To print this article, all you need is to be registered or login on Mondaq.com. Surrender of shares: can a shareholder surrender his shares in a company by way of a stock transfer form? 2.2 Purchaser will pay the Offer Price per Share to the Shareholder who has validly tendered (or defectively tendered provided that such defect has been waived by Purchaser) promptly after Purchaser has accepted the shares validly tendered and not withdrawn in the Offer for payment. The obligation imposed by section 45 seems on one reading to render void every transfer of shares effected by the transferring shareholder and perfected by the company without presenting any evidence of the payment of capital gains tax. share certificate and sends them to the company with a request to company shall where it wholly or partially accepts the application, Mondaq uses cookies on this website. 2. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through this post without seeking the appropriate legal or professional advice from the particular facts and circumstances at issue from a lawyer. A Redeemable share is one issued on the terms that the company will or may buy them back at a future date. The authors may be contacted at: steve.arubike@gelias.com; athanasius.akor@gelias.com. so in this case a sum of money is transacted that. SHARE CAPITAL OF A COMPANY IN NIGERIA The share capital is fundamental to a set up of a company. How can one director/shareholder exit a private company without the cooperation of the other? A company can forfeit its shares only when the following conditions are satisfied: 1. Articles of association commonly provide that nil-paid or partly paid shares that are liable to forfeiture may be surrendered to the company (see for eg the Model Articles for a public company limited by shares, article 62). for dividend to a reserve fund and shall not be available for Are such transfers tax exempt until the threshold is reached? All Rights Reserved. Authority of Directors to Allot Shares. Treasury shares are now As Forfeiture of shares is a serious step since it involves in depriving a person of his property as a penalty of some act or omission. Then companies want to cancel the "original" shares. A company may acquire its own fully paid shares for no consideration from a shareholder by way of surrender of the shares. shareholders. To be sure, the annual returns form, which is filed with the Commission yearly, will reflect the shareholding changes: But that form is to be filed within six months after the end of the accounting year and there is no requirement in the law or any regulation that payment of capital gains tax is a condition for the inclusion of the shareholding changes in the annual returns. This raises many questions. Surrender of Shares Nature of Act: Surrender is a voluntary act on the part of the shareholder. However, it is imperative to state that the does not invalidate the investments made by a shareholder in a Original shares certificate of the the return of allotment at the Corporate Affairs Commission He also has an option to be registered as member conditions or directions that may be imposed by the company's guide to the subject matter. purchaser executes the transfer and sends the transfer instrument Specialist advice should be sought CAMA further provides that every person, whose name is entered applicant. To discuss trialling these LexisNexis services please email customer service via our online form. Provision for Electronic transfer of shares under Section 175(1) CAMA 2020. and transmission of shares of the shareholders of the Company. What can the company do with Treasury shares to existing members or allotment of shares to existing right upon transfer of shares. recognised and provided for in the CAMA 2020. for cash; (b) transfer them to its share option scheme; Shareholder rights and powers in Nigeria Streamsowers & Khn Nigeria July 10 2018 Rights and equitable treatment of shareholders. The shareholder will then deliver the share transfer form together with the shareholder's share certificate to the company. Yes your kids can hold shares in your company but there must be a minimum of two adult shareholders before kids can be included. It is a short cut to the long procedure of forfeiture of shares. dispose of any shares above the 15% threshold. The Insurance Act regulates the capacity of insurance companies to invest in Nigeria by stipulating that insurance funds must be invested and held in Nigeria in certain kinds of permitted investments. himself or another nominated by him as the transferee of the shares (CAMA) and a Company's Article of Association The company endorses on the By using our website you agree to our use of cookies as set out in our Privacy Policy. up); They do not confer a right to attend general meetings; and. by executing a transfer deed. Surrender of Shares Surrender of shares means the return of shares by the shareholder to the company for cancellation. Learn how your comment data is processed. This Affidavit is required to be filed with the Registrar of Companies upon voluntary surrender of shares by a shareholder. will be effected at the Corporate Affairs Commission by filing Form But there are only two cases where surrender of shares will be valid provided its acceptance by the company is authorised by the articles of association.. (A) As shares are surrendered in exchange of the new shares of the same nominal value. Standards A and B states that the number of public shareholders in a company must be 300 and above (for equity shares). price. The CAMA 1990 did not specifically provide for treasury shares, entitled to the shares of a deceased shareholder may himself 300 per share on making the first call, and Rs. (a) where it is done as a short cut to forfeiture to avoid the formalities for a valid forfeiture and (C) A new certificate will be issued to the personal Shares, which are liable to be forfeited on account of default in the payment of calls, may be surrendered by the holder if he so desires. Usually, a company's shares are transferred by an instrument of transfer. Surrender is a short cut to forfeiture.Surrender of shares means voluntary return of shares by a member to the company. Mondaq Ltd 1994 - 2021. members. The reintroduction of capital gains tax on realized gains from share disposals aligns Nigerian law with what obtains in several other jurisdictions. Dodds vs Hill [1865] 2 H&M 424A was the registered holder of shares in a Company and held them on trust for B. Concerning the transfer of shares in a listed company, if the Nigerian stock exchange is duty bound to ensure compliance with section 45, then henceforth the correct settlement of share transfers in trades on the exchange may well now take weeks rather than days. Section 22 (2) of CAMA provides that a private company may by its Accordingly, said applicant may validly revoke an offer Shares, which are liable to be forfeited on account of default in the payment of calls, may be surrendered by the holder if he so desires. As a practical matter, the secretary of the company should ensure compliance with section 45 before entering the name of the transferee in the register of members. Under the the company which may delegate it to the directors subject to any Zamfara State Governor, Bello Mohammed Matawallen on Thursday, received three more repented bandits who surrendered their arms at the Government House, Gusau, IgbereTV reports. ("Articles") provides for the transfer (1) Each share shall be subdivided into ten fully paid equity shares of Rs 10 each. Free trials are only available to individuals based in the UK. It was held that a company can only accept a surrender under condition and limitations which shares can be forfeited, which did not exist earlier . Stephen Chima Arubike is a Partner and Athanasius Akor is an Associate at G. Elias & Co. Dr. George Nwangwu. Either on valid call and a default must exist and the directors may, instead of going to the length of forfeiture, in good faith accept surrender from the shareholder. These shares can either be ordinary or preferred shares. However, the amendment now mandates a 10% capital gains tax on realized gains accruing to a person from the sale or disposal of shares in a Nigerian company. Thus, even if there is any inconsistency between section 4 of the CGTA and the amendment, the latter, being a specific provision, will prevail over the former (see Omini et al. This article will discuss the major types of shares, the party that can transfer shares. Or should the buyer insist on having warranties or indemnities against failures to complete the process as section 45 contemplates? Click to listen to Hillsong Worship's latest release, 'Team Night' here: https://worship.lnk.to/teamnightIDClick here to listen to the latest from Hillsong W. According to the law, a company has the power to issue various classes of shares. accompanied by the following documents; A copy of the Death Certificate of Surrender of shares means the return of shares by the shareholder to the company for cancellation. A copy of the probate or Letters of This poses a practical challenge. Companies are therefore advised to take note and ensure compliance or at least address and manage the risks sensibly. GET A QUOTE. treasury shares are also entitled to bonus shares. action in court to cancel the resolution within six weeks of the We need this to enable us to match you with other users from the same organisation. It is now possible to have single shareholder/single director FIND US PO Box 10008 Willow House Cricket Square Grand Cayman KY1-1001 Cayman Islands T +1 345 749 2000 F +1 345 749 2100 E cayman@careyolsen.com The power to forfeit shares must be expressly given in Articles of Association of the Company. authorising the share buy-back; The shares to be purchased must be fully paid up; The shares can only be paid for by the company from its (b) The power to accept the surrender of shares cannot be exercised by a company unless expressly given by the Articles of Association. The following Property precedent provides comprehensive and up to date legal information covering: Deed of surrender 1 Definitions 2 Interpretation 3 Surrender and acceptance 4 Reimbursement of Annual Rent, etc 5 Settlement of claims 6 Release 7 Mortgagee's consent 8 Guarantor's consent 9 Surrender costs, etc More. filing. and communicated to the applicant in accordance with the above Holder in this case voluntarily abandons all his shares in favour of the company. 618 Bees provides access to independent attorneys and self-help services at your specific direction. READ: Sterling Banks CEO announces date for dividends payment to shareholders. Vivian Umelue is an attorney and legal templates programmer at Wonder.Legal and is based in Nigeria. Appointment of Receiver. 650) 565, 591). A shareholder is an individual or entity that holds at least one share in a company. A proxy or agent representing a shareholder can, through a Power of Attorney, enter a binding contract to sell and transfer the shareholder's shares to another party. The Board may accept the surrender of any shares which it is in a . This is one of the key elements of a contract because is shows the meeting of the minds of both parties, The product categories include: Food, Cosmetics, Drug, Medical Device, Agro-Chemicals & Pesticide, Veterinary Products, Vaccines & Biologicals, Herbal and Nutraceuticals and Water. **Trials are provided to all LexisNexis content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. They are not entitled to dividends or any other distribution option scheme or any other similar scheme. A mere refusal to take up newly issued shares, to which a shareholder is entitled to, is not a surrender of shares. company which is a subsidiary may acquire shares in its holding made law in Nigeria in 1990 as a decree of the military The first step in share surrender is for the shareholder to write a letter to the company stating the amount surrendered. Primarily, the Corporate Affairs Commission is given the responsibility of registering companies in Nigeria. One of the most significant is the reintroduction of capital gains tax on transfers of shares in Nigerian companies, a move by the Federal Government of Nigeria, which has been battling revenue shortfalls since 2014, to increase income. entered in the register of members. company where the subsidiary company is concerned as personal Section 22 (2) of CAMA provides that a private company may by its Articles restrict the transfer of shares of its members. applicant withdraws his application by a written notice to the Procedure for Transfer and Transmission of Shares in Nigeria. Will the earlier or the later buyer take priority. It is equally worth noting that different interpretations have been provided to the statutory provision restricting the ability of a company to acquire its own share in Nigeria. Nature of payment Besides the forfeiture of shares is process in where the company forfeits the shares of a members or shareholders who fails to pay the call on shares or instalments of the issue price of his shares within a certain period of time after they fall due. THIS SHARE SURRENDER AGREEMENT (this " Agreement ") is made as of this 14th day of July, 2008, by and among Longfoot Communications Corp., a Delaware corporation (the " Company "), Frost Gamma Investments Trust (" FGIT "), Dr. Jane Hsiao (" Dr. Hsiao "), Dr. Subbarao Uppaluri (" Dr. Uppaluri "), Steven D. Rubin (" Rubin "), Sim Farar (" Farar ") So the forfeiture of a share should happen only for the non-payment of the call on shares by the members and in accordance with articles of the company. of shares from a company he just gives it back. A company's issued share capital is increased where the company in general meeting through an ordinary resolution allots additional shares to its shareholders. A company may not hold more than 15% of its issued shares as Primarily, the Corporate Affairs Commission is given the responsibility of registering companies in Nigeria. The legal position seems unsettled in relation to these relevant questions. 20 No. highlighting changes that have been introduced into the body of The Provisions in the articles, for the acceptance of surrender of shares in all other cases except the above A and B, will be void. Nigerias Finance Act 2021 (FA 2021) has ushered in notable modifications to several provisions of the countrys tax statutes. The UAE Federal Law No. The Companies and Allied Matters Act 2020 ("CAMA 2020", "the New CAMA", or "the Act") was assented to by President Muhammadu Buhari on 7 August 2020. transfer to the Company for registration. So on forfeiture of shares the member loses the amount paid thereon and his interest in the ownership of the shares. 1000 each. (LogOut/ (LogOut/ Mind Games John Lennon Lyrics, The company makes these calls on shares when it requires further capital. At least 25% of the issued share capital is now required to be paid up. written notice to the company. Qlik Sense Wiki, reduction in share capital of the A company is a corporate structure with separate legal personality status. This is in accordance with Section 2 (84) of the Companies Act, 2013. CAC2A. My understanding is that this would fall within section 659 (1) of the Companies Act 2006: the company has acquired its own fully paid up shares otherwise than for valuable consideration. An offer of membership in our legal plan is not an endorsement or advertisement for any individual Lawyer or Law Firm. Increase of Share Capital. allottee has been entered into a company's register of members, SHARE CAPITAL OF A COMPANY IN NIGERIA. companies now have the option of repurchasing their issued shares A share transfer must be executed by both parties either by themselves or on their behalf. He also has an option to be registered as member There would be no reduction of share capital in such a case; and (B)When shares are surrendered as a short cut to forfeiture of shares when all the circumstances for forfeiture have arisen. no right to vote at meetings of the parent company and shall not This shares can, however, be re-issued, even at a discount, but that is not the same thing as an allotment. Accordingly, if no power is given in the Articles, no forfeiture can be made. The application will be Get share prices, volume traded, daily price movements and year to date percentage changes for companies listed on the Nigerian Stock Exchange. Besides the surrender should not be used as a device for relieving a shareholder from his liability cases of bad surrender of shares Collectorof Moradabad vs Equity Insurance Co, AIR 1948 Oudh 197. this case explains as after the death of a Raja who held several shares in a company, his shares were surrendered to the company and the surrender was accepted by the secretary of the company. v. Yakurr LGA et al. The articles of the company must permit it; The shareholders of the company must pass a special resolution company's treasury shareholding to the 15% threshold. We are not a law firm or a substitute for a Lawyer or law firm. In a bid to transform the business environment and re-energize the private sector as the engine of growth of the economy, the Presidential Enabling Business Environment Council (PEBEC), headed by the Vice President of the Federal Republic of Nigeria, has led the vanguard for driving business reforms in Nigeria since 2016. therefore, required greater clarity. value of the shares shall be transferred out of profits available intestate or willed the shares to a beneficiary. We need this to enable us to match you with other users from the same organisation, it is also part of the information that we share to our content providers ("Contributors") who contribute Content for free for your use. It also considers insurable interest in subrogation, co-insurance and double insurance and the Insurable Interest Bill.What is insurable interest?Insurable, ECHR, art 5(4)rights and dutiesThe scope of article 5(4) Article 5(4) of the European Convention of Human Rights (ECHR) provides that: 'Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided, Commercial Property Standard EnquiriesThe Commercial Property Standard Enquiries (CPSE) have become the industry standard pre-contract enquiries for commercial property transactions:CPSE.1 (version 3.8) General pre-contract enquiries for all commercial property transactionsCPSE.2 (version 3.4), Tortthe different types of tortThis Practice Note identifies the main torts (bar negligence and nuisance, which are covered elsewhere in our related content) and their key characteristics.