Legal Business
Minimum Share Capital Requirement For Companies Under The Nigerian Law
The required minimum share capital of a company is dependent on either the objects of the company, type of company or statutory provisions regulating that company. The primary law on the registration and regulation of companies in Nigeria is the Companies and Allied Matters Act, 2004 (CAMA) while the Corporate Affairs Commission (CAC) is the body empowered to ensure that the provisions of the CAMA are complied with during pre-incorporation and post incorporation stages.
As interesting as it may sound, the CAMA is not the only law that regulates the minimum share capital of a company as there are other laws, policies and regulations that dictates what the minimum share capital of certain companies should be. The CAC being the regulator at the initiation stage must ensure the compliance of companies before issuing a certificate of incorporation.
This article attempts to list regulated business activities and their required minimum share capital. It also discusses the laws and the regulatory agencies that ensure that the provisions of the law are complied with during the post-incorporation stage.
Minimum Share Capital By Category of Company
In this regard, a company’s nature determines its required minimum share capital. In general, the required share capital of companies is set at a very low amount in order to make registration of companies attractive to everyone. Thus it is stated in Section 27 (2) of the CAMA that the minimum share capital of a Private company shall be N10,000 whereas a public company cannot fall below N500,000.
Private Company: N10,000
Public Company: N500,000
Minimum Share Capital By Classification
By virtue of the CAMA, a company can also either be a company limited by shares, an unlimited company or a company limited by guarantee. A company limited by shares is required to have a share capital as earlier discussed whereas an unlimited company which is also required to have a share capital had hitherto and before the act not fallen under the type of companies required to have a share capital.
A company limited by guarantee, however, is not required to have a share capital. This provision is contained in section 26 (2) which states that a company limited by guarantee shall not be registered with a share capital; and every existing company limited by guarantee and having share capital shall, not later than the appointed day, alter its memorandum so that it becomes a company limited by guarantee and not having a share capital.
It is worthy to note that a company limited by guarantee is also defined in the section as a company formed for promoting commerce, art, science, religion, sports, culture, education, research, charity or other similar objects, whose income and property are to be applied solely towards the promotion of its objects and no portion thereof is to be paid or transferred directly or indirectly to the members of the company except as permitted by the Act.
Private Company Limited by Shares: N10,000
Public Company Limited by Shares: N500,000
Private Companies Limited by Guarantee: N0
Public Companies Limited by Guarantee: N0
Private Unlimited Company: N10,000
Public Unlimited Company: N500,000
Minimum Share Capital Of Regulated Objects
There are certain businesses activities and ventures that are regulated by specific laws that provide guidelines for the registration, licensing and regulation of the business activities or ventures. These rules, policies and guidelines place an obligation on promoters of certain types of companies to ensure that the minimum share capital requirement of these types of companies are met. Failure to meet the required share capital will result in the registration being queried by the CAC. The rationale behind setting a higher threshold for certain companies is to provide a means of assurance that in the event of liquidation of the company, the assets of the company will be sufficient to pay a substantial part of any debt owed. This means that any company which purports to carry out the activities under the regulated list whether public or private would not be registered by the Corporate Affairs Commission unless it complies with the minimum share capital requirement by law.
The regulated objects, the enabling law and the post-incorporation regulatory agencies are discussed below for better understanding of the minimum share requirements of the different categories of companies under this umbrella.
- COURIER BUSINESS
By virtue of its power to regulate Courier Business in Nigeria as contained in Section 43 of the Nigerian Postal Service Act, 1992 the Nigerian Postal Service has set its guidelines for registration, licensing and operation of courier companies in Nigeria. The requirements which must be complied with before a courier company can commence operations includes registration of the company with a minimum share capital of N2 Million.
Courier Company: N2 Million
- CAPITAL MARKET OPERATORS
The Securities and Exchange Commission (SEC) is empowered by section 8 of the Investment and Securities Act, 2007 to regulate investment and securities business in Nigeria as defined in the Act. Below are the list of investment companies regulated by the SEC and their required minimum share capital.
Issuing House: N200 Million
Brokers/dealers: N300 Million
Trustees: N300 Million
Fund/ Portfolio Managers: N150 Million
Stock Brokers: N200 Million
Stock Dealers: N100 Million
Inter- Dealer Broker (IDB): N50 Million
Corporate Investment Adviser (Registrar) : N150 Million
corporate Investment Adviser: N5 Million
Individual Investment Adviser: N2 Million
Market Maker: N2 Billion
Consultant Partnership: N2 Million
Consultant Individual: N500,000
Consultant Corporate: 5 Million
Under Writer: 200 Million
Venture Capital Manager: 20 Million
Commodities Exchange: 500 Million
Commodities Broker: 40 Million
Capital Trade Point: 20 Million
Rating Agency: 150 Million
Corporate/Su Broker: 5 Million
- BANKS AND OTHER FINANCIAL INSTITUTIONS
The Central Bank of Nigeria (CBN) is empowered by the Banks And Other Financial Institutions Act, 2004 to regulate the Banking Industry and by virtue of section 2 of the Act, No person shall carry on any business in Nigeria except it is a company duly incorporated in Nigeria and holds a valid banking license issued under the Act.
Through its powers to regulate the banking business, the CBN from time to time make policies relating to the minimum share capital of the type of companies under its purview. Below is a list of the companies and their minimum share capital.
Commercial Bank With Regional Authorization: N10 Billion
Commercial Banks With National Authorization: N25 Billion
Commercial Banks With International Authorization: N50 Billion
Merchant Banks: N15 Billion
Micro Finance Bank (Unit): N20 Million
Micro Finance Bank (State & Fct): N100 Million
Micro Finance Bank (National): N2 Billion
Primary Mortgage Institutions: N2 Billion
Finance Company: N20 Million
Bureau De Change: N35 Million
Non-Interest Banks (Regional): N5 Billion
Non-Interest Banks (National): N10 Billion
- REGISTERED INSURANCE BROKERS
The Nigerian Council of Registered Insurance Brokers is the body empowered in Nigeria to regulate the enrolment and operation of Registered Insurance Brokers. Section 15(1) of the Nigerian Council of Registered Insurance Brokers Act, 2003 empowers the Council to make rules while subsection (1) (a) mandates the council to ensure that a Practicing Insurance Broker business should have a working capital of not less than N5 Million made up of verifiable movable and immovable assets and cash in proportion as the council may decide. Below is a list of insurance-related businesses and their required minimum share capital.
Insurance Brokers: N5 Million
- INSURANCE BUSINESS
The National Insurance Commission Act, 1997 empowers the National Insurance Commission by virtue of section 6 to regulate insurance business in Nigeria. The section provides that the principal object of the commission shall be to ensure the effective administration, supervision, regulation and control of insurance business in Nigeria.
The commission through its powers has issued guidelines regulating the insurance business in Nigeria.
Life Insurance: N2 Billion
General Insurance Business: N3 Billion
Re-Insurance Business: N10 Billion
Life Microinsurance Business: N150 Million
General Microinsurance Business: N200 Million
General Takaful/Family Takaful: N200 Million
- PRIVATE GUARD BUSINESS
The requirements for registration of Private Guard Security Companies are contained in policies made by the Civil Defence Corps made pursuant to Nigeria Security and Civil Defense Corp Act, 2003. According to section 3 of the Act, the Civil Defense Corps (the Corps) has the power to recommend to the Minister the registration of private guard companies. The Corps is also to supervise and monitor the activities of all private guard command and keep a register for that purpose.
Private Security Company/Consultant: N10 Million
- PENSION FUND MANAGERS
The Pension fund business is regulated by the provisions of the Pension Reform Act 2004. The minimum share capital required for Pension Fund business is as follows:
Pension Fund/Asset Custodians: N2 Billion
Closed Pension Fund: N500 Million
Pension Fund Administrators: N1 Billion
- NATIONAL HEALTH INSURANCE BUSINESS
Health Insurance Business is regulated under the National Health Insurance Scheme, HMO Accreditation Guidelines. Under this scheme, the following are the required minimum share capital.
Health Maintenance Organisations (HMOs) (National): N400 Million
Health Maintenance Organisations (HMOs) (Zonal): N200Million
Health Maintenance Organisations (HMOs) (State): N100 Million
- LOTTERY, CASINO AND BETTING BUSINESS
Setting up a lottery business in Nigeria requires compliance with the regulatory authority which is the National Lottery Regulatory Commission. The commission is empowered by the National Lotteries (Amendment) Regulations, 2007. Also, the Lagos State has its own Lottery Regulatory Commission with a different set of permit requirements. Below are the required minimum share capital for Lottery Businesses.
Non-Sports Lotteries: N5 Million
Sport Lottery Businesses: N30 Million + Approval In Principle (AIP).
- AIR TRANSPORT BUSINESS
The air transport business is regulated by the Nigerian Civil Aviation Authority which issues guidelines to the operators in the sector. Section 32 of the Civil Aviation Act gives the Authority the power to regulate and issue licenses to aircraft operators. The Authority from time to time have issued guidelines and directives to airline operators and some of the guidelines relate to the minimum share capital.
Air Transport (International): N2 Billion
Air Transport (Regional): N1 Billion
Air Transport (Local): N500 Million
Air Ambulance/Fumigation/Private Jet: N20 Million
Aerial Aviation Services: N20 Million
Aviation (Ground Handling Services): N500 Million
Aviation (Air Transport Training Institutions): N2 Million
Agents Of Foreign Airlines: N1 Million
- AGRICULTURE BUSINESS
Generally, the agriculture business is not strictly regulated. However, the National Agriculture Seeds Act, 2004 regulates the business of Agricultural Seeds, Productions, Processing And Marketing. The Act establishes a National Agricultural Seed Council and gives it oversight functions over any business, actions, or activities regarding seed development and the seed industry in general including legislation and research on issues relating to seed testing, registration, release, production, marketing, distribution, certification, quality control, supply and use of seeds in Nigeria, importation and exportation of seeds and quarantine regulations relating thereto.
Thus any business relating to seed business is within the purview of the council and the minimum share capital is as stated below:
Agricultural Seeds, Productions, Processing And Marketing: 10 Million.
- SHIPPING AND MARITIME BUSINESS
The maritime business is controlled and regulated by the Nigerian Maritime Administration and Safety Agency (NIMASA) which was created by the enabling law, the Nigerian Maritime Administration And Safety Agency Act, 2007.
By virtue of section 22 of the Act, the agency is saddled with the responsibility of pursuing the development of shipping and regulatory matters relating to merchant shipping and seafarers.
Shipping Company/Agent: N25 Million
Cabotage Trade: N25 Million
Freight Forwarding: 5 Million
Conclusion
Notwithstanding, a company can choose to increase its share capital above the required minimum either at the time of registration or subsequently. However, the same company cannot reduce its share capital below the minimum either at the time of registration or subsequently unless it alters its object clause to exclude the activities requiring the required minimum share capital.
ABOUT THE AUTHOR
Ezra Akintonde is a lawyer with over six years of court room and non-courtroom practice experience. He is seasoned in many areas of law including civil and criminal litigation, business registration, company secretariat services, corporate compliance and the general practice of law.
He has won several cases for his clients both in court and in alternative dispute resolution. He is a writer and has written several legal articles.
CORE PRACTICE AREAS: Civil Litigation, Criminal Defence, Corporate Practice, Divorce & Matrimonial Matters.
Tel: 08063321721
Email: meetmrezra@gmail.com
Morenike George Taylor, Founder Reni Legal Consulting | County Support Consulting (Image: Supplied)
I remember a pivotal moment in my career that taught me a profound lesson about the importance of securing sufficient funding for a project. It all started when my team and I were working on an ambitious venture, a hotel to be located in Lekki, a high brow area in Nigeria. After months of planning, I found an investor who was excited about the potential. He assured me that he would provide the necessary funds to bring our vision to life.
Initially, the investor invested a portion of the money, which gave my team and I a glimmer of hope. With that commitment, I felt a surge of confidence. We began allocating resources, hiring a team, and setting timelines. Everything seemed aligned for success.
However, as we progressed, the promises began to wane. The investor started delaying further payments, citing various reasons that ranged from market fluctuations to unforeseen personal issues. Each time I reached out for updates, I was met with assurances that the funds would come through soon. Then, midway through the project, the investor informed me that he could no longer fund the project.
This sudden withdrawal created a domino effect. We had already committed to other businesses that were relying on our funding to get started. As the primary business was still in development, those secondary businesses began to pressure me for repayments. They had their own obligations, and without the promised funds, they found themselves in a precarious position. It was an overwhelming situation, and I watched helplessly as relationships soured and trust evaporated.
The main business, which had so much promise, struggled to survive. Without the necessary capital, we couldn’t complete our operations or deliver our product to market. As the financial strain mounted, it became clear that our venture was on the brink of collapse. Ultimately, the business we had worked so hard to build didn’t make it.
This experience was a harsh but invaluable lesson. It underscored the critical importance of raising sufficient funding before embarking on any ambitious project and how this needs to be taken into consideration in any contract documentation you sign. If I had tied all our contracts and obligations to the complete funds being raised, we could have safeguarded our operations against such unforeseen circumstances.
This experience taught me that in business, clarity and preparation are paramount. Without sufficient funding, dreams can quickly turn into nightmares, and projects that hold so much promise can fade away before they even have a chance to succeed
In the world of business, securing adequate funding is crucial for success. Particularly, if you require $1,000,000 for example to execute your vision, it is essential to raise that exact amount and tie all your contracts to this figure, especially concerning repayment terms. This approach ensures that your business can commence operations without financial strain.
When you set out to raise capital, clearly defining your financial needs is the first step. If you determine that your project requires $1,000,000, raising exactly that amount helps avoid unnecessary complications. Insufficient funding can lead to a cascade of operational issues, including delays, inability to meet contractual obligations, and ultimately, project failure. By securing the full amount, you create a solid foundation for your business operations.
Tying your contracts to the $1,000,000 funding goal is a strategic move. This means that all agreements—whether with investors, lenders, or partners—should explicitly state that the commencement of business activities, as well as repayment obligations, are contingent on successfully raising this amount. If the funding goal is not achieved, the repayment terms should reflect that the business cannot commence. This protects you and your stakeholders from the risks associated with undercapitalization.
By ensuring that all agreements explicitly stated that the project’s commencement and the repayment terms hinged on successfully raising that target amount, we would have mitigated the risks of undercapitalization. It became clear to me that having a well-structured funding strategy is not just a financial necessity; it’s essential for operational stability and long-term success.
Now, I always emphasize to entrepreneurs the importance of securing the full amount required before diving into a project. A well-capitalized venture is not just better positioned to navigate challenges; it can seize opportunities and grow sustainably.
About the author:
Morenike is an award winning business strategist and the founder of Reni Legal Consulting and County Support Consulting. She operates as a business consultant across various sectors, leveraging her extensive expertise to provide strategic insights and tailored solutions. With a keen understanding of the complexities of different industries, she helps organizations navigate challenges and seize opportunities for growth.
As a qualified lawyer, Morenike combines her legal knowledge with a strong foundation in data management, agile methodologies, and risk management. She is a certified Data Management Professional, a Disciplined Agile Scrum Master, and a Risk Management Professional. This diverse skill set allows her to approach each consulting engagement with a comprehensive perspective, driving operational efficiency and fostering organizational success.
Legal Business
African Union, Google and Africa Practice launch Policy Framework to Transform Africa’s Startup Ecosystem
In a groundbreaking move to drive innovation and entrepreneurship across Africa, the African Union and its partners, including Google and Africa Practice, have launched the AU Startup Policy Framework and Model Law. The Policy Framework and Model Law articulate principles, recommendations, and policy innovations to tackle the challenges hindering startups in Africa. It provides specific sample clauses to guide African Union Member States in developing or updating their national startup legislative and regulatory governance arrangements.
The Policy Framework and Model Law, developed in cooperation with Google in line with its Memorandum of Understanding with the African Union Commission, is set to harmonise approaches to enabling startups and innovation, in line with the African Union’s broader harmonisation objectives.
Speaking during the launch held during the African Union 6th Mid-Year Coordination Meeting that brings together the African Union, the Regional Economic Communities, the Regional Mechanisms and the African Union Member States, H.E. Albert M. Muchanga, African Union Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, said, “We are excited about the new prospects for our continent unlocked by the adoption of the Startup Policy Framework and Model Law which is set to leapfrog the startup ecosystem in Africa. As you know, small and medium-sized enterprises, including startups, represent most businesses in all sectors and are the primary source of job creation. Specifically, startups spur development by creating jobs in the digital economy, employing 34,000 people across the continent. Unfortunately, out of 1000 unicorns globally, only seven are in Africa. This is primarily due to complex regulations, limited funding, a scarcity of skilled labour, and fragmented markets in Africa. Therefore, the framework is expected to unlock some of these hurdles and set a strong foundation for the growth of Africa’s startup landscape, projected to expand to USD 10 billion by 2056.”
H.E. Albert M. Muchanga went on to highlight that “Africa is a young continent, by 2050, the continent will account for 25% of the global population. Governments need to make the provisions to enable capital flow for the burgeoning ideas coming out of Africa. We need to create an environment that enables these innovative minds to catapult the continent to economic prosperity, and this framework is what enables this.”
Google’s Regional Director, Sub Saharan Africa, Government Affairs & Public Policy, Charles Murito, noted, “Africa receives a disproportionately small share of global venture funding. In 2023, the continent raised a total of USD 4.5 billion from 545 disclosed venture capital deals, reflecting a 30% decrease in value and a 31% decline in the number of deals compared to 2022. Notably, 16% of the funding recipients were female-led ventures, only marginally up from 11% in 2020. Funding flows also skew towards the same sectors, exacerbating the financing challenge; with fintech continuing to lead deal volumes. The same destinations also receive disproportionately more of the financing flows into the continent: startups in Nigeria, Kenya, South Africa, and Egypt received 62% of the total deal volume.”
While there’s no universal formula for fostering innovation and startups, the framework outlines principles derived from successful models. It is a call to action to ensure that startups — particularly those led by women and youth can be better supported. This Policy Framework and Model Law holds the potential to address gender disproportionality in financing flows, inspiring a new wave of innovation and growth.
Marie Wilke, the Chief Innovation Officer at consulting firm Africa Practice, said, “The adoption of the Startup Policy Framework and Model Law marks the beginning of an exciting but potentially transformative phase. We must maintain momentum behind engagements with regional economic communities (RECs), regional organisations (ROs), and member states, to update and enact regional legal frameworks and national laws. Innovation is as much about finance and people as it is about drive. The future of Africa’s small and new businesses depends on our joint and decisive efforts to support them, paving the way for The Africa We Want.”
Photo Credits: Tonkin Clacey Inc
In the complex and intricate world of law, where every case is a story waiting to be told, the wisdom passed down from seasoned legal professionals holds immeasurable value. Within the hallowed halls of law firms and legal institutions, an age-old tradition persists-one that transcends formal training and case law. It’s the tradition of fireside chats, where senior legal practitioners weave narratives of their experiences, trials, and triumphs, igniting the flames of inspiration in the hearts of their junior counterparts.
In these intimate gatherings, the rigid walls of hierarchy crumble, and the barriers between senior and junior practitioners’ dissolve. Here, amidst the flickering glow of the fire, stories untold-stories of courtroom battles won and lost, negotiations that sealed deals or unraveled, and ethical dilemmas faced with unwavering resolve. Through these stories, senior legal practitioners impart not just legal knowledge but invaluable lessons from the trenches of practice.
For junior practitioners, these fireside chats serve as a beacon of guidance, illuminating the path ahead with the collective wisdom of those who’ve walked it before. They chats provide insights that textbooks can’t convey, painting a vivid picture of the complexities and nuances of legal practice. From navigating tricky client interactions to finding creative solutions to legal challenges, the stories shared in these informal gatherings offer a treasure trove of practical advice.
Moreover, fireside chats help to build a sense of fellowship and community within the legal profession. They create spaces where junior practitioners feel seen, heard, and valued—not just as legal novices, but as aspiring storytellers in their own right. Through the exchange of anecdotes and experiences, bonds are forged, mentorship relationships blossom, and a culture of continuous learning thrives.
Most importantly, these chats have the power to shape the trajectory of junior practitioners’ careers. By exposing them to diverse perspectives and real-world scenarios, these informal gatherings expand their horizons, instilling in them the confidence to navigate the complexities of the legal landscape. They inspire them to dream bigger, reach higher, and aspire to leave their own indelible mark on the legal profession.
Photo Credits: Baker McKenzie
In a profession where the stakes are high, and the journey is fraught with challenges, storytelling becomes a guiding light—a compass that points towards excellence, integrity, and justice. The Advancing Women in the Workplace (AWW) program- a program to support women in leadership in South Africa adopted this approach of storytelling as a model. So, let us gather around, dear practitioners, and share our stories. For in the flicker of the flames lies the power to shape not just individual careers, but the future of the legal profession itself.
Acknowledgements
The AWW program, a program sponsored by Vance Centre in partnership with the South African Legal Fellows Network and the US mission.
Written by: Adaobi Adaobi Egboka and Dr Kim Lamont-Mbawuli. Africa Program Director, Cyrus R. Vance Center for International Justice, Vance Center Consultant and Director of KLM attorneys.
