Transfer and Transmission of Shares in Nigeria - General Guide

In Nigeria, the transfer and transmission of shares are governed by the Companies and Allied Matters Act (CAMA) 2020 and a company's Articles of Association. Sections 175 - 181 of CAMA 2020 provide for the Transfer and Transmission of Shares of a company.

Transfer of Shares - S. 175 of CAMA 2020:

Transfer of shares refers to the process of transferring ownership of shares from one party to another. It involves the sale or gifting of shares from the current shareholder (transferor) to another individual or entity (transferee). This process typically requires the completion of certain legal documentation, such as executing a deed of transfer, and may be subject to regulatory requirements and taxes depending on the jurisdiction and the specific circumstances of the transfer.

When a shareholder sells their shares to another person, they must follow specific procedures:

A) If the shareholder sells all their shares to one buyer, they need to complete an instrument of transfer and hand it over with the share certificate to the purchaser. The purchaser then submits these documents to the company for registration. Once registered, the company issues a new share certificate to the buyer.

B) If the shareholder sells part or all of their shares to multiple buyers, they must complete the instrument of transfer and send it with the share certificate to the company. The company endorses the instrument as "Certificate Lodged" and returns it to the shareholder, who then gives it to the respective buyers. The buyers then send the endorsed instrument to the company for registration. New share certificates are issued to each buyer for the shares they purchased.

To effect changes in shareholding with the Corporate Affairs Commission, Form CAC2A must be filed either at the CAC office or through an Accredited Agent of the Commission like Kjconsult.

Transmission of Shares - S. 179 of CAMA 2020:

Transmission of shares refers to the process of transferring ownership of shares due to circumstances such as death, bankruptcy, or inheritance, where the transfer is automatic and not initiated by the shareholder. The process typically involves legal procedures to transfer the shares to the heirs or beneficiaries of the deceased or bankrupt shareholder. This process requires documentation such as a death certificate, probate, or letters of administration, depending on the circumstances.

The personal representatives of the deceased shareholder must obtain probate or Letters of Administration from the relevant jurisdiction. They then apply to the company, providing the death certificate, probate or Letters of Administration, and the original share certificate. The company issues new share certificates to the personal representatives.

Additionally, compliance with regulations set by the Securities and Exchange Commission of Nigeria (SEC) and the company's articles of association is necessary.

However, whether through transfer or transmission, adherence to legal procedures and documentation is crucial for the smooth exchange of shares in Nigerian companies.

Note: This is not all about the Transfer and Transmission of Shares in Nigeria but to just provide a general guide on the topic.

J.I. Eze

KJconsult

09015477340