CAC Regulations Regarding Unissued Share Capital: Penalty For Non-Compliance

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Following the directive of the Corporate Affairs Commission (“CAC”), all companies in Nigeria are required to fully issue their unissued share capital not later than 31st December 2022. Any company with unissued share capital by 1st January 2023 is in violation of Regulation 13 of the Companies Regulations 2021 (“the Regulations”) made further to the Companies and Allied Matters Act, 2020 (“CAMA 2020”).

Previously, the Companies and Allied Matters Act, 1990[1] (“CAMA 1990”) mandated companies to issue a minimum of 25% of their “authorised share capital”. Companies could retain unissued share values on their books for an unlimited period without any adverse consequence. The concept of “Authorised Share Capital”[2] which recognised a company’s issued and unissued shares contained in CAMA 1990 was repealed by CAMA 2020. References to “authorised share capital” have now been replaced with “issued share capital”.[3] Section 868 of CAMA 2020 further defines “share capital” as “the issued share capital of a company at any given time”.

This means that companies are no longer expected to have unissued share capital and all the shares of a company must now be issued. And any share capital of a company that remains unissued after 31st December 2022 shall not be recognised as forming part of the share capital of the company until the share capital of the company is fully issued or reduced accordingly.


The CAC in providing guidance on Section 124 of CAMA 2020, released the Companies Regulations in 2021. Regulation 13 of the Regulations requires all companies to fully issue their shares by 30th June 2021. However, the deadline for compliance was extended to 31st December 2022 by a notice published by the CAC dated 18th April 2021.[4]

Regulation 13 of the Regulations compels companies with unissued shares as of the date of the commencement of CAMA 2020 to issue all unissued shares even though CAMA 2020 does not expressly require it. That is to say, there was no express provision in CAMA 2020 that required companies to issue out their unissued shares. Rather, it was the directive of the CAC that all companies with unissued shares should issue them out or risk them being derecognised, in an attempt to give effect to Section 124 of CAMA 2020 which only recognises “issued share capital”.


A combined interpretation of Sections 124 and 868 of CAMA 2020, and Regulation 13 of the Regulations would show that no company is expected to have unissued shares. Any company that fails to comply with the regulations will be liable along with every officer of the company to a daily default penalty of ₦250 for small companies, ₦500 for private companies limited by shares other than small companies, and ₦1,000 for public companies.[5]


Existing companies in Nigeria with unissued shares can either issue out the unissued shares and pay the daily default penalty as prescribed or forfeit the portion of its share capital that is unissued (as the unissued shares will no longer form part of the share capital of the company). Companies may issue unissued shares to existing shareholders as a bonus or rights issue. They may also allot the unissued shares to new shareholders.

Issuing all unissued shares either as a bonus or rights issue or allotment to new shareholders is not the only option available to companies. Companies may also cancel their unissued shares or reduce their share capital. Companies whose unissued shares have been derecognised may create additional shares by increasing the share capital of the company and issue out new shares accordingly.


Companies are prohibited from holding unissued shares. Companies are expected to comply with the Regulations by issuing out unissued shares after paying the default penalties which are applicable from 1st January 2023 or forfeit the portion of their share capital that is unissued. Any company that does not wish to forfeit the unissued portion of its existing “authorised share capital” (which is derecognised) is liable to a daily default fee as prescribed above and that applies to the company and its officers. Any private company (other than a small company) that seeks recognition of such portion of its “authorised share capital” (which is derecognised) is liable to a daily fee of ₦500 for the company and ₦500 for each officer. This means that if such a company has 5 affected officers, it will pay a total sum of ₦3,000 daily from the date of default.  Defaulting companies are advised to consult a Legal Professional for advice on options available to them and directions on how to proceed accordingly.


For further information on this article and area of law, please contact Oluwabusayo Ayinde at:

S. P. A. Ajibade & Co., Lagos by

Telephone (+234 1 472 9890), Fax (+234 1 4605092)

Mobile (+234.906.670.4611)



[1] Section 99 of the Companies and Allied Matters 1990 Act Cap. C20 L.F.N 2004 (now repealed).

[2] Authorised share capital is the number of shares that a company can issue as stated in its memorandum of association. It comprises both issued and unissued shares.

[3] See Section 124 of the Companies and Allied Matters Act, 2020.

[4] CAC, “PUBLIC NOTICE: existing companies and the requirements of issued share capital under the Companies and Allied Matter Act 2020” available at accessed on 27th February 2023.

[5] See the Penalties Section of the Companies Regulations, 2021.

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