Nominee Agreement (Nigeria)

A Nominee Agreement in Nigeria sets out the rights, duties and consideration binding the parties to it.

Under Section 119 of CAMA 2020, every company in Nigeria is required to maintain a register of members (shareholders) at its registered office. Where shares are held by a nominee, the nominee's name appears in the register of members and on the share certificate. However, Section 119(3) of CAMA 2020 requires companies to also maintain a separate register of beneficial owners, in line with the Financial Action Task Force (FATF) recommendations on beneficial ownership transparency and the Corporate Affairs Commission (CAC) regulations on beneficial ownership disclosure issued under Regulation 2 of the Companies Regulations 2021. Failure to disclose beneficial ownership to the CAC is an offence under Section 119(5) of CAMA 2020.

Nominee Agreements in Nigeria are commonly used for legitimate purposes including: holding shares on behalf of minor children (who under Section 27 of CAMA 2020 cannot be registered as shareholders), holding shares for investors who prefer confidentiality, enabling share trusts for employee share ownership plans (ESOPs), and holding assets pending completion of a larger transaction. The FIRS and CBN have, however, increased scrutiny of nominee arrangements in the context of Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) obligations under the Money Laundering (Prevention and Prohibition) Act 2022 and the CBN AML/CFT Regulations 2013.

A Nominee Agreement under Nigerian law must be distinguished from a Bare Trust Deed — the latter being a more formal instrument executed as a deed (under seal) with witnesses, typically used for higher-value asset holdings. A simple Nominee Agreement may be executed as an ordinary contract under the Contracts Act principles applied in southern Nigeria, while a Bare Trust Deed executed as a deed provides greater evidential weight. Both require disclosure to the CAC under the CAMA 2020 beneficial ownership provisions.

The legal framework governing the Nominee Agreement (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. 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. Parties executing a Nominee Agreement (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies and Allied Matters Act (CAMA) 2020 sets the foundational requirements.

A Nominee Agreement in Nigeria is required in the following circumstances.

A Nominee Agreement is needed when an investor wishes to hold shares in a Nigerian company through a nominee to maintain confidentiality, while retaining the full economic benefit of the shares — including dividends, voting rights exercised at the investor's direction, and proceeds of sale — under a written nominee arrangement that documents the relationship between the nominee and beneficial owner.

A Nominee Agreement is required when shares in a Nigerian company are to be held on behalf of a minor child below 18 years of age, as Section 27 of CAMA 2020 disqualifies minors from being registered as members of a company. A parent or trusted adult holds the shares as nominee until the child reaches majority and can be registered directly.

A Nominee Agreement is needed when a professional trustee — such as a legal practitioner enrolled with the Nigerian Bar Association (NBA) or a trustee company licensed by the Securities and Exchange Commission (SEC) under the Investments and Securities Act 2007 — holds shares or other assets for the benefit of a deceased person's estate pending the grant of probate or letters of administration by the Probate Registry of the relevant State High Court.

A Nominee Agreement is required when a company establishes an Employee Share Ownership Plan (ESOP) under which a nominee trustee holds a block of shares on behalf of employee beneficiaries, distributing shares to individual employees as their entitlements vest under the ESOP scheme rules.

A Nominee Agreement is needed in pre-incorporation arrangements where a promoter or company secretary holds a subscriber share in a company being formed, pending the allotment and transfer of shares to the actual founding shareholders after incorporation with the CAC.

Parties in Nigeria should prepare a Nominee Agreement (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 valid Nigeria Nominee Agreement must contain the following essential elements.

Parties: Full legal names, addresses, and descriptions of the nominee and the beneficial owner (nominator). For corporate nominees or beneficiaries, include the CAC registration number and registered office. The agreement must clearly identify which party is the nominee (holding legal title) and which is the beneficial owner (holding the economic interest).

Description of Assets: Precise description of the assets held on a nominee basis — for shares: the company name, CAC number, number of shares, class of shares, and nominal value per share; for property: the property address, title reference, and survey plan number; for bank accounts: the account name, number, and bank.

Nominee's Duties: Express obligations of the nominee including: to hold the assets solely for the benefit of the beneficial owner; to exercise voting rights and other rights attached to the assets only as directed by the beneficial owner; not to sell, charge, mortgage, or otherwise encumber the assets without the beneficial owner's written consent; and to account to the beneficial owner for all income and proceeds received in respect of the assets.

Beneficial Owner's Rights: The beneficial owner's right to direct the nominee's exercise of rights, to receive all economic benefits from the assets, and to demand retransfer or reassignment of the assets at any time without giving reasons.

Retransfer Obligation: An express obligation on the nominee to execute all documents necessary to transfer the assets back to the beneficial owner (or to any third party nominated by the beneficial owner) promptly upon demand, including execution of stock transfer forms for shares, deed of assignment for property, and bank mandate letters.

Indemnity: The beneficial owner's agreement to indemnify the nominee against all costs, liabilities, and expenses incurred by the nominee in acting as nominee in accordance with the agreement.

Confidentiality and Beneficial Ownership Disclosure: Acknowledgement that Nigerian law requires disclosure of beneficial ownership to the CAC under Section 119 of CAMA 2020 and the Companies Regulations 2021, and agreement on how the parties will manage such regulatory disclosures.

Additional compliance elements for a Nominee Agreement (Nigeria) used in Nigeria include: 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. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.