Not All Companies Can Be Registered with 1 million Share Capital in Nigeria

When incorporating a company in Nigeria, one of the most critical considerations is determining the appropriate share capital, especially for businesses in regulated sectors.

Under the Companies and Allied Matters Act (CAMA) 2020, the statutory minimum issued share capital is ₦100,000 for private companies and ₦2,000,000 for public companies. These often create the impression that any company, regardless of its sector, can be registered with the statutory minimum. However, this is a misconception.

In practice, certain industries are subject to higher minimum share capital requirements imposed by their respective regulators. Such requirements are designed to ensure that businesses operating in sensitive or high-impact sectors have the financial capacity to meet obligations, protect clients, and maintain operational stability. Failure to meet these thresholds can result in delayed licensing, ineligibility for contracts, and the need for costly post-incorporation share capital increases.

This article examines the distinction between statutory and regulatory minimum share capital, highlights industries with elevated thresholds, and outlines practical steps to ensure compliance from the outset.

Understanding Share Capital in Nigeria

Share capital refers to the total value of the shares a company issues to its shareholders in exchange for ownership in the company. It represents the financial foundation of the business and is a key element in determining ownership rights, voting power, and the company’s ability to raise funds.

Under Nigerian company law, it is important to distinguish between:

1. Authorised Share Capital

• The maximum amount of share capital a company is permitted to issue, as stated in its Memorandum of Association.
• It serves as a ceilingand according to the new CAMA, all authorised shares have to be issued at once.
  2. Issued Share Capital
• The actual value of shares that have been allotted to shareholders and paid for (or agreed to be paid for).
• This is the figure referenced in CAMA 2020 for determining minimum share capital thresholds.

With the enactment of CAMA 2020, the minimum issued share capital requirements were set at:

• ₦100,000 for private companies
• ₦2,000,000 for public companies

While these thresholds apply generally, they do not override industry-specific regulations. In many regulated sectors, such as banking, Fintech, and capital markets, etc.,  the relevant regulatory authorities impose significantly higher minimum share capital requirements to ensure operational and financial credibility.

This distinction between statutory and regulatory minimums is central to avoiding costly errors when setting up a company.

2. Regulatory Minimum Share Capital

This is imposed by industry-specific regulators and is often significantly higher than the statutory minimum.
Regulatory minimums are designed to:

• Demonstrate that the business has the financial capacityto operate in its sector.
• Protect clients, investors, and the publicfrom undercapitalised entities.
• Maintain industry stability and credibility.

Examples of regulatory bodies that prescribe higher share capital requirements include:

• Central Bank of Nigeria (CBN)– for banks, microfinance institutions, and bureaux de change, fintechs etc.,
• Securities and Exchange Commission (SEC)– for capital market operators.
• National Insurance Commission (NAICOM)– for insurance companies.

 

Key Point:
Meeting the statutory minimum under CAMA does not guarantee compliance with the regulatory minimum for your specific sector. Before incorporating, it is critical to confirm whether your industry has higher thresholds to avoid unnecessary delays, penalties, or re-registration costs.

1. Industry-Specific Minimum Share Capital Requirements

While the Companies and Allied Matters Act (CAMA) sets a baseline of ₦100,000 for private companies and ₦2,000,000 for public companies, many regulated sectors in Nigeria impose significantly higher minimum share capital thresholds. Understanding these sector-specific requirements is essential before incorporating or restructuring your company.

1. Bureau de Change (BDC) — Central Bank of Nigeria (CBN)

 

• Tier 1 (Nationwidelicense): ₦2 billion
• Tier 2 (Statelicense): ₦500 million

 

2. Microfinance Banks — Central Bank of Nigeria (CBN)

 

• Unit (Tier 1): ₦200 million
• Unit (Tier 2): ₦50 million
• State Microfinance Bank: ₦1 billion
• National Microfinance Bank: ₦5 billion

 

3. FINTECH – Central Bank of Nigeria (CBN)

 

• Payment Solution Services (PSS’s) – ₦250million
• Payment Terminal Service Provider (PTSP) – ₦100million
• Payment Solutions Service Provider (PSSP) – ₦100million
• Mobile Money Operation (MMO) – ₦2billion
• Switching and Processing – ₦2billion
• Super Agent – ₦50 million

 

4. Capital Market Operators — Securities and Exchange Commission (SEC)

 

• Broker/Dealer: ₦300 million
• Issuing House: ₦200 million
• Stock broker: ₦200million
• Stock dealer: ₦100million
• Venture capital manager: ₦20million
• Commodities broker: ₦40million
• Capital trade point: ₦20million
• Underwriter: ₦200 million
• Registrar: ₦150 million
• Individual investment adviser: ₦2million
• Corporate investment adviser: ₦5million
• Trustees: ₦300 million
• Rating Agency: ₦150 million
• Fund/Portfolio Manager: ₦150 million

 

5. Insurance Companies — National Insurance Commission (NAICOM)

 

• Life insurance: ₦8 billion
• General insurance: ₦10 billion
• Composite insurance: ₦18 billion
• Reinsurance: ₦20 billion

 

6. Private Security Companies – Nigeria Security and Civil Defense Corps (NSCDC)

 

• Private security – ₦10million

 

7. Air Transport – Nigerian Civil Aviation Authority – (NCAA)

 

• Air transport (International) – ₦2 billion
• Air transport (Regional) – ₦1billion
• Air transport (Local) – ₦500 million
• Air Ambulance/Fumigation/Private Jet – ₦20 million
• Aviation (ground handling services) – ₦500 million
• Aviation (Air transport training institutions) – ₦2 million
• Agent of Foreign Airline – ₦1 million

 

8. Sea Transport – Nigerian Maritime Administration and Safety Agency (NIMASA)

 

• Shipping Company/Agent – ₦25 million
• Cabotage trade – ₦25 million

 

9. Health Maintenance Organizations (HMO’s) – National Health Insurance Authority (NHIA)

 

• Health Maintenance Organizations (National) – ₦750 million
• Health Maintenance Organizations (Zonal) –  ₦500 million
• Health Maintenance Organizations (State) –  ₦250 million

 

10. Foreign Companies (General Requirement)

 

• CAC-imposed minimum:₦100 million (commonly expected in practice, though not expressly stated in updated CAC guidelines)

Key takeaway: Even if you meet CAMA’s statutory minimums, regulatory thresholds in your sector could be dozens or even hundreds of times higher. Failing to meet them means you cannot obtain the necessary licenses to operate.

1. Choosing the Right Share Capital for Your Business

Selecting the right share capital is not just about meeting the statutory minimum; it’s about aligning your company’s capital structure with your business goals, industry requirements, and future expansion plans.

Here are key considerations:

 

1. Identify Your Industry’s Regulatory Thresholds
   Before registering, confirm the share capital required by bothCAMA and your industry regulator. For instance, a company intending to operate as a microfinance bank must meet the CBN’s capital requirement, not just CAMA’s baseline.

 

2. Plan for Future Licensing Needs
   If you intend to expand into a regulated industry in the future, it may be wise toregister with a higher share capital from the outset. This can help you avoid post-incorporation share capital increases, which can be time-consuming and costly.

 

3. Consider Investor Perception
   A higher share capital can signal financial strength and commitment to potential investors, partners, and clients. While it should not be unnecessarily inflated, strategic capitalization can enhance credibility.

 

4. Account for Foreign Participation
   If your business will have foreign shareholders, be aware of theCAC’s higher share capital expectations for foreign-owned entities (often ₦100 million).

 

5. Balance Legal Compliance with Practicality
   While compliance is non-negotiable, ensure the share capital you declare is one you can realistically meet and maintain. Avoid excessive figures that may burden your finances unnecessarily.

Pro Tip: Work with a corporate lawyer to map out your incorporation strategy, ensuring your share capital meets both current requirements and future growth ambitions without exposing you to avoidable compliance risks.

Conclusion

While the statutory minimum share capital under CAMA 2020 is ₦100,000 for private companies and ₦2,000,000 for public companies, this is often just the starting point.

Many sectors in Nigeria require far higher thresholds set by industry regulators, and failing to meet these requirements can delay your operations, increase costs, or even result in license refusal.

The right approach is to research, plan, and align your share capital with both your immediate and long-term business objectives. This ensures you remain compliant, project financial credibility, and position your business for smooth regulatory approval.

At B.E. Legal Services, we help entrepreneurs, startups, and established companies navigate these requirements with precision, from determining the right share capital to completing all necessary regulatory registrations.

Need guidance on your company’s share capital requirements?
Contact us today and start your business journey on a solid legal foundation.