CAC Increase of Share Capital (Nigeria)

A Nigeria CAC Increase of Share Capital filing is the statutory process by which a company registered in Nigeria applies to the Corporate Affairs Commission (CAC) to raise its authorised share capital above the amount currently registered, under Sections 124 to 131 of the Companies and Allied Matters Act (CAMA) 2020. The authorised share capital sets the ceiling on the total shares a company may issue, and increasing it is a prerequisite to allotting new shares to investors, employees (under a share option scheme), or as consideration in an acquisition.

The process requires an ordinary resolution of shareholders under CAMA 2020, unless the Articles of Association specify a higher threshold, followed by payment of stamp duty at 0.75% of the increased amount to the Federal Inland Revenue Service (FIRS) under the Stamp Duties Act Cap S8 LFN 2004 (as amended by Finance Act 2020), and filing of the increase notice with the CAC within 15 days of the resolution. The CAC updates the company's registered particulars on the Company Registration Portal (CRP) at cac.gov.ng.

For companies raising capital from investors — venture capital, private equity, or angel investors — an increase in authorised share capital is typically a pre-condition to the investment. Investors require the company to have sufficient authorised but unissued shares available to cover the shares to be issued at completion. The share capital increase therefore frequently runs in parallel with a shareholders' agreement, term sheet, and board resolution to allot the new shares.

For regulated entities in Nigeria's financial services sector, any increase in share capital must also be notified to and, in some cases, approved by the relevant sectoral regulator: the Central Bank of Nigeria (CBN) under the Banks and Other Financial Institutions Act 2020 (BOFIA 2020) for banks and other financial institutions, the National Insurance Commission (NAICOM) under the Insurance Act 2003 for insurance companies, and the Securities and Exchange Commission (SEC Nigeria) under the Investments and Securities Act 2007 (ISA 2007) for capital market operators. Companies listed on the Nigerian Exchange Group (NGX) must also notify the exchange.

The Finance Act 2020 and Finance Act 2021 made important amendments to the Stamp Duties Act Cap S8 LFN 2004, clarifying that the Federal Inland Revenue Service (FIRS) — not the State Internal Revenue Services — has exclusive jurisdiction over stamp duty on instruments executed by companies. The FIRS issues a stamp duty certificate upon payment via Remita, and this certificate must be filed with the CAC alongside the resolution. Failure to file within the 15-day period under Section 130 of CAMA 2020 constitutes an offence punishable by fine under Section 843 of CAMA 2020, and the company secretary and directors may each be personally liable for the default.

A CAC Increase of Share Capital filing in Nigeria is required in the following situations.

When a company wishes to allot new shares to an investor, partner, or employee but the amount of shares to be issued would exceed the current authorised share capital. The company must first increase the authorised share capital before the allotment resolution is passed.

When a company is raising growth capital from a private equity fund or venture capital investor, the term sheet will invariably specify a pre-money valuation and the number of new shares to be issued, requiring the company to confirm or increase its authorised share capital to accommodate the investment round.

When a company implements an Employee Share Option Plan (ESOP) or a management incentive scheme, a pool of authorised but unissued shares must be available. This typically requires an increase in authorised share capital to create the option pool.

When a company undergoes a restructuring, merger, or acquisition involving a share-for-share exchange, the acquiring company must have sufficient authorised share capital to issue the consideration shares.

For companies seeking listing on the Nigerian Exchange Group (NGX) or the NASD OTC Securities Exchange, the Securities and Exchange Commission (SEC) Rules and the NGX Listing Rules require the company to have a minimum issued share capital that may necessitate a prior increase in authorised share capital under CAMA 2020.

Parties in Nigeria should prepare a CAC Increase of Share Capital (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A complete CAC Increase of Share Capital filing under CAMA 2020 must contain the following elements.

Company details: The current registered name, RC Number, registered address, and current authorised share capital as shown on the CAC register. Any discrepancy between the company's internal records and the CAC register must be resolved before the increase filing is made.

Resolution: A certified copy of the ordinary resolution of shareholders approving the increase, specifying the amount of the increase in naira, the class of shares to be created (ordinary, preference, or otherwise), and the date and quorum of the meeting (or date of written resolution). The resolution must be filed with the CAC within 15 days under Section 130 of CAMA 2020.

New authorised share capital: The total authorised share capital after the increase, the breakdown by share class, and the nominal value per share. For example: increased to NGN 200,000,000 divided into 200,000,000 ordinary shares of NGN 1.00 each.

Stamp duty certificate: Evidence of payment of stamp duty at 0.75% of the increased amount to the Federal Inland Revenue Service (FIRS) via Remita, as required by the Stamp Duties Act Cap S8 LFN 2004. The FIRS stamp duty certificate must be attached to the CAC filing. The Finance Act 2020 confirms FIRS jurisdiction over company stamp duty.

Amendment to Memorandum: Where the authorised share capital is stated in the Memorandum of Association (MoA), a concurrent special resolution to amend the capital clause of the MoA under Section 28 of CAMA 2020, and the restated MoA filed with the CAC.

Filing fee: Payment confirmation for the CAC filing fee at the rate prescribed in the Companies Regulations 2021, paid via Remita through the CAC Company Registration Portal (CRP).

Authorised signatory: Signature of a director or company secretary, certified by a Legal Practitioner enrolled at the Nigerian Bar Association (NBA).

Sectoral regulator notification: For banks (CBN under BOFIA 2020), insurance companies (NAICOM under Insurance Act 2003), or capital market operators (SEC Nigeria under ISA 2007), evidence of the regulator's approval or acknowledgement must accompany the CAC filing.

Post-increase allotment: Where the increase is made to accommodate a specific allotment to investors, a board resolution to allot shares under Section 173 of CAMA 2020 must be passed after the increase is registered, specifying the allottees, number of shares, and consideration. Share certificates must be issued within 60 days of allotment under Section 174 of CAMA 2020.

Data protection: The Nigeria Data Protection Act 2023 (NDPA) and the Nigeria Data Protection Commission (NDPC) require that any personal data of shareholders or directors processed during the share capital increase exercise is handled with a lawful basis. Forms-legal.com provides this template as a starting point for Nigeria-compliant share capital documentation. The Federal High Court and state High Courts have jurisdiction over disputes arising from CAMA 2020 share capital matters.