CAC change of shareholder

Companies duly registered under the companies and allied matters Act 2020 has shares as one of its features, the shares of a company are purchased by the members of the company whose names are the in the register of members of that company. A company can down grade its share capital from a particular number to another, or upgrade it shares capital to a higher number, the purposes and circumstances under which a company can upgrade its shares capital are majorly to meet up with regulatory requirements, the need to have more investors, the need to have bigger equity, the need to have higher purchasing power in business relationship with others. in a situation where the company wishes to ,or there arises a need to make non-existing company members shareholders in the company, after the company have been fully incorporated, how does the company go about it? yes to be a beneficiary of shares in a company, one need to be a member of the company, and his/her name need be registered in the register of members of the company, the person also need to be issued a certificate of shareholding in the company through an instrument of share transfer. the directors of the company need to agree to the shareholding as well., pub-4436339061114352, DIRECT, f08c47fec0942fa0


Transfer of shares is purely regulated by section 175 of companies and allied matters Act 2020, I restate the law hereunder

“The transfer of company’s shares shall be by instrument of
transfer and except as expressly provided in the articles, transfer of shares
shall be without restrictions, and instruments of transfer shall include electronic
instrument of transfer”.
“(2) Notwithstanding anything in the articles of a company, a company
shall not register a transfer of shares in the company, unless a proper instrument
of transfer has been delivered to the company:
Provided that nothing in this section shall prejudice any power of the company
to register as shareholder, any person to whom the right to any share in the
company has been transmitted by operation of law”.


The above provisions of section 175(1&2) of CAMA 2020, clearly permits that a shareholder in a company can agree to transfer his shares to another, except where the articles of association of the company expressly prohibits the transfer of shares, and in a situation where the articles of association of the company permits such transfer, such transfer to be legal must be by an instrument of transfer executed between the transferor and the transferee, and transfer must be entered in the register of the company, this position was made more lucid by the provision of section 175(3) of CAMA 2020,I restate it hereunder

3)” The instrument of transfer of any share shall be executed by or on
behalf of the transferor and transferee, and the transferor is deemed to remain
a holder of the share until the name of the transferee is entered in the register
of members in respect of the share”.

It is therefore legal to transfer shares in a company in Nigeria, the holder may transfer all or some of his shares in a company, and where the shareholder is owing the company, the company can place a lien on his shares. see section 175(4) CAMA 2020 hereinunder

(4) Subject to any restrictions of a company’s articles as may be
applicable, any member may transfer all or any of his shares by instrument in
writing in any usual or common form or any other form which the directors
may approve.


1.The shareholder meets a person having interest in his/her shares in a company, or have a monetary need, and wishes to sell some of his shares in exchange of money.

2.The shareholder reaches an agreement with the incoming share holder, and writes a formal letter to the directors of the company.


3.The letter is usually written to the directors through the secretary of the company.

4.The company in receipt of the letter might decide to hold a meeting

At the companies meeting, the issue is put in the agenda and deliberated upon.

5.The company passes a resolution at the meeting accepting the transfer of shares to the incoming share holder.

6.The company resolution is passed, and the transfer is hereby accepted.

7.The secretary armed with the letter of transfer or instrument of transfer begins the process of registering the person as a member in the company.

8.The company writes to the corporate affairs commission.

9.The company evidences the letter of transfer of the shares by a shareholder.

10.The company evidences the resolution passed by the company at the meeting accepting the transfer of the shares.

11.The company begins to add the name of the new share holder through a portal of an accredited cac agent.

12.The company transfer the share to the new member and a certificate of shareholding is issued to the new share holder.

13.The company may decide to refuse the transfer of such share at the meeting or even without having a meeting, such refusal might be on the grounds that the fees paid is very low, that such member is not wanted, that the transferor is owing the company monies worth more than his shares. even where the instrument of transfer has been exchanged between the transferor and the transferee, it will remain invalid if the company refuses to accept it and register the new share holder as a member. the transfer refusal is to be communicated to the transferee within two months of the refusal of such.

i hereby restate the position of the law hereunder of section 175(4) CAMA 2020.

(4) The company may refuse to recognize any instrument of transfer
(a) a fee, as the company may determine, is paid to the company in
respect of the instrument ;
(b) the instrument of transfer is accompanied by the certificate of
the shares to which it relates and such other evidence as the directors
may reasonably require to show the right of the transferor to make the
transfer ; and
(c) the instrument of transfer is in respect of only one class of shares.
177.—(1) If a company refuses to register a transfer of any share, it
shall, within two months after the date on which the transfer was lodged with
it, send notice of the refusal to the transferee.


(2) If default is made in complying with this section, the company and
each officer of the company is liable to such penalty as the Commission shall
specify in the regulation. see section 177(2) CAMA 2020

What is Transmission of shares? Transmission of shares is usually in a situation where the shareholder passes, the personal representative can immediately take over the shares, as the shares transmits to them automatically, for example in Lagos state the personal estate of a deceased devolves on the personal representatives, this is also the case in shareholding under CAMA 2020, but where the personal representative does not wish to take over the shares, any transfer of shares the representative makes is deemed as valid as if it was made by the deceased share holder.

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