Nigerian Court Greenlights Single Shareholder for All Private Companies Limited by Shares

Accordingly, upon the commencement of CAMA 2020, the Corporate Affairs Commission (CAC) initially permitted share transfers in all private companies even where this resulted in a reduction of the number of shareholders to a single shareholder. However, the CAC in its implementation of CAMA 2020 disallowed existing companies from reorganising their shareholding to become single shareholder companies despite stakeholders commenting that the CAC’s position did not accord with the clear provisions of CAMA 2020. The CAC’s interpretation of Section 571(c) was that any company incorporated under CAMA 1990 could not take the benefit of CAMA 2020 to become a single shareholder entity and notified the markets that such companies face the risk of being wound up under CAMA 2020.

In a recent decision delivered by the Federal High Court in Suit No: FHC/ABJ/CS/665/2023 Primetech Design and Engineering Nigeria Limited & Julius Berger Nigeria Plc v. Corporate Affairs Commission, Coram Egwuatu J., the court held that there should be no distinction between companies incorporated prior to or after the commencement of CAMA 2020 as section 869 (1) of CAMA 2020 repealed the former legislation making CAMA 2020 the principal law regulating all companies in Nigeria, regardless of their incorporation date. The Court further held that the intention of the legislature could not be to deprive private companies incorporated prior to CAMA 2020 from having single shareholders based on the date of their incorporation.

Although the CAC has a right of appeal, we hope that the issue is allowed to rest as the decision aligns with the legislative intent of section 18 (2) of CAMA 2020 and is just, and equitable as it removes an unnecessary dichotomy.

Should you have any questions about this legal alert, do not hesitate to contact Cephas Caleb.