Nigeria
Corporate Guide

What are the different types of companies that can be incorporated in Nigeria?

Further to section 21(1) of CAMA 2020, the following types of companies are registrable in Nigeria:

Company limited by shares

Which limits the liability of its members by the memorandum of association to the amount, if any, unpaid on the shares respectively held by them. In the event of the winding-up of the company or insolvency, the liability of the shareholders will be limited to the amount not fully paid up in respect of the shares held by them.

Company limited by guarantee

The liability of members, in the event of winding-up or insolvency, is limited up to the amount guaranteed to be contributed to the assets of the company. Further to section 26(12) of CAMA 2020, such amount to be guaranteed by each contributor shall not be less than NGN 100,000 (approximately, USD 240, based on the Central Bank of Nigeria exchange rate as of 1 August 2022). The guaranteed amount may only be demanded at the time of insolvency or winding-up. The consent of the Attorney General of the Federation is required for the registration of a company limited by guarantee, as the company is not formed to make profits for distribution to the members but for the promotion of commerce, art, science, religion, sports, culture, education, research, charity, or other similar objects. 

Unlimited liability company

The liability of its members in the event of winding-up is unlimited. Where the financial liability of the company exceeds its assets, such liability may attach to the members' personal property to liquidate the debt. The members have a joint and non-limited obligation to contribute to the assets of the company to enable settlement of its financial liability, if any, in the event of the company's insolvency.

Section 21(2) of CAMA 2020 provides that the types of companies highlighted above may be registered as private or public companies. A company is private where its memorandum and articles of association provides for it and contains restrictions on the transfer of its shares and sale of its assets and limits the maximum number of its members to 50 (although where two or more persons jointly hold one or more shares in a company, they will be treated as a single member). A private company cannot invite the public to subscribe for any of its shares or debenture unless authorised by law. 

Any other company not being a private company shall be a public company. The minimum membership of a public company is two members, without any maximum. 

In practice, companies are registered in Nigeria as either a:

• private company limited by shares; 
• public company limited by shares; 
• private company limited by guarantee;
• public company limited by guarantee; or
• private unlimited company.