ABSTRACT
This article examines the Court of Appeal’s decision affirming that section 18(2) of the Companies and Allied Matters Act, 2020 applies to all private companies in Nigeria, including those incorporated under the repealed Companies and Allied Matters Act, 1990. The case resolved uncertainty created by the Corporate Affairs Commission’s restrictive interpretation, which excluded pre-CAMA 2020 companies from operating with a single shareholder. By dismissing the appeal, the Court confirmed that such companies may lawfully adopt a sole-shareholder structure. The article highlights the decision’s significance for corporate flexibility, regulatory clarity, and business restructuring in Nigeria.
INTRODUCTION
Can a Nigerian private company validly continue to exist with only one shareholder where it was originally incorporated under a law that required at least two? This question has generated significant uncertainty following the enactment of the Companies and Allied Matters Act, 2020 (“CAMA 2020”).[1]
CAMA 2020 introduced a major reform by permitting the incorporation of private companies with a single shareholder under section 18(2), departing from the position under the Companies and Allied Matters Act, 1990 (“CAMA 1990”), which required a minimum of two shareholders for every private company.[2] The reform was designed to enhance flexibility and improve the ease of doing business in Nigeria.
However, uncertainty arose as to whether this innovation applied to companies incorporated before the enactment of CAMA 2020. This controversy was ultimately resolved by the Court of Appeal in 2026, which affirmed that pre-CAMA 2020 private companies may lawfully operate with a sole shareholder.
GENESIS OF THE DISPUTE
Under CAMA 1990, private companies were required to maintain at least two shareholders.[3]
In practice, this requirement often led to the use of nominal or “dummy” shareholders, even where the true beneficial ownership rested in a single individual or corporate entity.
CAMA 2020 introduced a departure from this requirement by allowing one person to form and incorporate a private company.[4] Despite this reform, the Corporate Affairs Commission (“CAC”) adopted a restrictive interpretation of section 18(2), maintaining that the provision applied only to companies incorporated under CAMA 2020 and not to those incorporated under CAMA 1990.
Consequently, the CAC refused to register share transfers and post-incorporation changes that would result in pre-CAMA companies having only one shareholder. This position created significant uncertainty for corporate restructuring, succession planning, and ownership consolidation.
This interpretation was challenged in Primetech Design and Engineering Nigeria Limited & Julius Berger Nigeria Plc v Corporate Affairs Commission.[5]On 30 July 2024, the Federal High Court held that section 18(2) applies to all private companies irrespective of their date of incorporation.
Dissatisfied with the judgment, the CAC appealed to the Court of Appeal.
JUDGMENT OF THE COURT OF APPEAL
The Corporate Affairs Commission, as appellant, argued that the single-shareholder regime under section 18(2) of CAMA 2020 applies exclusively to companies incorporated under that Act, and that companies incorporated under CAMA 1990 must continue to maintain a minimum of two shareholders.
The Court of Appeal unanimously rejected this argument and dismissed the appeal in its entirety. In affirming the decision of the Federal High Court, the Court held that section 18(2) of CAMA 2020 applies uniformly to all private companies, regardless of their date of incorporation[6] The Court found no statutory basis for distinguishing between pre- and post-CAMA 2020 companies.
The Court further held that CAMA 2020 is a reform-oriented statute aimed at modernising corporate regulation and improving business efficiency in Nigeria. Accordingly, a restrictive interpretation would defeat the legislative intent and create an unjustified distinction between companies based solely on incorporation date.
The Court therefore confirmed that private companies incorporated under CAMA 1990 may lawfully operate with a single shareholder and are entitled to restructure their shareholding accordingly.
KEY IMPLICATIONS OF THE DECISION
The decision resolves the long-standing uncertainty surrounding the scope of section 18(2) of CAMA 2020. It confirms that all private companies, regardless of incorporation date, may operate with a sole shareholder.
It also enhances corporate flexibility by allowing companies to undergo share transfers, succession arrangements, and restructuring processes without the constraint of maintaining a minimum of two shareholders.
From a regulatory perspective, the decision strengthens the ease of doing business framework in Nigeria by removing artificial barriers previously created through restrictive administrative interpretation.
However, while the decision promotes flexibility, it also raises governance considerations. Single-shareholder companies concentrate control in one individual, potentially reducing internal oversight mechanisms. This places greater importance on regulatory compliance and corporate governance safeguards.
BROADER IMPACT ON NIGERIAN BUSINESS LAW
This decision reflects a purposive approach to statutory interpretation and reinforces the principle that regulatory agencies cannot impose limitations not grounded in legislation.
It aligns Nigerian company law with global corporate practice, where single-member companies are widely recognised. More importantly, it signals a shift from formalistic compliance requirements to commercially practical corporate regulation.
The decision therefore represents a significant milestone in the evolution of Nigerian corporate law.
CONCLUSION
The Court of Appeal’s decision provides a definitive resolution to the controversy surrounding single-shareholder private companies in Nigeria. By affirming the applicability of section 18(2) of CAMA 2020 to both pre- and post-2020 companies, the Court has clarified the law and strengthened legal certainty in corporate practice.
RECOMMENDATIONS FOR IMPROVING NIGERIA’S SYSTEM
In light of the Court of Appeal’s decision, several steps are necessary to ensure effective implementation and to consolidate the gains of the judgment.
First, the Corporate Affairs Commission (“CAC”) should issue clear and comprehensive regulatory guidelines reflecting the judgment. This will ensure uniform application of the decision across all CAC offices and eliminate the risk of inconsistent administrative practices.
Second, legislative clarification of section 18(2) of CAMA 2020 should be considered. An express provision confirming that the single-shareholder regime applies to all private companies, irrespective of incorporation date, would further strengthen legal certainty and prevent future interpretational disputes.
Third, while the decision enhances flexibility, there is a need to strengthen corporate governance safeguards applicable to single-member companies. This may include enhanced disclosure requirements and stricter compliance monitoring to ensure accountability in situations where ownership and control are concentrated in one individual.
Fourth, the CAC should undertake targeted training and capacity-building programmes for its officers to ensure proper understanding and implementation of the Court of Appeal’s judgment. This is essential to prevent administrative resistance or misapplication of the law.
Fifth, legal practitioners and businesses should proactively review existing corporate structures and identify opportunities to regularise or restructure shareholding arrangements in line with the clarified legal position.
Finally, courts and regulators alike should continue to adopt a purposive approach to the interpretation of CAMA 2020, ensuring that corporate regulation evolves in line with commercial realities and the broader objectives of economic development.
[1] Companies and Allied Matters Act 2020 (CAMA 2020), s 18(2).
[2] Companies and Allied Matters Act 1990 (now repealed), s 18.
[3] ibid.
[4] CAMA 2020, s 18(2).
[5] Primetech Design and Engineering Nigeria Limited & Julius Berger Nigeria Plc v Corporate Affairs Commission (Federal High Court, 30 July 2024).
[6] Corporate Affairs Commission v Primetech Design and Engineering Nigeria Limited & Julius Berger Nigeria Plc (Court of Appeal, 10 June 2026).
