📈 Transfer of Company Shares in Nigeria: What Shareholders Must Know

Published by O.I.D. Legal Consult | July 2025Practical Legal Insights for Business Owners, Shareholders, and Corporate Advisors

🏛️ Introduction

Shares represent units of ownership in a company, and the transfer of such shares is a common occurrence in business restructuring, investments, and succession planning. In Nigeria, share transfers are governed primarily by the Companies and Allied Matters Act, 2020 (CAMA 2020) and the company’s Articles of Association.

Whether you're buying into a business or selling off your stake, understanding the legal process is essential to ensure proper documentation and compliance.

📊 Classes of Shares in Nigeria

Under CAMA 2020, a company may issue multiple classes of shares, but the most commonly issued are:

1. Preference Shares

These shares entitle the holder to:

• A fixed dividend.

• Priority payment over ordinary shareholders, both in profit distribution and in the event of company liquidation.

2. Ordinary Shares

• These do not carry fixed dividend rights.

• Shareholders are entitled to residual profits and voting rights.

• They rank lower than preference shareholders in claims over company assets.

🔁 What Is a Share Transfer?

A share transfer occurs when an existing shareholder sells or gifts their shares to another party (an individual or a company). This results in a change in the company's shareholding structure.

Under Section 115 of CAMA 2020, a shareholder must first offer the shares to existing members before transferring to an outsider — unless the company's Articles of Association state otherwise.

👤 Who Can Transfer Shares?

✅ Any shareholder (individual or company)✅ Legal representatives (using a Power of Attorney)⚠️ Minors can hold shares but are generally not competent to transfer them without legal assistance or representation.

🔄 How Shares Can Be Transferred

A. Transfer of Entire Shareholding

• Execute a Share Transfer Form and/or Share Sale and Purchase Agreement.

• Submit the original share certificate and transfer documents to the company.

• The company issues a new certificate to the buyer and updates its register of members.

✅ The seller ceases to be a shareholder immediately upon registration of the buyer.

B. Transfer of Partial Shareholding

• Complete a Share Transfer Form indicating:

  • The number of shares to be transferred.

  • The agreed purchase price.

• Submit the form and existing share certificate to the company.

• Upon approval:

  • The buyer receives a new share certificate.

  • The seller is issued a new certificate reflecting the remaining shares.

📝 Post-Incorporation Filing with CAC

After the transfer is completed internally, the company must notify the Corporate Affairs Commission (CAC). The following documents are required:

• 🧾 CAC Form 2A (Return of Allotment)

• 🧑‍⚖️ Board Resolution approving the share transfer

• 📄 Board Resolutions from both parties (if buyer or seller is a company)

Failure to file the necessary documents with CAC could result in penalties and invalidate the shareholding change in the eyes of third parties or potential investors.

📌 Key Notes

• Always review the company’s Articles of Association before initiating any share transfer.

• Ensure stamp duties and applicable taxes (e.g., Capital Gains Tax) are addressed.

• Transfers between related parties or as gifts may still require proper documentation to prevent disputes.

⚖️ How O.I.D. Legal Consult Can Help

At O.I.D. Legal Consult, we specialize in corporate structuring and shareholding matters, offering services that include:

✅ Drafting and reviewing Share Sale & Transfer Agreements✅ Handling CAC filings and post-incorporation compliance✅ Conducting legal due diligence and share audits✅ Advising on shareholders’ rights and pre-emptive clauses

Let us help you ensure your share transfer is valid, compliant, and enforceable under Nigerian law.

📞 Talk to Us Today📧 Email: oidlegalconsult@outlook.com🌐 Website: www.oidlegalconsult.com📱 Tel/WhatsApp: +2349058454839

O.I.D. Legal Consult — Practical Legal Solutions for Today’s Business Environment