By Tope Akinyode*
SECTION 102 (1) OF THE COMPANIES AND ALLIED MATTERS ACT (CAMA), CAP. C20, LAWS OF THE FEDERATION OF NIGERIA (LFN), 2004 (“Section 102”) provides:
“102 (1) A company having a share capital, whether or not the shares have been converted into stock, may in general meeting and not otherwise, increase its share capital by new shares of such amount as it thinks expedient.” [Emphasis mine]
In relation to and for a better appreciation of the foregoing, SECTION 233(6) CAMA states that:
A company may, by its articles, provide that any matter not required by the articles or by this Act to be passed by a special resolution, shall be passed by an ordinary resolution.
However, PARAGRAPH 29 OF THE COMPANIES REGULATIONS (“Paragraph 29”) also provides for the steps that are required of a company in order to increase its authorized capital. It states inter alia:
“Requirements for filing of notice of increase in authorized share capital shall include the following –
- Special resolution for increase in share capital signed by a director and secretary or two directors
- Updated annual return
- Updated section 553 where applicable
- Evidence of payment of FRC annual dues
- Payment of fees
If the two legislations highlighted above i.e, the Companies and Allied Matters Act (CAMA) and Companies Regulations (the “Regulations”) had adhered strictly to the same requirements for a Company to increase its share capital, this legal opinion would have been needless and would have amounted to a futile search for a thing which is not lost. In Nigeria’s corporate and companies’ firmament, the increase in shares of a running concern is common place. Hence, companies have had cause to worry over the appropriate procedure to adopt.
Read the full essay here.
*Tope Akinyode is a Legal Practitioner with areas cutting across “due dilligence”, debt recovery, and litigation. He also advises on Entertainment Law and Labour matters regularly. He can be reached at email@example.com.