Re-Registration is the process of altering an existing company’s status in terms of its liability limitations and shareholding structure through a new incorporation process.

This first instalment article focuses on all that you need to know regarding Re-Registration of companies under Nigerian law, particularly regarding :-

– Alteration if Company Status by Re-Registration

– Re-Registration of Private companies as public companies

– Re-Registration of Public companies as private companies

– Requirements as to share capital and net assets

Alteration of Company Status by Re-Registration

 – Under the act, a company may by re-registration under this Part alter its status from:

(a) a private company to a public company ;

(b) a public company to a private company ;

(c) a private limited company to an unlimited company ;

(d) an unlimited company to a limited company ; or

(e) a public limited company to an unlimited company.

Re-Registration of Private Companies as Public Companies

– A private company (whether limited or unlimited) may be reregistered as a public company limited by shares if:

(a) a special resolution that it should be so re-registered is passed ;

(b) the conditions specified under the act are met, and

(c) an application for re-registration is delivered to the Corporate Affairs Commission (CAC) in accordance with the act, together with-

(i) the other documents required by that section, and

(ii) a statement of compliance.

-The conditions are:

(a) that the company has a share capital ;

(b) that the requirements of the act are met as regards its share capital ;

(c) that the requirements of the act are met as regards its net assets ;

(d) if the relevant provision of the act applies, that the requirements of that section are met ; and

(e) that the company has not previously been re-registered as an unlimited company.

– The company shall make such changes to its name and articles, as are necessary in connection with its becoming a public company.

– If the company is unlimited it shall also make such changes in its articles as are necessary in connection with its becoming a company limited by shares.

Requirements as to Share Capital

– The following requirements shall be met at the time the special resolution is passed that the company should be re-registered as a public company:-

(a) the nominal value of the company’s allotted share capital shall be not less than the minimum specified under the act ;

(b) the company’s allotted shares shall be paid up at least one-quarter of the nominal value of that share and the whole of any premium on it ;

(c) if any share in the company or any premium on it has been fully or partly paid up by an undertaking given by any person that he or another should work or perform services (whether for the company or any other person), the undertaking shall have been performed or otherwise discharged ; or

(d) if shares have been allotted as fully or partly paid up as to their nominal value or any premium on them otherwise than in cash, and the consideration for the allotment consists of, or includes, an undertaking to the company , then either:

(i) the undertaking shall have been performed or otherwise discharged, or

(ii) there shall be a contract between the company and some person pursuant to which the undertaking is to be performed within five years from the time the special resolution is passed.

– Shares allotted in pursuance of an employees’ share scheme, by reason of which the company would, but for this subsection, be precluded under the act from being re-registered as a public company, shall not be regarded for the purpose of determining whether the requirements in the act are met.

– No more than one-tenth of the nominal value of the company’s allotted share capital is to be disregarded under the act and for this purpose the allotted share capital is treated as not including shares disregarded under the subsection.

Requirements as to Net Assets

– A company applying to re-register as a public company shall obtain:

(a) a balance sheet prepared as at a date not more than seven months before the date on which the application is delivered to the CAC ;

(b) an unqualified report by the company’s auditor on that balance sheet ; and

(c) a written statement by the company’s auditor that, in his opinion at the balance sheet date, the amount of the company’s net assets was not less than the aggregate of its called-up share capital and undistributable reserves.

– Between the date of the balance sheet and the date on which the

application for re- registration is delivered to the Commission, there shall be no change in the company’s financial position that results in the amount of its net assets becoming less than the aggregate of its called-up share capital and un-distributable reserves.

– Under the act, an “unqualified report” means:

(a) if the balance sheet was prepared for a financial year of the company, a report stating without material qualification the auditor’s opinion that the balance sheet has been properly prepared in accordance with the requirements of this Act ;

(b) if the balance sheet was not prepared for a financial year of the company, a report stating without material qualification the auditor’s opinion that the balance sheet has been properly prepared in accordance with the provisions of this Act which would have applied if it had been prepared for a financial year of the company.

– For the purpose of an auditor’s report on a balance sheet that was not prepared for a financial year of the company, the provisions of this Act apply with such modifications as are necessary.

Applications for Re-Registration as a Public Company

– An application for re-registration as a public company shall contain:

(a) a statement of the company’s proposed name on re-registration; and

(b) in the case of a company without a secretary, a statement of the company’s proposed secretary.

– The application shall be accompanied by:

(a) a copy of the special resolution that the company should re-register as a public company ;

(b) a copy of the company’s memorandum and articles as proposed to be amended ;

(c) a copy of the balance sheet and other documents referred to under the act; and

(d) where applicable, a copy of the valuation report (if any) under the relevant section.

– The statement of compliance required to be delivered together with the application is a statement that the requirements of this Part as to reregistration as a public company have been complied with.

– The CAC may accept the statement of compliance as sufficient evidence that the company is entitled to be re-registered as a public company.

Issuance of Certificate of Incorporation upon Re-Registration.

– If, on an application for re-registration as a public company,the Commission is satisfied that the company is entitled to be re-registered,the company shall be re-registered accordingly.

– The Commission shall issue a certificate of incorporation altered to meet the circumstances of the case.

– The certificate shall state that it is issued on re-registration and the date on which it is issued.

– Upon the issue of the certificate:

(a) the company by virtue of the issue of the certificate becomes a public company ;

(b) the changes in the company’s name, memorandum and articles take effect ; and

(c) where the application contained a statement of proposed secretary,the person or persons named in the statement as secretary or joint secretaries of the company are deemed to have been appointed to that office.

-The certificate is prima facie evidence that the requirements of this Act as to re-registration have been complied with.

Re-Registration of Public Companies as Private Companies

– A public company may be re-registered as a private limited company if:

(a) a special resolution that it should be so re-registered is passed ;

(b) the conditions specified under this section are met ; and

(c) an application for re-registration is delivered to the Commission in accordance with the act, together with:

(i) the other documents required by that section, and

(ii) a statement of compliance.

– The conditions are that:

(a) where no application under the act for cancellation of the resolution has been made:

(i) having regard to the number of members who consented to, or voted in favour of, the resolution, no such application may be made, or

(ii) the period within which such an application could be made has expired; or

(b) where such an application has been made:

(i) the application has been withdrawn, or

(ii) an order has been made confirming the resolution and a copy of that order has been delivered to the Commission.

-The company shall make such changes:

(a) in its name ; and

(b) in its memorandum and articles, as are necessary in connection with its becoming a private company limited by shares or, as the case may be, by guarantee.

Corporate Law :- All You Need To Know About Company Re-Registration In Nigeria- Part 2

The second instalment of this article will be looking at the following subtopics concerning Company Re-Registration in Nigeria :-

– Cancellation of Resolutions.

– Notices to the Corporate Affairs Commission (CAC).

– Applications for Re-Registration as Public Companies.

– Re-Registration of Private companies into Unlimited Companies.

– Re-Registration of Unlimited Companies into Limited Companies.

Application to Court to cancel Resolution

– The act provides that where a special resolution by a public company to be reregistered as a private limited company has been passed, an application to the court for the cancellation of the resolution may be made:

(a) by the holders of at least 5% in nominal value of the company’s issued share capital or any class of the company’s issued share capital(disregarding any shares held by the company as treasury shares) ;

(b) if the company is not limited by shares at least 5% of its members; or

(c) by at least 50 members of the company, but not by a person who has consented to or voted in favour of the resolution.

– The application shall be made within 28 days after the passing of the resolution and may be made on behalf of the persons entitled to make it by such one or more of their number as they may appoint for that purpose.

– On the hearing of the application, the Court shall make an order either cancelling or confirming the resolution.

-The Court may:

(a) make that order on such terms and conditions as it deems fit ;

(b) if it deems fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Court for the purchase of the interests of dissenting members ; and

(c) give such directions, and make such orders, as it considers expedient for facilitating or carrying into effect any such arrangement.

-The Court order may, if the Court deems fit:

(a) provide for the purchase by the company of the shares of any of its members and for the reduction accordingly of the company’s capital ; and

(b) make such alteration in the company’s memorandum articles as may be required in consequence of that provision.

– The Court order may, if the Court deems fit, require the company not to make amendment to its articles without the leave of the Court.

Notice to CAC of Court Application or Order

– On making an application to the Court to cancel the resolution,the applicants, or the person making the application on their behalf, shall immediately give notice to the Corporate Affairs Commission (CAC), without prejudice to any provision of rules of court as to service of notice of the application.

– On being served with notice of any such application, the company shall immediately give notice to the Commission.

– Within 15 days of the making of the Court order on the application, or such longer period as the Court may at any time direct, the company shall deliver to the Commission a copy of the order.

– If default is made in complying with the relevant provisions of the act, the company and each officer of the company is liable to such penalty as the Commission shall prescribe by regulation for every day during which the default continues.

Applications for Re-Registration as Public Limited Companies

-An application for re-registration as a private limited company shall contain a statement of the company’s proposed name on re-registration.

-The application shall be accompanied by a copy of the:

(a) resolution that the company should re-register as a private limited company; and

(b) company’s memorandum and articles as proposed to be amended.

– The statement of compliance required to be delivered together with the application is a statement that the requirements of this Part as to reregistration as a private limited company have been complied with.

– The commission may accept the statement of compliance as sufficient evidence that the company is entitled to be re-registered as a private limited company.

Issuance of Certificate of Incorporation upon Re-Registration as a Private Limited Company.

– If, on an application for re-registration as a private limited company, the Commission is satisfied that the company is entitled to be so reregistered, the company shall be re-registered accordingly.

-The Commission shall issue a certificate of incorporation altered to meet the circumstance.

– The certificate shall state that it is issued on re-registration and the date on which it is issued.

– Upon the issue of the certificate:

(a) the company by virtue of the issue of the certificate becomes a private limited company ;

(b) the changes in the company’s name, memorandum and articles take effect.

– The certificate is prima facie evidence that the requirements of this Act as to re- registration have been complied with.

Re-Registration of Private Limited Company as Unlimited.

-A private limited company may be re-registered as an unlimited company if:

(a) all the members of the company have assented to its being so reregistered ;

(b) the condition specified under the act is met ; and

(c) an application for re-registration is delivered to the Commission in accordance with the act, together with:

(i) the other documents required by that section, and

(ii) a statement of compliance.

-The condition is that the company has not previously been re-registered as limited.

– The company shall make such changes in its name and its memorandum and articles-

(a) as are necessary in connection with its becoming an unlimited company ; and

(b) if it is to have a share capital, as are necessary in connection with its becoming an unlimited company having a share capital.

– For the purposes of this section:

(i) a trustee in bankruptcy of a member of the company is entitled, to the exclusion of the member, to assent to the company’s becoming unlimited ; and

(ii) the personal representative of a deceased member of the company may assent on behalf of the deceased.

– Under the act, “a trustee in bankruptcy of a member of the company” includes:

(a) a permanent trustee or an interim trustee on the sequestrated estate of a member of the company ; and

(b) a trustee under a protected trustee deed granted by a member of the company.

Application for Re-Registration as an Unlimited Company

– An application for re-registration as an unlimited company shall contain a statement of the company’s proposed name on re-registration.

– The application shall be accompanied by:

(a) the prescribed form of assent to the company’s being re-registered as an unlimited company, authenticated by or on behalf of all the members of the company ; and

(b) a copy of the company’s memorandum and articles as proposed to be amended.

-The statement of compliance required to be delivered together with the application is a statement that the requirements of this Part as to reregistration as an unlimited company have been complied with.

– The statement shall contain a statement by the directors of the company:

(a) that the persons by whom or on whose behalf the form of assent is authenticated constitute the whole membership of the company ; and

(b) if any of the members has not authenticated that form himself, that the directors have taken all reasonable steps to satisfy themselves that each person who authenticated it on behalf of a member was lawfully empowered to do so.

– The Commission may accept the statement of compliance as sufficient evidence that the company is entitled to be re-registered as an unlimited company.

Issuance of Certificate of Incorporation upon Re-Registration as an Unlimited Company

– If, on an application for re-registration of a private limited company as an unlimited company the Commission is satisfied that the company,is entitled to be so re-registered, the company shall be re-registered accordingly.

 -The Commission shall issue a certificate of incorporation altered to meet the circumstance.

– The certificate shall state that it is issued on re-registration and the date on which it is issued.

– Upon the issue of the certificate:

(a) the company by virtue of the issue of the certificate becomes an unlimited company ; and

(b) the changes in the company’s name, memorandum and articles take effect.

– The certificate is conclusive evidence that the requirements of this Act as to re- registration have been complied with.

Re-Registration of Unlimited Companies as Limited

– An unlimited company may be re-registered as a private limited company if:

(a) a special resolution that it should be re-registered is passed ;

(b) the condition specified under the act is met ; and

(c) an application for re-registration is delivered to the Commission in accordance with the act, together with-

(i) the other documents required by that section, and

(ii) a statement of compliance.

– The condition is that the company has not previously been reregistered as unlimited.

– The special resolution shall state whether the company is to be limited by shares or by guarantee.

– The company shall make such changes:

(a) in its name ; and

(b) in its memorandum and articles, as are necessary in connection with its becoming a company limited by shares or, as the case may be, by guarantee.

Application for Re-Registration as a Limited Company

-An application for re-registration as a limited company shall contain a statement of the company’s proposed name on re-registration.

-The application shall be accompanied by:

(a) a copy of the resolution that the company should re-register as a private limited company ;

(b) if the company is to be limited by guarantee, a statement of guarantee ; and

(c) a copy of the company’s memorandum and articles as proposed to be amended.

– The statement of guarantee required to be delivered in the case of a company that is to be limited by guarantee shall state that each member undertakes that, if the company is wound up while he is a member, or within one year after he ceases to be a member, he will contribute to the assets of the company to such amount as may be required for:

(a) payment of the debts and liabilities of the company contracted before he ceases to be a member ;

(b) payment of the costs, charges and expenses of winding-up ; and

(c) adjustment of the rights of the contributories among themselves, not exceeding a specified amount.

– The statement of compliance required to be delivered together with the application is a statement that the requirements of this Part as to reregistration as a limited company have been complied with.

– The Commission may accept the statement of compliance as sufficient evidence that the company is entitled to be re-registered as a limited company.

Issuance of Certificate of Incorporation upon Re-Registration of an Unlimited Company as a Limited Company

-If, on an application for re-registration of an unlimited company as a limited company, the Commission is satisfied that the company is entitled to be so re- registered, the company shall be re-registered accordingly.

– The Commission shall issue a certificate of incorporation altered to meet the circumstances of the case.

– The certificate shall state that it is issued on re-registration and the date on which it is so issued.

– Upon the issue of the certificate:

(a) the company by virtue of the issue of the certificate becomes a limited company; and

(b) the changes in the company’s name, memorandum and articles take effect.

-The certificate is prima facie evidence that the requirements of this Act as to re- registration have been complied with.

How do we make careers multinational? What are the ingredients in the 21st century knowledge economy? How do you begin in the village and land in the trading halls of New York City? How can we go international in this age?

Yes, you like to give speeches which pay $5,000 per hour. How can you expand that business, from Lagos, Nairobi, etc to Tokyo, London, etc. You sing in the community. Any aspiration to sing for the world? The world pays!

Join me at 7pm WAT today for Tekedia Mini-MBA Personal Economy class, focusing on Planning a Multinational Career, as we continue how you can build your own economy, not your company’s or Nigeria’s economy, but yours. That is why Tekedia Mini-MBA is unique: you are not just trained to make the company better. We put efforts on YOU and your Personal Economy.  Advance your leadership ascent and go global.

Zoom link in the board – this is the #best school and the winner of Mhagic Velocity  $60,000 Global Prize for Innovation in Business Education. Register for the next edition here. It remains N90k or $170 if you beat the early bird deadline.