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Procedure for Transfer and Transmission of Shares in Nigeria

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Procedure for Transfer and Transmission of Shares in Nigeria

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Legal Framework The Provisions of the Companies and Allied Matters Act (CAMA) and a Company’s Article of Association (“Articles”) provides for the transfer and transmission of shares of the shareholders of the Company. Section 22 (2) of CAMA provides that a private company may by its Articles restrict the transfer of shares of its members. Where there is such restriction, the Articles may provide for preemptive right upon transfer of shares.

Transfer of Shares

This occurs where a shareholder alienates the interest in his shares in a Company to another person.

A) Where a shareholder transfers all his shares to only one purchaser;

The transferor deliver to the purchaser an instrument of transfer duly executed together with the share certificate. The purchaser executes the transfer and sends the transfer instrument together with the share certificate to the Company for registration. Upon registration, a new share certificate is issued to the transferee and his name entered into the register of members.

B) Procedure where transferor sells part or all of his shares to more than one purchaser;

The shareholder executes the instrument of transfer with his share certificate and sends them to the company with a request to recognize and register the instrument. The company endorses on the instrument the words “Certificate Lodged”. The endorsed instrument is then given to the purchaser in exchange for the price. The purchaser executes and sends the endorsed instrument of transfer to the Company for registration. Upon registration, new share certificates are issued to the respective purchasers in respect of the part of the shares they purchased in their names and entered in the register of members.

In both cases, the change in the shareholding of the Company will be effected at the Corporate Affairs Commission by filing Form CAC2A.

Transmission of Shares

This occurs upon the death of a shareholder who may have died intestate or willed the shares to a beneficiary.

Section 154 of CAMA provides that a personal representative so entitled to the shares of a deceased shareholder may himself validly transfer the shares of a deceased member although he is not a member himself. He also has an option to be registered as member himself or another nominated by him as the transferee of the shares by executing a transfer deed.

Procedure for transmission of shares;

(a) The Personal representatives of the shareholder shall obtain probate or Letters of Administration from the jurisdiction in which the deceased shareholder was domiciled to deal with his shares in the Company.

(b) Apply to the Company notifying it of their intention to either become members of the company or to transfer same to another person. The application will be accompanied by the following documents;

(i) A copy of the Death Certificate of the deceased shareholder.

(ii) A copy of the probate or Letters of Administration.

(iii) Original shares certificate of the deceased shareholder.

(c)A new certificate will be issued to the personal representatives of the deceased.

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