Learn the step-by-step process of increasing share capital in Nigeria, CAC requirements, costs, and timelines. A complete guide for business compliance and expansion.

Increasing share capital is a crucial decision for many Nigerian companies seeking to expand, attract investors, or comply with statutory requirements. The process is regulated by the Corporate Affairs Commission (CAC) under the Companies and Allied Matters Act (CAMA) 2020. This article provides a detailed guide on the process of increasing share capital in Nigeria, the requirements, benefits, and compliance obligations.

 

 

What is Share Capital?

Share capital represents the amount of money a company raises by issuing shares to its shareholders. It is the foundation of a company’s financial structure and determines the liability of its members. In Nigeria, companies are required to state their authorised share capital during incorporation, which sets the limit of shares that can be issued unless increased.

 

 

Reasons for Increasing Share Capital

Companies may need to increase their share capital for various reasons, including:

1. Business Expansion – To finance growth and new investments.
2. Regulatory Requirements – Certain businesses like banks, insurance firms, and specialized companies have minimum share capital thresholds.
3. Admission of New Investors – To accommodate new shareholders or investors.
4. Compliance with CAC Rules – For some company amendments, CAC requires a higher share capital.
5. Improving Creditworthiness – A higher share capital can strengthen a company’s financial profile.

 

 

Legal Basis for Share Capital Increase

The Companies and Allied Matters Act (CAMA) 2020, particularly Sections 127–130, empowers companies to increase their share capital by passing a special resolution and filing necessary documents with the CAC.

 

 

Step-by-Step Process for Increasing Share Capital in Nigeria

1. Board Resolution

• The directors must hold a Board of Directors meeting to propose an increase in share capital.
• A resolution is passed, recommending the increase and calling for a general meeting of shareholders.

2. Shareholders’ Approval

• At the general meeting, members must pass a special resolution approving the increase.
• The resolution should state the new share capital structure.

3. Payment of Stamp Duties

• The company must pay stamp duty on the additional share capital at the Federal Inland Revenue Service (FIRS).

4. Filing with CAC

The following documents must be submitted to the Corporate Affairs Commission:

• Form CAC 2A (Notice of Increase in Share Capital).
• Board and Shareholders’ Resolutions.
• Updated Memorandum and Articles of Association (if applicable).
• Evidence of Stamp Duty Payment.
• Updated Annual Returns (if not up to date).

5. CAC Approval

• CAC reviews the documents, and once approved, issues a Certificate of Increase in Share Capital.

 

 

Timeline for Share Capital Increase

The process typically takes 5–10 working days, depending on the efficiency of document preparation, payment of stamp duties, and CAC’s workload.

 

 

Cost of Increasing Share Capital in Nigeria

The cost depends on:

1. Amount of Capital Increase – Stamp duty is charged as a percentage of the increase.
2. CAC Filing Fees – Payable according to the CAC fee schedule.
3. Professional Fees – If you engage a chartered accountant, lawyer, or CAC-accredited agent.

 

 

Benefits of Increasing Share Capital

• Attracts Investors – Higher share capital signals financial stability.
• Regulatory Compliance – Helps businesses meet statutory thresholds.
• Flexibility – Enables companies to raise funds without borrowing.
• Business Growth – Facilitates expansion and scaling operations.

 

 

Challenges and Common Mistakes

1. Failure to Update Annual Returns – CAC will not approve if returns are pending.
2. Incorrect Resolutions – Improperly drafted board or shareholder resolutions can delay approval.
3. Underpayment of Stamp Duties – Can cause rejection.
4. Not Updating MEMART – Some companies forget to align their memorandum with the new share capital.

 

 

Professional Assistance

Navigating the CAC process can be complex. Engaging a CAC-accredited agent or chartered accountant ensures compliance, proper documentation, and faster approval.

 

 

Conclusion

Increasing share capital in Nigeria is an important legal and financial step that enables companies to expand, attract investors, and comply with regulations. By following the CAC’s guidelines—passing resolutions, paying stamp duty, and filing the right documents—your company can smoothly upgrade its financial standing.

If you need professional assistance with share capital increase or other post-registration services, our team of experts can handle the entire process for you efficiently.