How do companies allot shares?

How do companies allot shares?

March 26, 2019

A person becomes a shareholder of a Company either by shares being allotted, transferred or transmitted to him/her.

What is allotment? A company may allot shares when it is first set up or at any time during its lifetime in order to raise share capital and/or introduce new shareholders. Who can allot shares? Unless the Investments and Securities Act provides otherwise, the power to allot shares shall be vested in the Company, which may delegate it to directors, subject to any conditions or directions that may be imposed in the articles or from time to time by the company in general meeting.

In the case of a private company or a public company where the issue of shares is not public, there shall be submitted to the company a written application signed by the person wishing to purchase shares and indicating the number of shares required;

In the case of a public company, subject to any conditions imposed by the Securities and Exchange Commission where the issue of shares is public, there shall be returned to the company a form of application as prescribed in the company’s articles, duly completed and signed by the person wishing to purchase shares;

Upon the receipt of an application, a company shall, where it wholly or partially accepts the application, make an allotment to the applicant and within 42 days after the allotment notify the applicant of the fact of allotment and the number of shares allotted to him.

An allotment of shares made and notified to an applicant shall be an acceptance by the company of the offer by the applicant to purchase its shares and the contract takes effect on the date on which the allotment is made by the company. A company may, in its articles, make provision with respect to payments on allotment of its shares.

Whenever a company limited by shares makes any allotment of its shares, the company shall within one month thereafter deliver to the Commission for registration‐

(a) a return of the allotments, stating the number and nominal amount of the shares comprised in the allotment, the names, addresses and description of the allottees, and the amount, if any, paid or due and payable on each share and

(b) in the case of shares allotted as fully or partly paid up otherwise than in cash‐

(i) a contract in writing, constituting the title of the allottee to the allotment together with any contract of sale, or for services or other consideration in respect of which that allotment was made, such contracts being duly stamped

(ii) a return stating the number and nominal amount of shares so allotted, the extent to which they are to be treated as paid up, and the consideration for which they have been allotted and

(iii) particulars of the valuation of the consideration

(iv) If default is made in complying, every officer of the company who is in default shall be liable to a fine of N50 for every day during which the default continues:

Provided that, in case of default in delivering to the Commission within one month after the allotment any the court for relief, and the court, if satisfied that the omission to deliver the document was accidental or due to inadvertence or that it is just and equitable to grant relief, may make an order extending the time for the delivery of the document for such period as the court may think proper.

Reference- S.124-127, 129 CAMA

Team 618 Bees




The information in this blog post (“post”) is provided for general informational purposes only, no information contained in this post should be construed as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter. 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.This post is protected by intellectual property law and regulations. It may however be shared using appropriate sharing tools provided that our authorship is always acknowledged and this Disclaimer Notice attached

More Articles


Connect With Us

Got any questions?

If you are having any questions, please feel free to ask.

Send us an email

Frequently Asked

  • When are Annual Returns due for filing?

    A company’s first Annual Returns are due for filing after 18 months of its inception, subsequently it should be filed annually as the name implies. The filing dates could differ for each company depending on their financial year end but must be filed not later than 42 days after its Annual General Meeting.

    The Annual Returns for Business Names is due not later than the 30th of June each year except in the year the business was registered.

  • What’s the difference between a business name and an LLC?
    • A business name is a sole proprietorship, usually owned and managed by one individual only. Legally, the sole proprietor and his business are one. It simply means an individual trading with an alias. The sole proprietor is personally liable for all business related obligations.

    • A limited liability company on the other hand is a separate business entity from the individuals that hold its shares and act as directors. Legally, it’s a separate business entity and a person on its own who can transact business, own property separate from its owners and can sue or be sued. 

  • What is an execution clause in a contract?

    This is the section in which the parties sign the contract or agreement.

  • What is SON?

    SON stands for ‘Standards Organization of Nigeria’

  • What is data protection?

    Data protection is a legal process of protecting sensitive data.

  • What is eligible for Patent registration?

    Patents are granted for the invention of products or processes. However, for it to be patentable, the invention

    • Must be new,
    • Must have an inventive step that is not obvious to someone with knowledge and experience in the subject,
    • Must be capable of being made or used in some kind of industry and not be, a scientific or mathematical discovery, theory or method, a literary, dramatic, musical or artistic work, a way of performing a mental act, playing a game or doing business, the presentation of information, or some computer programs, an animal or plant variety, a method of medical treatment or diagnosis,
    • And must not be against public policy or morality.
  • Can I process/register multiple products at NAFDAC at the same time?

    Yes, you can process/register multiple products at the same time

  • Why do i need a Shareholders Agreement?

    You need a Shareholders Agreement to protect your investment in a company.  The shareholders Agreement establishes a fair relationship between all shareholders and sets out how the company is run.

  • Does Trademark registration protect my website domain name?

    Yes, it does.

Call Us Now on +234 901 719 0079 Chat on WhatsApp