What is the main source of law authorising this entity form?

Companies and Allied Matters Act, 2020 (as amended) (“CAMA”).

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

A private company limited by shares, upon incorporation has separate and distinct corporate legal personality from that of its promoters and shareholders. (CAMA, s. 42).

(Maximum) period of existence

A private company limited by shares has perpetual succession and may exist in perpetuity subject to its compliance with regulatory requirements and preference of the shareholders.

Governing document(s)

A private company limited by shares is governed by its Memorandum of Association and Articles of Association.

Liability of incorporators / shareholders

The liability of its members is limited by its Memorandum of Association to any unpaid amount on the shares respectively held by the members (CAMA, s. 21(1)(a)). The members are however not personally liable for the liabilities, acts, and/or omissions of the private company, subject to the rules on lifting of the corporate veil by the order of the court.

(Governing) bodies

The governing body of a private company limited by shares is its board of directors. A Managing Director and/or Chief Executive Officer is appointed by the Board of Directors to oversee the day-to-day management of the company. The Chief Executive Officer appointed to oversee the day-to-day management of the company need not be a director of the company.

Other particularities

The company may be constituted by a single (1) shareholder/member or more, provided that the total number of members/shareholders does not exceed fifty (50) (CAMA, s. 22(3)).

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

Yes. A private company limited by shares is not precluded from entering into cross-border mergers, asset acquisitions and divestitures, equity acquisitions, and conversions, amongst others, subject to applicable law and relevant regulatory approvals.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

No. The law prohibits a private company limited by shares from inviting members of the public to subscribe to its securities unless authorised by law (CAMA, s. 22(5)). Where the entity desires to issues its securities to the public as well as be listed on a recognized stock exchange, it must re-register as a public company limited by shares.

Can this type of entity be used for a non-profit or charitable organization?

No. A private company limited by shares cannot be used for a non-profit or charitable purpose. The reason is that a private company limited by shares is incorporated to carryout business operations for profit. However, an alternative type of company that can be used as a non-profit or charitable organisation is a private company limited by guarantee. A private company limited by guarantee is not allowed to have a share capital. The liability of its members is limited to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up. It is incorporated as a not-for-profit entity and its income/profits are not distributed to its members but put back into the business. Similar to a company limited by guarantee is the incorporated trustees (IT) vehicle recognized by the companies’ law for non-profit and charitable purposes.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

Two proposed names of the company (the Corporate Affairs Commission (“CAC”) has the prerogative to determine the preferred name) and other details (i.e. address, email address and phone number) of the company.

The Memorandum of Association and Articles of Association of the company which must include the objects of the company and the share capital.

Details of the directors, secretary, and shareholders: Photocopies of the International Passport data page or Driver’s Licence or National Identification Card of the directors, shareholders and company secretary. Where any of the foreign directors will provide a Nigerian address, the residence permit of that director will be required.

Where a shareholder is a corporate entity, board resolutions of the investing company authorizing the investment in the new company.

A copy of the certificate of incorporation of a shareholder (where a shareholder is a company).

Details of a nominated representative of a corporate shareholder (where shareholding is 5% or more).

Specimen signatures of the directors, shareholders and secretary of the company.

Involvement of notary, company register, governmental authorities

The Nigerian companies’ registry, the CAC, is responsible for the incorporation of companies in Nigeria and the registration process (including submission of documents in para 1 above) is completed on the CAC’s portal. A notary public is not required to execute any of the documents before the company’s incorporation is approved by the CAC.

Timing (estimate)

The timeline for approval of the company’s proposed name takes 24-72 hours and the company is typically incorporated within 1-3 weeks from submission of all details on the CAC’s portal.

Main costs, including registration and similar fees (excluding legal fees)

The official cost for the incorporation of a private company is as follows:

• Fees for Reservation for Name – N500 (less than $1 as at July 1, 2025) to be paid to the CAC. (The Naira/US$ exchange rate is N1,531.5 to US$1 as at July 1, 2025).
• The statutory fee for the incorporation of the company would depend on the nominal share capital of the company. For a private company with share capital of 1 million Naira (about US$653 as at July 1, 2025), the official filing fee cost is 10 thousand Naira (about US$7 as at July 1, 2025).

However, where a private company has a share capital above 1 million Naira but less than 500 million Naira (US$326,477 as at July 1, 2025), the official filing fee cost payable is N10,000 (Ten Thousand Naira) for the first 1 million Naira share capital and 5000 Naira (about US$3 as at July 1, 2025) for every 1 million Naira share capital up to 500 million Naira.

Whereas, for every share capital above 500 million Naira (about US$326,477 as at July 1, 2025), the official filing fee cost payable is 7,500 Naira (about US$5 as at July 1, 2025) for every 1 million Naira share capital.

Notably, the CAC has issued a new schedule of fees that will take effect from August 1, 2025, which will affect the statutory rates in (a) and (b) above. The statutory fee (a) for name reservation will be ₦1,000 (still less than $1 as at July 1, 2025) and (b) to incorporate a private company will be ₦10,000 (about US$7 as at July 1, 2025) for every 1 million Naira share capital irrespective of the amount of the total share capital.

• Stamp duties imposed at the rate of 0.75% on the authorized share capital at incorporation.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

Business of the company

The business of the company must be stated in the objects clause of its Memorandum of Association.

Minimum number of incorporators / shareholders and residency requirements

The minimum number of shareholders is one (1) and there are no residency requirements. However, foreign shareholders must adhere to applicable laws that govern foreign shareholdings in Nigeria, such as immigration requirements. The following permits and residency requirements will apply to such foreign owned company:

• Business Permit: A foreigner (either an individual or a body corporate) is prohibited from practicing a profession or establishing any trade or business without the written consent of the Minister of Interior (Immigration Act, s. 8(1)(b).).
• Expatriate Quota: Where a company wishes to employ foreigners/expatriates for more than six (6) months, it must also seek Expatriate Quota Approval (“EQA”) for the relevant positions from the Minister of Interior. This also includes the shareholders and directors if they decide to work for the company. The EQA is valid for an initial period of three (3) years and is renewable for two consecutive periods of two (2) years each (Handbook on Expatriate Quota Administration (Revised 2022) (the “Handbook”), para. 2.3.) Failure to renew the EQA attracts a fine of 3 million Naira (Handbook, para. 5.1.)
• Expatriate Employee Visas: These will be required if a company intends to have non-Nigerians as employees. A foreigner intending to take up employment temporarily in Nigeria must first obtain a Temporary Work Permit (“TWP”). TWPs are usually issued by the Ministry of Interior for a ninety (90) day period and renewable for a further three (3) month period. The application for TWP is made by the employer i.e. the Nigerian company.
• Residence Permit: Foreigners who intend to reside and work in Nigeria for more than ninety (90) days must obtain a residence permit and register under the alien registration scheme. Application in this case is made by the employer. The employer must first obtain an EQA before it can apply for residence permits on behalf of its employees. In practice, the foreigner obtains a Combined Expatriate Residence Permit and Aliens Card (“CERPAC”) for the residence permit and alien registration. CERPAC is typically issued for a one (1) year period which will be renewable thereafter. CERPAC also serves as a multiple-entry visa.

The applications for business permit, expatriate quota and Nigerian Investment Promotion Commission (the “NIPC”) registration maybe made simultaneously. The NIPC is further explained below.

Minimum number of directors (or other applicable officers) and residency requirements

All private companies (not being small companies (NB. a company with foreign participation is not regarded as a small company under Nigerian law)) in Nigeria must have a minimum of two (2) directors and at least one secretary (CAMA, s. 271). Small companies are allowed to have a single director. The directors are also not required to be resident in Nigeria subject to the immigration requirements noted in question 9 above.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The minimum share capital for a private company limited by shares with foreign participation is 100 million Naira. The payment for the share capital can be made either by cash or, subject to the Articles of Association of the company, by consideration other than cash or by part cash and part non-cash consideration (CAMA, ss. 152 and 160).

A company is permitted to open a corporate bank account in Nigeria subject to obtaining a SCUML Certificate. A SCUML certificate is issued by the Special Control Unit against Money Laundering to organizations in compliance with the extant provisions of Nigeria’s anti-money laundering laws.

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

No. A company may be incorporated in Nigeria if it is duly registered with the CAC and has its registered address in Nigeria. The physical presence of the directors and shareholders of the company is not required by law.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

All companies incorporated in Nigeria must register with the Federal Inland Revenue Service (“FIRS”), the Nigerian federal tax authority (upon incorporation) and obtain a tax identification number to enable it to discharge its tax obligation in line with applicable tax laws. The tax identification number is obtained by a formal application to the FIRS. The timeline for obtaining a tax identification number from the FIRS is two (2) to three (3) weeks.

What is the title of the applicable company registry?

The Corporate Affairs Commission. It is a governmental agency established pursuant to the Company and Allied Matters Act, 2020 (as amended).

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles or other formation document, Articles or other formation document, Group structure, Share capital, Directors, Accounts, Insolvency, good-standing, liquidation, Liens and encumbrances on the shares, Liens and encumbrances on assets of the entity, Other (e.g. litigation, tax matters)

The information and documents listed below must be filed with the Corporate Affairs Commission at various stages:

At Incorporation

• Memorandum of Association and Articles of Association(“Memart”);
• Subscribers to the Memart (the initial Shareholders);
• Share capital;
• Directors;
• Company secretary;
• Registered office address;
• Means of identification of directors of the company (i.e. national identification number, international passport, or drivers licence); and
• Residence permit for a foreign director.

Post Incorporation

• Alteration of share capital;
• Transfer of shares;
• Change of directors (whether due to appointment, removal, resignation, rotation or death);
• Alteration of the Memart;
• Change of registered address;
• Annual returns; and
• Liens and encumbrances on the shares and assets of a company are registered in the register of charges (CAMA, s. 216) while the debentures issued by the company shall be contained in the register of debentures (CAMA, s. 218).

All information and documents listed above with the exception of the filing of the annual returns, are accessible to the public.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The executive body is known as the Board of Directors. It is constituted of the Directors which will include both the Non-Executive Directors (NEDs) and the Executive Directors (Eds) of the company.

The directors owe a fiduciary duty to the company (not to any particular shareholders) to act at all times in the best interests of the company, preserve its assets and collectively oversee the management of the affairs of the company while a number of codes of corporate governance issued by a range of regulators also compel directors to take into consideration the interest of the shareholders, employees, and the stakeholders in general. The directors can make decisions over matters which they have been authorized by the Articles of Association to deal with.

In addition to the Board of Directors, there is also the management team comprised of the chief executive officer and other “C-Suite” executives. Companies have a choice as to whether their managers are to be directors as well or not.

How are the members of the executive body appointed, dismissed and replaced?

The first directors must be appointed by the initial subscribers during the incorporation of the company. Subsequent appointments of directors are by the shareholders of the company at an annual general meeting. The appointment could either be by re-election or nomination.

A director may be removed by rotation or by a resolution of the members in compliance with the procedure for removal under CAMA. By the principle of rotation, one-third (or a number closest to one-third) of the directors are to retire at every annual general meeting. The directors eligible for retirement are the ones who have served the longest. Where two persons were appointed on the same day, their retirement will be determined by vote. A director may also be removed before the expiration of his tenure at a general meeting of the company (at which a special notice of the removal was given to the director) by an ordinary resolution of the shareholders (CAMA, s. 288). A director may also voluntarily resign from his position as a director of the company.

The board of directors can also appoint directors where there is a casual vacancy arising out of death, resignation, retirement or removal of a director. Where this occurs, such an appointment must be approved by the members of the company at the next general meeting otherwise such an individual must immediately cease to be a director.

Is it possible to appoint corporate directors or must all directors be natural persons?

A corporate entity (that is, an artificial person) cannot be a director of a company. All directors must be natural persons. A corporate entity can, however, nominate a natural person as its representative for appointment as a director (CAMA, s.283).

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

Yes. The Nigerian code of corporate governance recommends both executive and non-executive directors on the board of a company (Nigerian Code of Corporate Governance, 2018, para. 2.3(b)). The structure of the board of directors in Nigeria is typically a one-tier board. All the appointed members of the board of directors have similar fiduciary duties and obligations towards the company. The rules for appointment, dismissal, or replacement of a director are applicable to both executive and non-executive directors.

It is pertinent to state that the appointment and removal of an executive director is governed by the terms of the director’s contract of employment. In the absence of, and notwithstanding, such a contract, such a director can be removed by ordinary resolution (CAMA, s. 288). To remove such director under CAMA, a special notice to the director must be issued while the director is also granted an opportunity to be heard. The shareholders may thereafter pass an ordinary resolution to remove such a director.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The owners of a company are called “members” and “shareholders”. CAMA statutorily limits some tasks and responsibilities which can only be carried out by the shareholders by themselves or their proxies in a general meeting. These include:

• alteration of the company’s Memorandum of Association and/or Articles of Association;
• appointment of directors;
• removal of directors;
• alteration of share capital;
• change of the company’s name;
• approval of the company’s annual accounts;
• issues pertaining to re-organizations;
• declaration of dividends;
• scheme of arrangement;
• decisions to wind-up the company; and
• any issue or approval of a directors’ decision expressly provided to be so approved by the companies’ articles of association.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Generally, a simple majority votes of the shares is required for decisions for which an ordinary resolution is required, while the votes of at least three-fourths (75%) of the shares by value are required for decisions requiring special resolutions such as schemes, winding up, amendment and reductions of capital. The shareholders can however vary this requirement in the Articles of Association or a Shareholders’ Agreement subject to applicable law. The law permits an ordinary resolution to be passed as a special resolution but not vice versa.

Shareholders of a company can decide the quorum for meetings in the company’s articles of association and any shareholders’ agreement. Where no quorum is agreed by the shareholders in the articles of association of the company (except in case of a single-member company), one third of the total number of members of the company or 25 members (whichever is less) present in person or by proxy will constitute a valid quorum. However, where the total number of members is not divisible by three, then the number nearest to one third will be applied to determine quorum. Where the number of members is six or less, the quorum is two members. All the members or their proxies will be counted for the purpose of determining the quorum (CAMA, s. 256(2)).

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

No, there are no special governance regimes for private companies.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

Every company (including a private company limited by shares) is mandated by CAC to file its returns annually. This is usually done by filing the audited financial statements for the relevant year of assessment. The first financial statements/annual returns must be submitted to the CAC not later than eighteen (18) months from the incorporation of the company and thereafter once at least every year, and not later than forty-two (42) days after the annual general meeting for the year, whether or not that meeting is the first or only general meeting of the company in that year. (CAMA, ss. 417 & 421).

Is the entity permitted to determine its own financial year?

Yes. A private company limited by shares is permitted to determine its own financial year which is usually from January 1 to December 31, unless such financial year is determined by a specific sector regulator.

Is the entity subject to any statutory (external) auditor obligations?

Yes. Every company in Nigeria, other than a small company or a company that has not carried on business since its incorporation is required to appoint an auditor or auditors to audit the financial statements of the company every year (CAMA, ss. 401 and 402).

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

Every company in Nigeria is required, save where it is a small company, to appoint a company secretary (CAMA, s. 330). There is no specific qualification for the secretary of a private company however such secretary must be a person who has the requisite knowledge and experience to discharge the functions of a secretary (CAMA, s. 332).

The functions of a secretary as prescribed by CAMA, s. 335 are to:

• attend meetings of the board and general meetings of the shareholders as well as advise on compliance with applicable law;
• maintain the registers and other records required to be maintained by the company as prescribed by CAMA;
• render proper returns and notify and file the documents at the CAC as required by CAMA; and
• carry out such administrative and other secretarial duties as may be prescribed by the directors of the company.

There is however no mandatory requirement for such an entity to appoint executive officers or internal auditor/accountants where is simply a non-operational special purpose vehicle. Whilst there is no residency requirement for such officers of the company, immigration law on visas and permits will apply to any such employees as discussed in Question 9 above. CAMA does not make any provision for the residency requirement for a secretary of a company.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

The designated title is ownership of shares and this is held by the shareholders. Ownership of shares in a private company limited by shares can be by way of a direct allotment of a company’s share capital or transfer of the shares from an existing shareholder of the company.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Different classes of shares can be owned in a company. The common classes of shares include:

• Ordinary shares: These are the most common type of shares. Usually ordinary shareholders do not have special rights other than the right to attend meetings and vote at such meetings as well as receive dividends when declared. In the event of a liquidation or a distribution of dividends, ordinary shareholders are paid last.
• Preference shares: Preference shares may take priority over ordinary shares. Before preference shares are issued, the company must provide for the issuance of this class of shares in its articles of association (CAMA, s. 147(2)). Nigerian law prohibits the issuance of irredeemable preference shares by a company (CAMA, s. 147(1)). Unlike ordinary shares, payment of dividends on preference shares may be at a fixed ascertained price.

It is noteworthy that shareholders may attach special rights to each of the classes of shares (CAMA, s. 144).

What documentation is required for the transfer of ownership interests?

A resolution of the board authorizing the transfer together with a duly signed share transfer instrument would be required for the transfer of shares. The transferor and transferee can also enter into a Share Purchase Agreement to expressly state all the terms of the transfer. The approval of the board would also be needed to approve such transfer of shares. Subsequent to the transfer, the company may issue a new share certificate to the transferee/new shareholder upon demand as evidence of the ownership of the transferred shares (CAMA, s. 171) and the name of the new shareholder(s) would be entered into the Register of Members of the company.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

Yes. The regulatory approvals to be sought are usually determined by the deal structure adopted by the parties, the types of entities involved and whether any of the entities operate in a regulated sector.

Where the transfer of shares will result in a direct or indirect change of control of the target company and subject to meeting the turnover threshold, whether any of the parties is foreign or not, a filing may be required to be made with the Federal Competition and Consumer Protection Commission (“FCCPC”) to obtain merger control approval. Also, acquisitions involving a public company will require the approval of the Securities and Exchange Commission (“SEC”). This is, however, subject to certain exceptions that include (1) where the shares of the public company are not issued as consideration for the acquisition and (2) divestments below 15% of the total assets of the public companies or of assets and/or liabilities which do not constitute a business line of the company.

Where an acquisition of direct or indirect interest in a public company is 30% or more, a tender offer is triggered, the parties would be required to file with the SEC to obtain (1) authorization to proceed with the tender offer and (2) approval of the bid document and its registration. Filings will also be required with (1) the relevant stock exchange (e.g., Nigerian Exchange Limited) where the securities of the public company are listed and (2) the specific sector regulator of the company (where applicable).

Post-transaction implementation filings will also be required at the CAC to reflect the new changes in the shareholding and structure of the target company. In addition, the company has the duty to enter the name of the new shareholder in its register of members. A new shareholder is only deemed a member of the company upon the registration of the shares in the register of members of the company (CAMA, s. 176).

In addition, where the transfer of shares is implemented by a scheme of arrangement, it must be filed with the Federal High Court, which will need to sanction the transaction and a copy of the court’s order delivered to the CAC, SEC (if applicable) and the applicable sector regulator for registration and gazetted.

For all the filings stated above, the companies involved in the transfer of shares will be required to pay various prescribed fees. No stamp duty is payable on a transfer instrument transferring shares. However, the Federal Inland Revenue Service (“FIRS”) charges ad valorem duties at 1.5% of the purchase price on the relevant share sale or purchase agreement that governs the transfer of shares.

Capital gains tax of 10% is payable on the proceeds from the disposal of shares. This will, however, not apply where (i) the proceeds from such disposal are re-invested within the same year of assessment in the acquisition of shares in the same company or other Nigerian companies, (ii) the disposal proceeds, in aggregate, are less than 100 million Naira (approximately US$65,296 as at July 1, 2025) in any 12 consecutive months, or (iii) the gains realized are in respect of shares transferred between an approved borrower and lender in regulated securities lending transactions made pursuant to the SEC Rules.

Are there any applicable stamp duties imposed when transferring ownership interests?

Yes. Stamp duties are chargeable on transfers of securities (by implication transfer of shares) in the Schedule to the Stamp Duties Act, Cap S8, Laws of the Federation of Nigeria, 2004 (the “SDA”). The FIRS charges ad valorem duties at 1.5% of the purchase price on the relevant share sale or purchase agreement that governs the transfer of shares (SDA, s. 53). No stamp duty rate is payable on the transfer instrument transferring the shares. In practice, the FIRS charges a nominal fee of 500 Naira on a share transfer form being the transfer instrument.

How are shares issued? (including information on payment obligations, registration requirements)

At incorporation, shares are issued (and must be fully issued) to the subscribers to the Memorandum of Association and Articles of Association of the company. During this stage, the share capital of the company is registered alongside the incorporation of the company. Given that under CAMA, all shares must be issued, there must be an increase in shares before subsequent issuances can be carried out. The company (or its board of directors when authorized by the company’s Articles of Association or the members at a general meeting) will pass a resolution for the increase in its share capital. Upon the increase, the company is mandated, within fifteen (15) days of the increase (fourteen (14) days, in the case of a board resolution), to register the increase in share capital with the CAC (CAMA, s. 127(2); and the Business Facilitation (Miscellaneous Provisions) Act, 2022 (“BFA”), Part 1, s. 3).

It is notable that CAMA gives existing shareholders of a private company pre-emptive rights. Thus, every new issuance of shares by a private company must be first offered in proportion to the current shareholding of the existing shareholders before they are offered to a third-party purchaser (CAMA, s. 142 as amended by the BFA). However, the existing shareholders can equally waive their rights in favour of the company. During the filing with the CAC, the statutory fees payable include the registration fees and the stamp duties paid on the nominal amount on the increase.

The payment of shares of the company can be via cash or, subject to the provisions of the Articles of Association, by a valuable consideration or by partly cash and partly non-cash consideration (CAMA, ss. 152 and 160).

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Yes. Payment for shares can be by way of a consideration for value other than cash. There can be full non-cash payment or a mixture of both cash payments with payments by valuable consideration other than cash, provided that the articles of association of the company permits such payment (CAMA, s. 160). There are no strict requirements on how to determine non-cash payment for private companies and parties can determine this through a private arrangement. This is unlike public companies which are required to appoint an independent valuer to determine the value of non-cash consideration (CAMA, s. 162).

Shares can be issued at a premium (CAMA, s. 145). However, the share premium account of the company can be restructured under a scheme of arrangement under CAMA.

There is provision for shares of a company to be partially paid up at incorporation (CAMA, s. 37(1)(d))

However, where there is an increase in the shares of the company, such allotment shall not take effect until at least twenty-five per cent (25%) of the share capital of the company including the increase has been paid up (CAMA, s. 128 (1)(a)). Where a shareholder has not fully paid up its shares, a company may refuse to register any transfer of such shares to another person (CAMA, s. 176(3)).

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Yes. Repurchase of shares by a company under Nigerian law is called a share buyback. A company may buy back its shares (i) from its existing shareholders pro rata to their shareholding; (ii) from its existing shareholders pursuant to a scheme of arrangement sanctioned by the Federal High Court; (iii) from the open market; or (iv) pursuant to a scheme such as stock option from its employees (CAMA, s. 186).

Before a company can buy back its shares, its articles of association must allow the same and a special resolution of the shareholders of the company must be passed approving the buy back (CAMA, s. 184). Shares buybacks must be made out of the distributable profits of the company (CAMA, s. 185) and only shares fully paid up by shareholders can be repurchased (CAMA, s. 184(1)I).

A company may cancel its unissued shares by making an application to the CAC approved by a members’ resolution authorizing the cancellation. In addition, the Memorandum of Association and Articles of Association of the company are amended and are filed with the CAC to reflect its new share capital. Cancellation of unissued shares no longer exists under the new companies’ law dispensation as companies are no longer allowed to have unissued shares. Companies with such shares have been required to cancel or allot their unissued shares as of December 31, 2022.

Both paid-up or unpaid shares may be reduced.

To reduce its share capital, a company must: (i) authorize a share capital reduction in its articles of association; (ii) obtain court order to hold the court-ordered meeting authorizing the reduction; (iii) pass a special resolution authorizing the reduction and the consequential amendment to the company’s memorandum of association; (iv) obtain Court sanction approving the reduction; (v) if applicable, deal with creditors’ objection to the reduction; (vi) file the reduction with the CAC; and (vii) publish in a newspaper the notice of registration of the reduction by CAC (CAMA, s. 131).

Any requirements with respect to distributions to shareholders?

Dividends payable to shareholders must be paid from a company’s distributable profits. The board of the directors of the company will first recommend the declaration of dividends for further approval by the shareholders of the company, provided that while recommended dividends may be reduced, such must not be increased before approval by the shareholders (CAMA, s. 426). In addition, a company is restricted from declaring or paying dividends where the payment of the same may result in a reasonable belief of lack of capacity to pay due liabilities (CAMA, s. 428).

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes. Shareholders may adopt a shareholders’ agreement and such agreement will be regarded as a private arrangement binding on the shareholders.

Such agreements, however, between or among shareholders must be subject to applicable law. For instance, such agreement must not restrict competition in the market generally.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The company must file its annual returns within forty-two (42) days from the date of the Annual General Meeting of the company (CAMA, s. 421). In addition, changes in its officers must be filed with the CAC. The statutory fees (and stamp duties where applicable) payable would depend on the post-incorporation filings being made with the CAC and other regulatory authority (if any).

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The following are applicable taxes under Nigerian law:

• Companies Income Tax : Nigerian companies are liable to pay income tax at the rate of thirty per cent (30%) on their assessable profits for each year of assessment. (Companies Income Tax Act (“CITA”), ss. 9 and 40). However, a lower companies’ income tax rate of twenty per cent (20%) applies in respect of companies with annual turnover of more than 25 million Naira (approximately US$16,324 as at July 1, 2021) but less than 100 million Naira (approximately US$65,296 as at July 1, 2025). Additionally, companies are liable to pay the Police Trust Fund (“PTF”) levy of 0.005% of the net profit of the company. However, the PTF levy will not apply where the company has incurred a net loss in the relevant year of assessment. This PTF Levy is however currently being contested.
• Tertiary Education Tax : A Nigerian company, not being a small company under CAMA, will be required to pay a tertiary education tax of three per cent (3%) of the assessable profit of the company (Tertiary Education Tax Act, s. 1 (2).)
• Withholding Tax: Further, withholding tax (“WHT”) is charged at the rate of five per cent (5%) or ten per cent (10%) depending on the type of payment, or the nature of the transaction or whether the beneficiary of the payment is an individual or a company. The company will be required to deduct and remit WHT from payments made to another company or individual whether resident in Nigeria or not in relation to those specified transactions to which WHT applies (CITA s. 78; Personal Income Tax Act, s. 73). Recently, the Federal Ministry of Finance issued the Deduction of Tax at Source (Withholding) Regulations, 2024 ("Regulations”) with the commencement date of July 1, 2024. Pursuant to the Regulations, small companies are exempt from the requirement to withhold tax from any transaction provided that the supplier has a valid Tax Identification Number and the transaction value during the given calendar month is at most 2 million Naira (approximately US$1,306 as at July 1, 2025)).
• Capital Gains Tax: Capital gains tax (“CGT”) is levied at the rate of ten per cent (10%) on the capital gains accruing to any person (company or individual) making a chargeable disposal of assets (including shares) (CGT Act, s. 2). CGT is chargeable on the disposal of shares worth, in the aggregate, 100 million Naira or above in any twelve (12) consecutive months, except if the proceeds of the disposal are reinvested in the acquisition of shares in a Nigerian company or the shares are transferred within a regulated securities lending transaction. (CGT Act, s. 30 as amended by the Finance Act 2021, s. 2). CGT is not chargeable on business reorganizations between related entities, provided that the merging parties were related for at least twelve (12) months prior to the merger.
• Value Added Tax: Value added tax (“VAT”), at the rate of seven point five per cent (7.5%), is payable on the goods consumed and services rendered by any person, whether government agencies, business organizations or individuals. Certain goods and services are exempted from VAT pursuant to the Value Added Tax (Modification) Order, 2021 Schedule 1. Non-oil exports, goods and services purchased by diplomats, and goods purchased for humanitarian donor-funded projects are zero-rated goods and services. Non-residents who supply taxable goods and services to Nigeria are required to register with the FIRS and obtain a Tax Identification Number.
• Stamp Duty - Rates of stamp duty payable may be nominal or ad valorem depending on the nature of the instrument in issue. For example, a charge on corporate assets is charged at the ad valorem rate of 0.375%, but only nominal stamp duty is payable on a credit facility agreement where the agreement creating the charge has been stamped ad valorem. Documents required to be, but not, stamped are inadmissible in evidence in civil proceedings in Nigeria (Stamp Duties Act, s. 22).
• Minimum Tax: A company that has made a loss or no profit will be liable to pay a minimum tax of 0.5% of its gross turnover less franked investment income (CITA s. 33(2)). A Company in its first four (4) years of commencement of business, or a company carrying on agricultural trade or business or a company that earns annual gross turnover lower than 25 million Naira will be exempted from the minimum tax.
• Deemed Profits: A company will be charged to Income tax of thirty per cent (30%) where the company pays dividend as profits to its shareholders out of its non-taxable profits or in excess of its total profits, provided the dividend was not paid out of (A) retained earnings that have already suffered taxation, (B) tax exempt income, (C) franked investment income and (D) distributions made by a real estate investment company to its shareholders (CITA s. 19).
• Double Taxation: Nigeria has double taxation treaties (“DTT”) with sixteen (16) countries namely, the United Kingdom, the Netherlands, Canada, South Africa, China, Philippines, Pakistan, Spain, Romania, Sweden, Belgium, France, Czech Republic, Slovakia, Italy and Singapore. The Kingdom of Saudi Arabia has no DTT with Nigeria. The rate of WHT deductible on payments made to recipient tax residents in DTT countries depends on each agreement. For Spain, WHT on interest is 7.5% while WHT on dividend is 7.5% except for companies with voting powers lower than 10%, in which case the rate of 10% applies. Nigeria has signed but has not yet ratified DTTs with 6 other countries namely the United Arab Emirates, Kenya, Mauritius, Poland, South- Korea, and Qatar.
• Tax Exemption on Foreign Interest: Interest payable on foreign loans (with a term of two (2) years and up to seven (7) years, and a moratorium of twelve (12) months and above) are exempted from taxes from 10% to up to 70% (CITA s. 11(1)). Interest on loans granted by banks to companies engaged in agricultural trade, fabrication of plant and machinery and manufacturing goods for export are also tax-exempt (CITA, s. 11(2)).

Summary of any specific matters, e.g. recent or prospective major legal developments

Localization/ local content requirements:

• Some sectors in Nigeria such as oil and gas, coastal shipping, broadcasting, private security (goods and services), arms and ammunition, narcotic drugs, aviation, telecommunication, pharmacy, among others have rules that in effect insist on majority Nigerian shareholding. These requirements aim to promote local content, employment, and skill development across various industries.
• In the oil and gas sector for instance, the Nigerian Oil and Gas Industry Content Development Act, 2010 (the “NOGICD Act ”) mandates that Nigerian independent operators receive priority in the award of oil blocks, oil field licences, oil lifting licences, and all projects in the oil and gas industry (NOGICD Act, s. 3). Further, these operators must also prioritize Nigerian goods and services project implementation (NOGICD Act, s. 13).

These rules apart, a foreigner can own a Nigerian company 100% (NIPC Act, s. 17, CAMA, s. 78).

Registration with the NIPC:

Nigerian companies with foreign participation must register with the NIPC before they can commence business in Nigeria (NIPC Act s. 20). Further to the amendments in the BFA, an already-existing Nigerian company with foreign participation is required to register with the NIPC within three (3) months of the acquisition of shares by the foreigner (BFA s. 54). The timeline for registering with the NIPC and obtaining a business permit is usually six (6) to eight (8) weeks.

Foreign investors are prohibited from undertaking the following types of businesses in Nigeria: (a) production of arms and ammunition; (b) production of and dealing in narcotic drugs and psychotropic substances; (c) production of military and para-military wears and accoutrements, including those of the Police and the Customs, Immigration and Prison Services; and (d) such other items as the Federal Executive Council may from time to time determine (NIPC Act, s. 31.)