Conversion of private companies to public companies in Nigeria.

INTRODUCTION   

Companies enjoy recognition in law as separate legal entities, for this reason, their activities are closely monitored and accordingly regulated by statutes, the Companies and Allied Matters Act (CAMA), 2020.

A private company may wish to change its legal form to a public company without forming a new corporation or disrupting its business. The process of effectuating this is called conversion or re-registration of a company and the procedure for achieving it is contained in the Companies and allied matters act 2020. At the fulfillment of the procedures and presentation of requisite documents, a new certificate of incorporation is issued by the Corporate Affairs Commission (“CAC”) to the company showing the new status of the company.

Before this application can be initiated, however, there are some requirements that must be met, and they are:

1. That the minimum issued share capital is not less than 2,000,000.
2. That the company has not previously been re-registered as an unlimited company.
3. That the company fulfills the net assets requirements as stipulated in the Companies and Allied Matters Act.

Succinctly, the procedure for conversion are as follows;

1. Board Meeting:

A board meeting is convened and at the meeting, a board resolution proposing the conversion and re-registration from a private company (LTD) to a public company (PLC) will be passed, subsequently, the board authorizes the Company Secretary to issue a notice of General Meeting in order to pass a special resolution.

2. General meeting:

A general meeting will be convened, and a special resolution will be passed that the company be re-registered as a public company (PLC).

3. Requisite alterations:

Consequential alterations with regard to the following must be made;

1. The company name must be changed from Ltd to Plc in the Memo and Articles of the company.
2. Increase of share capital to meet the legal minimum for public company (PLC) in the Memorandum and Articles of Association of the company.
3. Removal of restrictions on transfer of shares and invitation of the public in the Articles.
4. Regulations on appointment of directors and company secretary to conform with the requirement of public company (PLC) in the Articles.

4. Application to the Corporate Affairs Commission: Application must be made to CAC in a prescribed form which shall be signed by at least one director and the secretary with the accompanying documents:

1. A statement of the company’s proposed name on re-registration.
2. In the case of a company without a secretary, a statement of the company’s proposed secretary.
3. A special resolution of the general meeting stating that the company should re-register as a public company.
4. Printed copy of the Memorandum and Articles of Association as altered in pursuance of the resolution, which reflects the provision as required under CAMA for public companies.
5. A copy of a written statement certified on oath by the directors and secretary showing that the paid-up capital as at the date of the application is not less than 25% of the authorized capital.
6. A copy of the company’s Balance Sheet as at the date of the resolution or the preceding 6 months, whichever is later.
7. A copy of the valuation report (where required).
8. A statutory declaration (Statement of Compliance) by the director and the secretary to the effect that the special resolution has been passed and the company’s assets are not less than the aggregate of the paid-up capital and the un-distributable reserves.
9. In the event that the company is also going to be quoted at the Stock Exchange, a copy of any prospectus or statements in lieu of prospectus delivered within the preceding 12 months to the Securities and Exchange Commission for registration must also be submitted to CAC.
10. Original receipt of filing fees.
11. Evidence of filing of Annual Returns to date.}

Upon satisfaction of the requirements, the CAC retains the documents and issues a new certificate of incorporation stating that the company is a public company. It is important to obtain Certified True Copies (CTC) of the documents filed at the CAC for record purposes.

If you would like to know more about conversion of Companies or require legal advice please contact info@berkeleylp.com

The information provided in this article is for general informational purposes only and does not constitute legal advice.