Share Subscription Agreement (Nigeria)
SHARE SUBSCRIPTION AGREEMENT
Companies and Allied Matters Act 2020 (CAMA 2020) — Section 149 | Investments and Securities Act 2007
THIS SHARE SUBSCRIPTION AGREEMENT is made this [Date of Agreement]
BETWEEN:
(1) [Company Name] of [Company Address] (hereinafter referred to as the "Company"); AND
(2) [Subscriber Name] of [Subscriber Address] (hereinafter referred to as the "Subscriber").
1. SUBSCRIPTION FOR SHARES
1.1 Subject to the terms and conditions of this Agreement, the Company agrees to issue and allot to the Subscriber, and the Subscriber agrees to subscribe for, [Number of Shares] [Share Class] of NGN [Nominal Value] each at a subscription price of [Subscription Price Per Share] per share (the "Subscription Shares"), for a total subscription amount of [Total Subscription Amount].
1.2 The pre-money valuation of the Company for the purpose of this subscription is [Pre-Money Valuation].
1.3 Completion of the subscription shall take place on [Completion Date], when the Subscriber shall pay the total subscription amount of [Total Subscription Amount] and the Company shall issue and allot the Subscription Shares.
2. ALLOTMENT AND CAC FILINGS
2.1 The board of directors of the Company shall, at or immediately after Completion, pass a resolution allotting the Subscription Shares to the Subscriber in accordance with Section 149 of the Companies and Allied Matters Act 2020 (CAMA 2020).
2.2 The Company shall file a Return of Allotment on CAC Form CAC 2.1 with the Corporate Affairs Commission (CAC) within 15 days of the allotment date under Section 148 of CAMA 2020.
2.3 Share certificates shall be issued to the Subscriber within 60 days of the allotment date under Section 153 of CAMA 2020.
3. COMPANY WARRANTIES
3.1 The Company warrants that it is duly incorporated under CAMA 2020; has the authority to issue the Subscription Shares; the Subscription Shares will be issued free from encumbrances; and the Company's financial statements have been prepared in accordance with IFRS as adopted by the Financial Reporting Council of Nigeria (FRC).
4. INVESTOR RIGHTS
4.1 Board representation: The Subscriber shall be entitled to nominate one director to the board of the Company: [Board Seat].
4.2 Anti-dilution: The Subscriber shall benefit from [Anti-Dilution] anti-dilution protection in the event of a future issuance of shares at a price below the subscription price per share.
4.3 Pre-emption rights: The Subscriber shall have the right to participate in any future equity issuance by the Company, pro rata to its then-existing shareholding, in accordance with Section 149 of CAMA 2020 and the terms of any shareholders' agreement.
4.4 Information rights: The Company shall provide the Subscriber with quarterly management accounts and audited annual financial statements.
5. GOVERNING LAW AND DISPUTE RESOLUTION
5.1 This Agreement is governed by the laws of Nigeria and the laws of [Governing State] State.
5.2 Any dispute shall be referred to arbitration under the Arbitration and Conciliation Act (Cap A18, LFN 2004) or before the Federal High Court of Nigeria.
Company (Authorised Signatory)
________________
Signature
Subscriber (Authorised Signatory)
________________
Signature
Witness
________________
Signature
What Is a Share Subscription Agreement (Nigeria)?
A Share Subscription Agreement in Nigeria sets out the rights, duties and consideration binding the parties to it.
Share subscription in Nigeria is governed by the Companies and Allied Matters Act 2020 (CAMA 2020), which replaced the Companies and Allied Matters Act 1990 (Cap C20, LFN 2004). Under CAMA 2020, Section 149, the directors may allot new shares only if authorised by the company's Articles of Association or by an ordinary resolution of shareholders. The company must file a Return of Allotment on CAC Form CAC 2.1 with the Corporate Affairs Commission (CAC) within 15 days of the allotment. Where the subscription requires an increase in the authorised share capital above the current limit in the Memorandum of Association, shareholders must first pass a special resolution to increase the authorised capital and file Form CAC 10 with the CAC.
For startup and growth-stage companies in Nigeria, the Share Subscription Agreement is the primary instrument for angel investment, seed rounds, and Series A and later venture capital rounds. The agreement typically includes: a pre-money valuation establishing the price per share; representations and warranties from the company; investor rights (information rights, anti-dilution protection, pre-emption rights, board representation); and conditions precedent to the subscription.
For public companies listed on the Nigerian Exchange Group (NGX), share subscriptions through a public offer or rights issue are additionally regulated by the Investments and Securities Act 2007 (ISA 2007) and the Securities and Exchange Commission (SEC) Rules and Regulations 2013, which require prospectus registration and SEC approval before shares can be offered to the public.
The legal framework governing the Share Subscription 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 Share Subscription 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.
When Do You Need a Share Subscription Agreement (Nigeria)?
A Share Subscription Agreement in Nigeria is needed whenever a company issues new shares to an investor, employee, or other subscriber and the parties require a written agreement documenting the terms of the investment.
A Share Subscription Agreement is required when a Nigerian startup raises a seed or angel investment round and issues new equity shares to the investor in exchange for capital. The agreement records the pre-money valuation, the number of shares allotted, any investor rights (board seat, information rights, anti-dilution), and the conditions for completion.
A Share Subscription Agreement is needed when a private equity fund or venture capital firm makes a growth equity investment in a Nigerian company, subscribing for a defined percentage stake at a negotiated price per share that implies a specific post-money valuation.
A Share Subscription Agreement is required when a Nigerian company converts a convertible loan note or Simple Agreement for Future Equity (SAFE) into equity at the agreed conversion terms, because the conversion results in the issuance of new shares to the noteholder.
A Share Subscription Agreement is needed when a Nigerian company issues shares to employees or directors as part of a long-term incentive plan (LTIP) or employee share ownership plan (ESOP), setting out the vesting schedule, exercise price, and conditions.
A Share Subscription Agreement is required when a foreign investor subscribes for shares in a Nigerian company and will bring investment funds into Nigeria through official banking channels to obtain a Certificate of Capital Importation (CCI) from a Nigerian bank under the CBN Foreign Exchange Manual, enabling future repatriation of returns.
Parties in Nigeria should prepare a Share Subscription 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.
What to Include in Your Share Subscription Agreement (Nigeria)
A valid Nigeria Share Subscription Agreement must contain the following essential elements to protect both the investor and the company.
Parties: Full legal names, CAMA 2020 RC numbers for companies, and addresses of the company and each subscriber. For foreign investors, include nationality and details for the Certificate of Capital Importation (CCI) process.
Subscription shares: The total number of new shares to be issued, the class (ordinary or preference), the nominal value, and the resulting percentage of the expanded issued share capital that the subscriber will hold post-subscription.
Subscription price and valuation: The price per share, the total subscription amount in NGN (or approved foreign currency), the pre-money valuation of the company, and the post-money valuation after the subscription. The subscription price must not be below the nominal value under Section 151 of CAMA 2020.
Conditions precedent: Actions that must be completed before the subscription closes — including board resolutions authorising the allotment under Section 149 of CAMA 2020, shareholder resolutions increasing authorised share capital if required, regulatory consents (FCCPC notification under FCCPA 2018 if applicable), and any pre-emption waivers from existing shareholders.
Completion mechanics: The date and actions at completion — payment of the subscription price by the subscriber, allotment by the board, delivery of share certificates, and filing of CAC Form CAC 2.1 with the CAC within 15 days of allotment.
Representations and warranties: Warranties by the company about its corporate status under CAMA 2020, authority to issue the shares, financial condition, material contracts, tax compliance with FIRS and state IRS, and absence of undisclosed liabilities.
Investor rights: Post-subscription rights including information and inspection rights, pre-emption rights on future share issuances, anti-dilution adjustments, and board representation or observer rights.
Governing law: Nigerian law, with disputes resolved by arbitration under the Arbitration and Conciliation Act (Cap A18, LFN 2004) or before the Federal High Court or the relevant State High Court.
Additional compliance elements for a Share Subscription 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.
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title = {Share Subscription Agreement (Nigeria) (Nigeria)},
year = {2026},
howpublished = {\url{https://forms-legal.com/nigeria/business/corporate/share-subscription-agreement-nigeria}},
note = {Free legal document template. Based on Companies and Allied Matters Act (CAMA) 2020}
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Frequently Asked Questions
A Share Subscription Agreement and a Share Purchase Agreement are both instruments for transferring equity in a Nigerian company, but they differ in a fundamental way: a Share Subscription Agreement involves the company issuing new shares that did not previously exist, increasing the total issued share capital of the company and diluting existing shareholders' percentage holdings. A Share Purchase Agreement involves an existing shareholder selling shares they already own to a buyer — no new shares are created and the company's issued share capital remains unchanged. The legal and corporate steps also differ: a subscription requires a board resolution to allot under Section 149 of CAMA 2020 and a CAC Form CAC 2.1 filing; a share purchase requires a stock transfer form and CAC Form CAC 2.1A. From a tax perspective, stamp duty applies to share transfers at 0.075% under the Finance Act 2020, but not to new allotments in the same way.
A Nigerian company can issue preference shares to investors under the Companies and Allied Matters Act 2020 (CAMA 2020), provided the company's Articles of Association authorise the creation and issuance of preference shares. Section 141 of CAMA 2020 permits companies to issue shares with preferred, deferred, or special rights attached to them, including cumulative dividend rights, liquidation preference, and redemption rights. Preference shares are commonly used in private equity and venture capital transactions in Nigeria because they give investors priority over ordinary shareholders in dividend distributions and in the distribution of assets on a winding up. If the company has no existing preference share class, its shareholders must first pass a special resolution to amend the Articles of Association to create the preference share class before they can be issued. The rights attaching to preference shares must be stated in the Articles or in the terms of issue.
If a Nigerian company's authorised share capital — the maximum number of shares that the company is permitted to issue as stated in its Memorandum of Association — is insufficient to accommodate a new share subscription, the company must first increase its authorised share capital before issuing the new shares. Under the Companies and Allied Matters Act 2020 (CAMA 2020), Section 136, a company may increase its authorised share capital by passing an ordinary resolution (unless the Articles require a higher threshold) and filing the resolution and CAC Form CAC 10 (Notice of Increase of Share Capital) with the Corporate Affairs Commission (CAC). The CAC charges a filing fee based on the amount of the increase. Once the increase is registered, the directors may then allot the new shares under Section 149 of CAMA 2020 and file the CAC Form CAC 2.1 Return of Allotment. The Share Subscription Agreement should include a condition precedent requiring the authorised capital increase to be completed before completion.
Foreign investors who bring capital into Nigeria to subscribe for shares in a Nigerian company should obtain a Certificate of Capital Importation (CCI) from a Nigerian commercial bank, through which the investment funds are transferred. The CCI is issued by the receiving bank under the Central Bank of Nigeria (CBN) Foreign Exchange Manual and documents the amount, currency, and nature of the inward capital transfer. Holding a CCI entitles the foreign investor to repatriate dividends, capital gains, and proceeds from the eventual sale of the shares at the prevailing exchange rate without restrictions under the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995. Failure to obtain a CCI does not render the share subscription invalid, but it substantially restricts the investor's ability to repatriate returns from Nigeria in the future. The Share Subscription Agreement for a foreign investor should include an obligation for the company to assist the investor in obtaining the CCI within a specified number of days of capital remittance.
An investor subscribing for shares in a Nigerian company can negotiate anti-dilution protection clauses in the Share Subscription Agreement to protect against dilution of their percentage ownership and economic value in future funding rounds. The two common forms of anti-dilution protection used in Nigerian transactions are: (1) broad-based weighted average anti-dilution, which adjusts the investor's conversion price or the number of ordinary shares into which preference shares convert, taking into account all outstanding shares and options; and (2) full ratchet anti-dilution, which resets the investor's conversion price to match the lower price in a down round — a more aggressive mechanism that is less commonly accepted by Nigerian founders. Anti-dilution provisions are typically combined with pre-emption rights (the right of the investor to participate in future equity rounds pro rata to their existing holding) under the terms of a Shareholders' Agreement entered into at the time of the subscription. Nigerian courts will enforce anti-dilution provisions as contractual terms under the general law of contract.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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