The Corporate Affairs Commission (CAC) has set June 30, 2021 as the deadline for all Nigerian companies to allot all shares in a company that are yet to be allotted to shareholders of such company (“Unissued Shares”) or face a default penalty. This alert may be relevant to you, if your company has unissued shares, or if your company, in the course of its business activities, has previously established special purpose vehicles (SPVs) as part of implementing corporate structures to develop projects, run service operations, participate in bids, etc. Such SPVs typically reserve unissued shares for future collaborations with technical or financing partners and other stakeholders relevant to delivering the project or transaction. Those unissued shares are the object of the new directive by the CAC, so your companies must make immediate arrangements to allot those shares, by either adopting a rights issue to the existing shareholders, warehousing them in an affiliate or nominee company, cancelling the unissued shares, or issuing to third parties i.e., new shareholder(s).
The provisions of the company’s existing articles of association and shareholders’ agreements (if applicable) will have a bearing on the strategy adopted in allotting these unissued shares. It will be prudent to seek legal advice to ensure your company’s compliance with this directive, avoids unintended consequences in contractual relationships between your company and its stakeholders, especially shareholders or lenders.