate of transfer shall include a certificate issued in electronic form.

(2) A company to which a request is made under subsection (1), may recognise the instrument of transfer by endorsing on it the words, “certificate lodged” or words to the like effect.

(3) The recognition by a company of any instrument of transfer of shares in the company shall be taken as a representation by the company to any person acting on the faith of the recognition that there have been produced to the company such documents as on the face of them show a prima facie title to the shares in the transferor named in the instrument of transfer, but not as a representation that the transferor has any title to the shares.

(4) Where any person acts on the faith of a false recognition by a company made negligently, the company shall be under the same liability to that person as if the recognition has been made fraudulently.

(5) For the purposes of this section—

(a) an instrument of transfer is deemed to be recognised if it bears the words, “certificate lodged” or words to the like effect ;

(b) the recognition of an instrument of transfer is deemed to be made by a company if—

(i) the person issuing the instrument is a person authorised to issue certificated instruments of transfers on the company’s behalf, and

(ii) the recognition is signed by a person authorised to recognise transfers of shares on the company’s behalf or by any officer or servant either of the company or of a body corporate so authorised ; and

(c) a recognition is deemed to be signed by any person if—

(i) it purports to be authenticated by his signature or initials (whether handwritten or not), and

(ii) it is not shown that the signature or initials was or were placed there by any person other than him or a person authorised to use the signature or initials for the purpose of transfers on the company’s behalf.

Open section 181 on its own page

(1) The provisions of this section apply with respect to the redemption by a company of any redeemable preference share issued by it under section 147.

(2) The shares are not redeemed unless they are fully paid, and redemption shall be made only out of—

(a) profits of the company which would otherwise be available for dividend ; or

(b) the proceeds of a fresh issue of shares made for the purposes of the redemption.

(3) Before the shares are redeemed, the premium, if any, payable on redemption, shall be provided for out of the profits of the company or out of the company’s share premium account.

(4) Where shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits which would otherwise have been available for dividend, be transferred to a reserve fund, to be called “the capital redemption reserve account”, a sum equal to the nominal amount of the shares redeemed, and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the capital redemption reserve fund were paid-up share capital of the company.

(5) Subject to the provisions of this section, the redemption of preference shares may be effected on such terms and in such manner as are provided by the articles of the company or in the terms of issue of the relevant preference shares.

(6) The redemption of preference shares under this section by a company shall not be taken as reducing the amount of the company’s share capital.

(7) The capital redemption reserve fund may, notwithstanding anything in this section, be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.

(8) Any redeemable share issued by a company is regarded as a preference share and the provisions of this Act with respect to preference shares shall apply to all redeemable shares.

Open section 182 on its own page

(1) In this section—

(a) “financial assistance” means a gift, guarantee, any form of security or indemnity, a loan or any form of credit or any other financial assistance given by a company, the net assets of which are thereby reduced by up to 50%, or which has no net assets ;

(b) “net assets” means the aggregate of the company’s assets, less the aggregate of its liabilities (“liabilities” to include any charges or provision for liabilities in accordance with the applicable accounting standards applied by the company in relation to its accounts).

(2) Subject to the provisions of this section—

(a) where a person is acquiring or is proposing to acquire shares in a company, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place ; and

(b) where a person has acquired shares in a company and any liability has been incurred (by that or any other person), for the purpose of this acquisition, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred.

(3) Nothing in subsection (1) of this section shall be taken to prohibit—

(a) the lending of money by the company in the ordinary course of its business, where the lending of money is part of the ordinary business of a company ;

(b) the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of, or subscription for, fully-paid shares in the company or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees of the company, including any director holding a salaried employment or office in the company ;

(c) the making by a company of loans to persons, other than directors, bona fide in the employment of the company with a view to enabling those persons to purchase or subscribe for fully-paid shares in the company or its holding company, to be held themselves by way of beneficial ownership ;

(d) any act or transaction otherwise authorised by law including—

(i) a distribution of a company’s assets by way of dividend lawfully made or a distribution made in the course of the company’s winding-up,

(ii) the allotment of bonus shares,

(iii) a reduction of capital confirmed by order of the court under this Act, and

(iv) a redemption or purchase of shares ;

(e) anything done in pursuance of an order of the court under a scheme of arrangement ; a scheme of merger or any other scheme or restructuring of a company done with the sanction of the Court ; or (f ) an assistance given by a company where its principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in the company or its holding company, or the reduction or discharge of any such liability, but an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company.

(4) This section does not prohibit a private company from giving financial assistance in a case where the acquisition of shares in question is or was an acquisition of shares in the company or, if it is a subsidiary of another private company, in that other company, provided that—

(a) the financial assistance may only be given if the company has net assets which are not thereby reduced or to the extent that they are reduced, if the assistance is provided out of distributable profits ;

(b) the giving of assistance under this section must be approved by special resolution of the company in general meeting ; and

(c) the directors of the company proposing to give the financial assistance and, where the shares acquired or to be acquired are shares in its holding company, the directors of that holding company shall, before the financial assistance is given, make a statutory declaration in a form prescribed by the Commission.

(5) If a company acts in contravention of this section, the company and every officer of the company who is in default shall be liable to such penalty as the Commission shall specify by regulation.

(6) A Company may accept from any shareholder, a share in the Company, surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share, except in accordance with section 131 of this Act.

Open section 183 on its own page

(1) A limited liability company may purchase its own shares including redeemable shares provided that—

(a) a company may only purchase its own shares if so permitted by its articles ;

(b) the shareholders shall, by special resolution, approve the acquisition by the company of the shares that it intends to purchase ;

(c) only fully paid up shares of a company may be purchased by the company, and the terms of purchase shall provide for payment for the purchase ;

(d) within seven days after the passing of the special resolution referred to in paragraph (b), the company shall cause to be published in two national newspapers, a notice of the proposed purchase by the company of its own shares ;

(e) within 15 days after the publication in two national newspapers, the directors of the company shall make and file with the Commission, a statutory declaration of solvency, to the effect that the company is solvent and can pay its debts as they fall due, and that after the purchase of its shares, the company shall remain solvent and can pay its debts as they fall due ; (f ) a company may not under this section purchase its shares if, as a result of the purchase, there would no longer be any issued shares of the company other than redeemable shares or shares held as treasury shares.

(2) Within a period of six weeks following the publication in two national newspapers, any of the company’s creditors may make an application to the Court for an order cancelling the resolution and a dissenting shareholder who did not vote in favour of the share buyback shall also have the right to seek an order of court cancelling the resolution.

(3) The ability of the company to proceed with the share buyback shall depend on the order of the court, where applicable.

(4) For the purpose of determining a company’s creditors under this section, service providers whose fees are not yet due shall be excluded.

(5) Where a company holds shares as treasury shares, the company shall be entered in the register of members as the member holding those shares.

Open section 184 on its own page

Where a company buys back its shares, payment for the share buyback shall be made from the distributable profits of the company.

Open section 185 on its own page

A company may buy back its shares—

(a) from the existing shareholders or security holders on a proportionate basis ;

(b) from the existing shareholders in a manner permitted pursuant to a scheme of arrangement sanctioned by the court ;

(c) from the open market ; and

(d) by purchasing the securities issued to employees of the company pursuant to a scheme of stock option or any other similar scheme.

Open section 186 on its own page

(1) A company shall not hold more than 15% of the nominal value of the issued share capital of any class of its shares as treasury shares.

(2) Where a company buys back more than 15% of the issued share capital of any class of its shares, the company shall, before the end of 12 months beginning with the date on which that contravention occurs—

(a) reissue,

(b) cancel, or

(c) reissue and cancel such number of shares that will ensure that the company holds not more than 15% of the issued share capital of any class of its shares as treasury shares upon the completion of the transaction.

(3) Notwithstanding anything contained in section 142, a company shall not exercise any right in respect of the treasury shares (including any right to attend or vote at meetings) and any purported exercise of such a right shall be void.

(4) No dividend shall be paid, and no other distribution (whether in cash or otherwise) of the company’s assets (including any distribution of assets to members on a winding-up) shall be made to the company, in respect of the treasury shares.

(5) Nothing in this section prevents an allotment of shares as fully paid bonus shares in respect of the treasury shares, or the payment of any amount payable on the redemption of the treasury shares (if they are redeemable shares).

(6) Shares allotted as fully paid bonus shares in respect of the treasury shares shall be treated as if purchased by the company at the time they were allotted.

Open section 187 on its own page

(1) A contract with a company providing for the acquisition by the company of shares in the company is specifically enforceable against the company, except to the extent that the company cannot perform the contract without thereby being in breach of the provisions of section 184.

(2) In any action brought on a contract referred to in subsection (1), the company shall have the burden of proving that performance of the contract is prevented by the provisions of section 184.

Open section 188 on its own page

Where shares are held as treasury shares, the company may at any time—

(a) sell the shares (or any of them) for a cash consideration, or

(b) transfer the shares (or any of them) for the purpose of or pursuant to an employees’ share scheme.

Open section 189 on its own page

(1) A company which is a subsidiary may acquire shares in its holding company where the subsidiary company is concerned as personal representative or trustee, unless the holding company or any subsidiary of it is beneficially interested otherwise than by way of security for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.

(2) A subsidiary which is, at the commencement of this Act, a holder of shares of its holding company or a subsidiary which acquired shares in its holding company before it became a subsidiary of that holding company, may continue to hold such shares but, subject to subsection (1), shall have no right to vote at meetings of the holding company or any class of shareholders of the holding company and shall not acquire any future shares in it except on a capitalisation issue.

(3) Where a public company, or a nominee of a public company, acquires shares in the company, and those shares are shown in a balance sheet of the company as an asset, an amount equal to the value of the shares shall be transferred out of profits available for dividend to a reserve fund and shall not be available for distribution.

Open section 190 on its own page