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Several laws and regulations govern the business sectors in Nigeria. Some of these laws stipulate the minimum share capital required of businesses. Consequently, when a company fails to meet the minimum threshold required by the law governing its sector, it will not be accepted for registration with the Corporate Affairs Commission.
WHAT IS A MINIMUM SHARE CAPITAL THRESHOLD?
The term is used to describe the lowest share capital a company is required to have before it can legally carry out business. Section 27 (2) (a) of the Companies and Allied Matters Act, 2020 provides for the general minimum share capital of a company, to wit; Hundred Thousand Naira for Private Companies and Two Million Naira for Public Companies. However, as stated above, there are specific sectors with minimum share capital threshold and these thresholds must be adhered to by the concerned companies.
COMPANIES AND THEIR MINIMUM SHARE CAPITAL THRESHOLD
| SN | TYPES OF COMPANY | MINIMUM SHARECAPITAL THRESHOLD | JUSTIFICATION |
|---|---|---|---|
| 1 | ISSUING HOUSE | 200 MILLION | Securities and Exchange Commission Guidelines on New Minimum Share Capital for Market Operators |
| 2 | BROKER/DEALERS | 300 MILLION | |
| 3 | TRUSTEE | 300 MILLION | |
| 4 | FUND/PORTFOLIO MANAGER | 150 MILLION | |
| 5 | STOCK BROKER | 200 MILLION | |
| 6 | STOCK DEALER | 100 MILLION | |
| 7 | CORPORATE INVESTMENT ADVISER (REGISTRAR | 150 MILLION | |
| 8 | CORPORATE INVESTMENT ADVISER | 5 MILLION | |
| 9 | INDIVIDUAL INVESTMENT ADVISER | 2 MILLION | |
| 10 | MARKET MAKER | 2 BILLION | |
| 11 | CONSULTANT (PARTNERSHIP) |
2 MILLION | |
| 12 | CONSULTANT (INDIVIDUAL) | 500,000 | |
| 13 | CONSULTANT (CORPORATE) | 5 MILLION | |
| 14 | UNDERWRITER | 200 MILLION | |
| 15 | VENTURE CAPITAL MANAGER |
20 MILLION | |
| 16 | COMMODITIES BROKER | 40 MILLION | |
| 17 | CAPITAL TRADE POINT | 20 MILLION | |
| 18 | RATING AGENCY | 150 MILLION | |
| 19 | CORPORATE/SUB BROKER | 5 MILLION | |
| 20 | ASSET MANAGEMENT (INTANGIBLE ASSETS) |
300 MILLION | |
| 21 | COMMERCIAL BANK WITH REGIONAL AUTHORIZATION |
10 BILLION | CBN Scope and Standards Commercial Regulations 2020 |
| 22 | COMMERCIAL BANK WITH NATIONAL AUTHORIZATION |
25 BILLION | |
| 23 | COMMERCIAL BANK WITH INTERNATIONAL AUTHORIZATION |
50 BILLION | |
| 24 | MERCHANT BANK | 15 BILLION | CBN Scope Condition, And Minimum Standard For Merchants Bank Regulation 2, 2010 |
| 25 | UNIT MICRO FINANCE BANK (TIER 1) | TIER 1: 200 MILLION |
CBN Regulations |
| 26 | UNIT MICRO FINANCE BANK (TIER 2) | TIER 2: 50 MILLION | |
| 27 | MICRO FINANCE BANK (STATE & FCT) |
1 BILLION | |
| 28 | MICRO FINANCE BANK (NATIONAL) |
5 BILLION | |
| 29 | PRIMARY MORTGAGE INSTITUTION | 2 BILLION | |
| 30 | FINANCE COMPANY | 20 MILLION | |
| 31 | BUREAU DE CHANGE | 35 MILLION | |
| 32 | NON-INTEREST BANK (REGIONAL) | 5 BILLION | |
| 33 | NON-INTEREST BANK (NATIONAL) | 10 BILLION | |
| 34 | INSURANCE BROKER | 5 MILLION | Nigerian Council of Registered Insurance Brokers Act, 2003 |
| 35 | LIFE INSURANCE | 8 BILLION | National Insurance Commission Revised Regulations 2019 |
| 36 | GENERAL INSURANCE | 10 BILLION | |
| 37 | COMPOSITE INSURANCE | 18 BILLION | |
| 38 | RE-INSURANCE | 20 BILLION | |
| 39 | UNIT MICROINSURER | 40 MILLION | Guidelines for Microinsurance Operation in Nigeria 2018 |
| 40 | STATE MICROINSURER | 100 MILLION | Guidelines for Microinsurance Operation in Nigeria 2018 |
| 41 | NATIONAL MICROINSURER | 600 MILLION | Guidelines for Microinsurance Operation in Nigeria 2018 |
| 42 | TAKAFUL INSURANCE (GENERAL AND FAMILY TAKAFUL) |
200 MILLION | National Insurance Commission Regulations |
| 43 | PRIVATE SECURITY COMPANY/CONSULTANT | 10 MILLION | Guideline on Requirements for Registration of Private Guard Security Companie made Pursuant to Nigerian Security and Civil Defence Corp Act No. 2 of 2003 |
| 44 | PENSION FUND/ASSET CUSTODIAN | 2 MILLION | Requirements for Licensing of Pension Fund Custodians (FEB
2005); Section 40 (2)(a) Pension Reform Act, 2004 |
| 45 | CLOSED PENSION FUND | 500 MILLION | |
| 46 | PENSION FUND ADMINISTRATION | 1 BILLION | |
| 47 | LOTTERY | 5 MILLION | Section 2 (1), National Lotteries (Amendment) Regulation, 2007 |
| 48 | SPORTS LOTTERY | 30 MILLION | National Lottery Commission Circular |
| 49 | AIR TRANSPORT (INTERNATIONAL) |
2 BILLION | Nigerian Civil Aviation Authority |
| 50 | AIR TRANSPORT (REGIONAL) | 1 BILLION | |
| 51 | AIR TRANSPORT (LOCAL) | 500 MILLION | |
| 52 | AIR AMBULANCE/FUMIGATION/ PRIVATE JET | 20 MILLION | |
| 53 | AVIATION (GROUND HANDLING SERVICES) | 500 MILLION | |
| 54 | AVIATION (AIR TRANSPORT TRAINING INSTITUTIONS) | 2 MILLION | |
| 55 | AGENTS OF FOREIGN AIRLINES | 1 MILLION | |
| 56 | TRAVEL/TOURS | 30 MILLION | International Air Travel Agency (IATA) |
| 57 | AGRICULTURAL SEEDS, PRODUCTIONS, PROCESSING, MARKETING | 10 MILLION | NASA Cap 5, LFN, 2004 |
| 58 | SHIPPING COMPANY/AGENT | 25 MILLION | NIMASA Guidelines for 59. CABOTAGE TRADE 25 Million Registration |
| 59 | CABOTAGE TRADE | 25 MILLION | |
| 60 | LIFE MICRO-INSURANCE | 150 MILLION | Guideline for Micro Finance Operations in Nigeria (NAICOM), December, 2013 |
| 61 | GENERAL MICRO- INSURANCE | 200 MILLION | |
| 62 | FREIGTH FORWARDING | 5 MILLION | Registration of Freight Forwarding Regulation 2010 |
| 63 | PAYMENT SERVICE BANK | 5 BILLION |
It is also worthy of note that companies with foreign participation are required to be with N100 Million minimum share capital in line with the Handbook on Expatriate Quota Administration (Revised 2022) before they can register with the Corporate Affairs Commission.
The table above as contained in the Corporate Affairs Commission's Operations Checklists 2022, highlights the minimum share capital thresholds for different business sectors in Nigeria and the legal frameworks that justify them. This information is thus crucial to prospective business owners who would like to register their business with the appropriate authorities and obtain the required license to carry out business.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
