Does the concept of single-shareholding apply to foreign-owned entities in Nigeria?

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Section 18(2) of the Companies and Allied Matters Act 20201 (the ‘Act’), provides that notwithstanding the requirement for the formation of a company by two or more persons as provided for in Section 18(1) of the Act, one person may form and incorporate a private company by complying with the requirements of the Act in respect of private companies. This implies that all private companies registered in Nigeria can be registered with a single shareholder.

There have been arguments that the concept of single-shareholding does not apply to foreign-owned entities registered in Nigeria as they are not considered small companies as defined under the Act. It is important to note that the requirements for qualification as a small company as provided for in Section 394(3) (a-f) of the Act does not include the number of shareholders. As such, any private company in Nigeria whether foreign-owned or indigenous can register as a single-shareholder company. However, foreign-owned entities registered in Nigeria cannot operate as small companies.

It is also important to note the major features of a small company and single shareholder company as follows:

Small Company Single Shareholder Companies2
Small companies shall have a single director3 Single shareholder companies MAY have a single director
Small companies are not required to have a Company Secretary4 Single shareholder companies MAY still be required to have a company secretary.
Small companies are not required to hold annual general meetings in Nigeria. Single shareholder companies are not required to hold annual general meetings in Nigeria5.
Small companies are not required to file annual audited financial statements with the Corporate Affairs Commission (the ‘CAC’)6. Single shareholder companies MAY still be required to file annual audited financial statements with the CAC.

Accordingly, a foreign-owned company registered in Nigeria can operate as a single-shareholder company, provided it complies with the registration requirements of the CAC and NIPC7 on foreign participation in Nigeria.

  1. CAMA, 2020
  2. A single shareholding entity may also be a small company, it all depends on the modalities of incorporation
  3. Section 271 (1) of CAMA 2020
  4. Section 330 (1) of CAMA 2020
  5. Section 240(1) of CAMA 2020
  6. Section 393 (1) and 424(2) of CAMA 2020
  7. Nigerian Investment Promotion Commission Act- Section 20

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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