Can a company incorporated under the Companies and Allied Matters Act 1990, when two shareholders were required, subsequently become a single-member company under the Companies and Allied Matters Act 2020?
The Court of Appeal has answered yes.
But I think the real significance of this decision goes beyond the question of whether one company can have one shareholder. It raises a more interesting question:
When the law governing companies changes, how far should an existing company be able to benefit from the reforms introduced by the new law?
That is where, in my view, this case becomes particularly important for corporate lawyers, directors, shareholders and businesses restructuring their affairs.
First, What Actually Happened?
Primetech Designs & Engineering Nigeria Limited was incorporated in 2011 under the then applicable Companies and Allied Matters Act. At that time, the law required a private company to have at least two members.
Years later, after CAMA 2020 had come into force, one of the shareholders proposed a transfer of shares which would result in the other shareholder becoming the company’s sole shareholder.
The problem? The Corporate Affairs Commission would not accept and register the share transfer. The respondents challenged that position before the Federal High Court. The Federal High Court ruled in their favour, and CAC appealed. The Court of Appeal eventually dismissed CAC’s appeal and affirmed the Federal High Court’s decision.
On the surface, this may look like a dispute about one share transfer. I think it is much bigger than that.
Primetech was incorporated under the law applicable at the time, and the company had two shareholders because that was what the law then required. So the question was not whether Primetech was properly incorporated under CAMA 1990. It was.
The question was: what happens when that company wants to undertake a corporate transaction after CAMA 2020 has changed the law?
That distinction matters. A company is not a photograph taken on the day of incorporation. It is a continuing legal entity. Its shareholders change. Its directors change. Its capital may change. Its business may change. It may restructure, acquire another company, bring in investors, transfer shares or reorganise its ownership.
So when the law changes, should an existing company remain permanently confined to the corporate structures available under the law that existed on the day it was incorporated?
I do not think that is a sensible way to understand modern company law. And, importantly, the Court of Appeal did not accept that approach either.
What Changed Under CAMA 2020?
One of the significant reforms introduced by CAMA 2020 was the recognition of the single-member private company. Section 18(2) provides that:
“Notwithstanding subsection (1), one person may form and incorporate a private company…”
That was a deliberate departure from the previous regime. Under the former regime, a private company required at least two members. Under CAMA 2020, one person can incorporate a private company.
The difficulty was that Primetech was not incorporated under CAMA 2020. It was incorporated years earlier.
CAC’s position was essentially that section 18(2) concerned the formation and incorporation of companies under CAMA 2020 and should not be stretched to allow an existing company incorporated under CAMA 1990 to become a single-member company through a post-incorporation share transfer.
At first glance, that argument has some attraction. But I think it becomes less convincing when we separate incorporation from subsequent corporate transactions.
The date of incorporation, or the law in force at the time of incorporation, should not freeze a company in time when a new law is in force. This is the point I find most compelling about the Court’s decision. The fact that a company was incorporated under CAMA 1990 should not automatically mean that it must continue to operate forever as though CAMA 2020 never happened.
That would create a rather strange situation. Imagine two companies carrying on essentially the same business. Company A was incorporated in 2019. Company B was incorporated in 2021. Under CAMA 2020, Company B can be incorporated with one shareholder. But if Company A later finds itself with one shareholder because of a legitimate share transfer, should the law necessarily require Company A to maintain a second shareholder simply because it was incorporated two years earlier?
I think not.
What should be considered is not the time of registration, or the fact that the company was incorporated under an old law, but the transaction itself. The company did not become a different company because the law changed. The transaction occurred under the new legal regime. That distinction is fundamental.
The Court of Appeal similarly rejected the argument that permitting the post-CAMA 2020 share transfer would amount to impermissibly applying the new Act retrospectively. The Court noted that the relevant share transfer occurred after CAMA 2020 had commenced.
This Is Not Really About Retrospective Legislation
One of CAC’s central arguments was that applying section 18(2) to Primetech would give CAMA 2020 retrospective effect. I think this is where the distinction between past events and new transactions becomes critical.
If CAMA 2020 had said that Primetech’s original incorporation in 2011 was to be treated as though it had taken place under CAMA 2020, that would raise a very different question. But that was not what was happening. Primetech was already a validly incorporated company. The issue arose because, after CAMA 2020 had come into force, the shareholders wanted to undertake a share transfer that would result in one shareholder owning all the shares. The Court therefore treated the transaction as one occurring under the current legal regime.
That, to me, is a more coherent approach. The law should not be confused with the historical circumstances under which the company was born.
But Here Is Where Corporate Lawyers Need to Be Careful
When advising an existing company on a post-incorporation transaction, we should not assume that the law applicable to the company’s incorporation is necessarily the only law that matters. We must examine:
- the nature of the proposed transaction;
- when the transaction is taking place;
- the provisions of CAMA 2020 applicable to that transaction;
- the company’s Articles of Association;
- its existing shareholding structure;
- any contractual restrictions;
- applicable regulatory requirements; and
- the consequences of the proposed restructuring.
That is a much more useful lesson for corporate practice.
The CAC’s Position Raises an Important Question About Corporate Regulation
I find the CAC’s position interesting from an institutional perspective. The Corporate Affairs Commission has an important role in maintaining the integrity of Nigeria’s corporate registry. But cases like this demonstrate that corporate registry administration and substantive company-law interpretation can sometimes intersect.
A filing may appear administrative. But behind that filing may be a substantive legal question. Here, the question was whether CAC could refuse to register a share transfer because, in its interpretation, the resulting single-member structure was not permitted for a company incorporated under the old law.
The Court disagreed with that interpretation. That does not diminish CAC’s regulatory role. Rather, it demonstrates why the interpretation of corporate legislation matters so much to the way that role is exercised.
I Think the Court’s Purposive Approach Is Important
One aspect of the judgment that I find particularly persuasive is the Court’s refusal to interpret the provisions of CAMA 2020 in isolation. The Court considered the broader legislative reform introduced by CAMA 2020.
The Court reasoned that section 571(c) could not be interpreted in a way that effectively undermined the innovation introduced by section 18(2). It considered a harmonious interpretation of the statutory provisions necessary.
This is important because legislation should ordinarily be read as a coherent whole. If lawmakers introduce a new corporate structure, the interpretation of another provision should not automatically be used to defeat that reform unless the legislation clearly requires such a result. Otherwise, we risk preserving the old law through the back door. And that, in my view, would undermine the purpose of legislative reform.
What Does This Mean for Companies Incorporated Before CAMA 2020?
This is probably the question most business owners will ask. The answer is not that every old company is automatically entitled to every benefit of CAMA 2020 without further analysis.
The more important lesson is that existing companies should not assume that their pre-CAMA 2020 corporate structure permanently determines what they can do today. If an existing company wants to:
- restructure its shareholding;
- transfer shares;
- consolidate ownership;
- introduce an investor;
- reorganise its group structure;
- alter its capital structure; or
- undertake another significant corporate transaction,
the transaction should be analysed under the law currently applicable to that transaction. This is where proper corporate advice matters.
The Bigger Issue: Companies Are Living Legal Structures
This is perhaps my biggest takeaway from the judgment. We sometimes talk about incorporation as though it is the defining moment of a company’s legal existence. It is not. Incorporation is the beginning. The company then continues to evolve.
A company’s legal structure has to accommodate the reality of its business. That is why corporate law has provisions dealing with:
- share transfers;
- allotments;
- directors;
- membership;
- capital;
- mergers;
- restructuring;
- arrangements;
- corporate governance; and
- winding up.
The law anticipates change. It would therefore be strange to interpret every subsequent corporate transaction solely through the lens of the law that existed when the company was first incorporated.
A company may be old. Its transaction is new. That distinction should not be overlooked.
So, Was the Court Right?
In my view, yes. I consider the Court of Appeal’s interpretation to be more consistent with the reforming purpose of CAMA 2020 and with the practical reality of corporate life.
The alternative interpretation would create an artificial distinction between a company incorporated under CAMA 2020 with one shareholder, and an existing company incorporated under CAMA 1990 that, after CAMA 2020 came into force, legitimately arrives at the same ownership structure through a share transfer.
Unless the legislation expressly preserves such a distinction, I am not persuaded that the date of incorporation should, by itself, produce that result.
The Court’s reasoning recognises something that is fundamental to corporate law: companies continue to exist after the law changes. Their future transactions cannot necessarily be governed as though the legislative environment has remained frozen since incorporation.
What Should Corporate Advisers Take From This?
For me, the practical lesson is not simply that an old company can become a single-member company. The better lesson is this:
Do not advise a company on a present transaction solely by looking at the law that governed its incorporation.
Start with the transaction. Ask:
- What is the company trying to do?
- When is it doing it?
- What statutory regime applies?
- What does CAMA 2020 provide?
- Are there transitional provisions?
- What do the company’s Articles say?
- Are there contractual or regulatory restrictions?
- What filings are required?
- What other consequences follow from the transaction?
Only after answering those questions should the filing be made. That is the difference between processing a corporate filing and providing corporate legal advice.
Final Thoughts
CAC v. Primetech Designs & Engineering Nigeria Limited & Julius Berger Nigeria Plc is, in my view, a useful decision for understanding how Nigerian company law should respond to corporate evolution.
The Court of Appeal affirmed the Federal High Court and rejected CAC’s position that the single-member company regime could not operate in relation to the existing company in the circumstances before the Court.
But the judgment should not be reduced to the headline “Old company can become single-member company.” The more important principle is this:
A company’s incorporation date tells us how it came into existence. It does not necessarily tell us which legal rules govern every transaction it will undertake for the rest of its existence.
That distinction matters to shareholders, to directors, to the CAC, and particularly to corporate advisers.
As CAMA 2020 continues to shape Nigerian corporate practice, we should be asking not only what the legislation says, but also how its reforms should operate in the lives of companies that existed before the reforms were introduced. That, in my view, is what makes this decision worth paying attention to.
About This Case Analysis
This article forms part of B. E Legal Services’ Case Analysis Series, where we examine significant Nigerian judicial decisions from a corporate and commercial perspective and consider what they mean for businesses, directors, shareholders and corporate advisers.
By Blessing Etu, Corporate & Commercial Lawyer
Considering a share transfer, restructuring or other corporate transaction? Speak with B. E Legal Services before you file.
Disclaimer
This article is an expression of legal analysis based on the judgment identified above and is provided for general informational purposes. It does not constitute legal advice and should not be relied upon as a substitute for advice on a particular transaction or dispute.
The judgment analysed is Corporate Affairs Commission v. Primetech Designs & Engineering Nigeria Limited & Julius Berger Nigeria Plc, Appeal No. CA/ABJ/CV/1226/2024, delivered by the Court of Appeal, Abuja Judicial Division, on 10 June 2026. The Court dismissed the appeal and affirmed the judgment of the Federal High Court delivered on 30 July 2024.