Benue State University, Makurdi

Corporate Capital under the Nigerian Company Law: A Key to Corporate Success.

Imbwaseh, R.N.* Orhange, A.N.** and Yagba, J.T.***

Abstract

Capital is the driving force for corporate success. Nigerian corporate law has provided a base line of minimum issued share capital for both private and public companies and the maintenance of same to avoid lack, depletion of corporate capital, company failure and to ensure success of companies. This Article examined the provisions of Nigeria Law relating to corporate capital and its maintenance using doctrinal approach and concluded that, there is an improvement under the extant Law (Companies and Allied Matters Act (CAMA) 2020) over that of CAMA 2004 in terms of provision of minimum issued share capital of N100,000 and N2,000,000 for both private and public companies respectively, however, the provision emphasised for subscription of shares only and not actual payment. Therefore, the article suggested that the law should provide for a 100% paid up capital or at least 75% of the minimum issued share capital of companies should be paid up for all categories of companies. Companies are also to be given certificate to do business after incorporation and after ensuring that they have enough capital to start off business. This is to ensure that they achieve their respective objectives without running into undercapitalization problems. The provisions allowing private companies to give financial assistance unlike public companies to buy their shares or shares of other private companies and provision relating to payment of dividends out of distributable profits need to be revisited since the assistance and dividend should be given or declared from distributable profit which is only calculated from current profit of the accounting year without recourse to previous loses. This is because to continue to allow that would mean that companies would continue to operate at a loss which could lead to corporate failure. Government Provisions of conducive and friendly business environment by way of tax reliefs or free tax on indigenous privately owned companies, good roads and accessible markets to sell companies’ products would lessen the burden on companies’ capital, ensure expansion and corporate success.

DOWNLOAD COMPLETE ARTICLE HERE (CLICK)