Benue State University, Makurdi

Classification of Companies under Nigerian Law: An Interrogation of the Bases.

Nicholas Iorember Iorun *, Terzungwe Gbakighir** and Orhange N. Ayia ***

Abstract

The classification of companies by law is crucial for purposes of effective and efficient regulation of companies, particularly in the areas of securities trading, information disclosure, control of anti-competition practices, and several other unethical corporate behaviours. Despite this, Nigerian company law has lumped up together all categories of company with different functions and roles and regulates them under a single legal regime. This situation places heavy regulatory burden on the small and medium sized private companies. Indeed, such regulation might not be suitable to them. Using the doctrinal method, which involves the analysis and interpretation of statutes, cases and scholarly works, this article has examined classification of companies under Nigerian law to find out the bases and appropriateness of such classification particularly, in relation to the characteristics of these companies and the challenges which the different types of companies pose to regulation. The article has found that the classification is not ideal because the bases for it are not economic structures and functions of the corporate entities operating in Nigeria, and that different types of companies are regulated under a single legal regime. Therefore, this article recommends that the bases for classification of companies in Nigeria should be economic structures and functions, and not legal formula. Further, the one-man company should be given legal recognition in the companies’ statute and distinct legal regimes provided to regulate the different types of companies in Nigeria.

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