There are different share capitalization prescriptions for varying types of companies. Though this article focuses on how to increase your share capital as a startup.
We’ll closely look at the regulatory provisions on share capital.
Regulatory Provisions On Share Capital
The principal regulatory instrument on corporate affairs, CAMA, has stipulated the minimum share capital private and public companies must have before getting incorporated.
Other than CAMA, there are also other regulatory provisions that provide minimum capitalization requirements for specific companies. For example, NAICOM, Telecoms, Fintechs operating select licenses all have definite share capital that must be met before a valid incorporation.
CAMA particularly prescribes a minimum issued share capital of 100,000N for private companies and 2,000,000 million for public companies in Nigeria.
Company promoters would usually do all they can to secure compliance with incorporation requirements by doing just the bare minimum.
However, in due course, there might be reasons why a company would want to increase its share capital due to the advantages that come with it.
Can a Startup Increase Share Capital?
There is no limitation on the maximum amount of share capital a company may have. A company may increase it by complying with certain requirements.
Highlighted below are the steps to follow.
- The first step is to pass an ordinary resolution approving the increase.
- Notify CAC within 15 days with notice signed by two company directors or secretary
- Pay the prescribed stamp duties and filing fees
- File return of allotment using the prescribed form
- There are different reasons why companies and startups may want to increase share capital. These may be personal, economic or structural. We will be considering a few of the legal Implications that may accrue to increase or decrease in share capital in our next posts.
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References
1. https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.cac.gov.ng/companies/&ved=2ahUKEwiv5MDthYb-AhWjhv0HHaBbDS4QFnoECAcQBQ&usg=AOvVaw2qB5tcPxEtvoMgUXXthNjO accessed on March 31 2023
2https://www.google.com/amp/s/www.thisdaylive.com/index.php/2023/01/09/cama-2020-and-end-of-authorised-share-capital-regime-implications-for-companies/amp/ accessed on March 31 2023
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