LEGAL IMPLICATIONS OF NON-COMPLIANCE WITH MINIMUM ISSUED SHARE CAPITAL REQUIREMENTS UNDER NIGERIAN COMPANY LAW

Abstract

This study investigates the legal implications of non-compliance with the minimum issued share capital requirements under Nigerian company law, with particular emphasis on the Companies and Allied Matters Act (CAMA) 2020. It explores the rationale behind the introduction of minimum issued share capital within the corporate regulatory system, the liabilities and regulatory consequences associated with non-compliance, and the challenges associated with the operation of the regime in Nigeria. The study adopts a doctrinal research methodology by examining relevant statutory provisions, judicial authorities, regulatory instruments, textbooks, scholarly journal articles, and other legal sources. The study finds that non-compliance with the prescribed minimum issued share capital requirements may expose companies to regulatory penalties, restrict certain corporate operations, and create potential liability for directors and promoters. It further observes that the current framework is affected by several challenges, including the absence of a compulsory paid-up capital requirement, deficiencies in the enforcement and penalty mechanisms, and difficulties faced by startups and venture capital-backed businesses in raising capital. In light of these findings, the study recommends legislative and regulatory reforms aimed at requiring a portion of issued share capital to be paid up at incorporation, strengthening the sanction and enforcement structure under CAMA 2020, and improving coordination between CAMA 2020 and sector-specific capital regulations