What Section 171 of CAMA 2020 says about share certificates.
The Companies and Allied Matters Act 2020 makes specific provisions regarding the issue and delivery of share certificates.
Issue of Share Certificates
“Every company shall, within two months after the allotment of any of its shares and within three months after the date on which a transfer of any such shares is lodged with the company, complete and have ready for delivery the certificates of all shares allotted or transferred, unless the conditions of issue of the shares otherwise provide.”
In practical terms, this provision establishes the statutory timeframe within which a company should complete and have share certificates ready for delivery following the allotment or transfer of shares.
The Right of a Registered Member to a Certificate
“Every person whose name is entered as a member in the register of members is entitled, without payment, to receive within three months of allotment or lodgment of transfer or within such other period as the conditions of issue provide, one certificate for all his shares or several certificates each for one or more of his shares upon payment of a fee as the directors shall determine.”
This provision recognises the entitlement of a person entered in the company's register of members to receive a certificate representing their shares.
Share certificates are specifically provided for under CAMA 2020.
Section 171 establishes both the company's responsibility to prepare share certificates and the entitlement of registered members to receive certificates representing their shareholding.
Share certificates are recognised by Nigerian company law.
CAMA 2020 establishes the framework for the issue and legal effect of share certificates, while the Business Facilitation Act recognises that certificates may also be issued electronically.
Companies are required to issue share certificates.
Section 171 provides that a company must complete and have share certificates ready for delivery within the prescribed period following the allotment or transfer of shares, unless the conditions of issue provide otherwise.
The law recognises electronic share certificates.
The Business Facilitation Act amended Section 171 by adding subsection (7), which provides that a share certificate may be issued in either physical or electronic form.
This supports secure, modern and paperless corporate documentation without limiting companies to traditional paper certificates.
Failure to comply can attract regulatory penalties.
Where a company defaults in complying with Section 171, the company and officers responsible for the default may be liable to penalties specified by the Corporate Affairs Commission for every day the default continues.
A person entitled to receive a certificate may also pursue the statutory remedies available where the company fails to make good the default.
Share certificates provide important evidence of ownership.
Under Section 172 of CAMA 2020, a properly executed share certificate specifying shares held by a member is prima facie evidence of the member's title to those shares.
This makes the certificate an important corporate document for shareholders, companies and institutions reviewing evidence of share ownership.
The importance of a properly issued share certificate.
Provides prima facie evidence of share ownership.
Helps companies maintain proper corporate records.
Supports compliance with the applicable provisions of CAMA 2020.
Provides shareholders with documentary evidence of their holdings.
Creates a clear record of the shares issued and held.
Supports verification and due diligence involving company ownership.
Generate and manage your share certificates digitally.
SCRS helps companies create professionally prepared share certificates with a structured digital process for generation, indexing and verification.
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