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This article examines the incorporation of companies and the types of companies recognised under the Companies and Allied Matters Act 2020 (CAMA 2020). It explains the meaning of incorporation, outlines the registration process before the Corporate Affairs Commission (CAC), and considers the legal consequences of registration, in separate corporate sense. It analyses the classes of companies created by section 21 of the Act, namely private and public companies and companies limited by shares, limited by guarantee and unlimited, highlighting the statutory requirements and restrictions that distinguish each. The article concludes that CAMA 2020 makes incorporation more accessible through single-member private companies, while preserving the core doctrines of limited liability and separate entity. Keywords: Incorporation; CAMA 2020; Corporate Affairs Commission; Separate Legal Personality; Limited Liability; Private Companies; Public Companies; Company Classification.

Introduction: The meaning of ‘Incorporation’ is the statutory process by which an association of persons or a single person is registered with the CAC and thereby becomes a body corporate with a legal entity distinct from its members. Under CAMA 2020, the right to form a company belongs to any person or persons who comply with the Act. One person may form and incorporate a private company. A company is not open to everyone; an individual who is under 18 years of age or of unsound mind as found by a court is ineligible to forming a company, unless two other qualified persons have also agreed to the memorandum. Section 19 also regulates associations and partnerships of more than 20 members, which must be registered as companies unless the Act permits otherwise.

The Process and Requirements for IncorporationIncorporation begins with the choice of a name. It must comply with section 29 and may be reserved with the CAC; the Commission may withdraw or cancel a reserved name before a certificate is issued if it is identical to that of an existing company

The promoters must then lodge the registration documents. The most essential is the memorandum of association, whose contents are prescribed by section 27 and which must state prima facie, the company’s name, objects, where there is share capital, the minimum issued share capital with which it proposes to be registered. CAMA 2020 replaced the former concept of “authorised share capital” with a minimum issued share capital of ₦100,000 for a private company and ₦2,000,000 for a public company. The articles of association regulate internal management and where a company does not register its own, the rules prescribed under the Act applies.

The application must also include a statement of capital and initial shareholdings, a statement of proposed directors and a statement of compliance confirming that the requirements of the Act have been met. The statement of compliance replaces the declaration of compliance required under the repealed Act. The CAC also issues subsidiary rules on filing under the Companies Regulations 2021. If fulfilled, the Commission registers the company and issues a certificate of incorporation. The certificate is evidence that the statutory requirements for registration have been complied with, but the CAC retains power to withdraw or revoke where it was obtained unlawfully or improperly.

The Effect and Significance of IncorporationRegistration provides for consequences in section 42, under which the subscribers become a body corporate. The central consequence is separate legal entity. It was established in Salomon v A Salomon & Co Ltd, that a duly incorporated company is a legal person distinct from its members even where one person holds virtually all the shares. The company may own property, contract, sue and be sued in its own name; it enjoys perpetual succession and its members’ liability is limited according to the type of company. The property of the company belongs to the company not to its shareholders, as Macaura v Northern Assurance Co Ltd illustrates. A controlling shareholder may even be an employee of his own company. These English authorities state the common law position on which Nigerian company law is built. The memorandum and articles bind the company and its members, and the Act qualifies the consequences of acts beyond the company’s stated objectives.

Types of Companies

Under CAMA 2020 Section 21(1) provides that an incorporated company may be a company limited by shares, a company limited by guarantee, or an unlimited company. A company is either private or public. Each type is considered below.

• Private company: A private company is defined by Section 22. Its articles restrict the right to transfer its shares and prohibit any invitation to the public to subscribe for its shares or debentures. A company which fails to comply with these conditions loses the privileges of a private company. A private company may have a single member, and its minimum issued share capital is ₦100,000. CAMA 2020 also recognises small companies, which enjoy reduced regulatory requirements such as exemption from the audit requirement.

• Public company: A public company is one that is not a private company; it may offer its shares and debentures to the public, and it must satisfy the higher minimum issued share capital of ₦2,000,000. Its name must end with the word “Plc” and because of its wider public reach, it is subject to stricter rules and governance obligations than a private company.

• Company limited by shares: Here, the liability of members is limited by the memorandum to the amount, if any, unpaid on the shares they hold. This is the most common form of company and may be either private or public.

• Company limited by guarantee: Members of such a company undertake to contribute a specified sum to its assets if it is summed up. It has no share capital and is used for non-profit, charitable, professional and educational purposes. CAMA 2020 raised the minimum liability of members of a guarantee company to ₦100,000, with penalties for breach.

• Unlimited company: In an unlimited company, there is no limit on the liability of members to contribute to the company’s debts on winding up. An unlimited company must be registered with a share capital not below the minimum issued share capital permitted by section 27(2)(a). Its members accept greater personal exposure in return for reduced formalities, such as those attaching to publicity of accounts.

A company may change its status by re-registration, for example a private company becoming public, provided the statutory conditions are met. Limited liability partnerships, limited partnerships, business names and incorporated trustees are governed by separate Parts of the Act and are not companies under Part B.

Conclusion

CAMA 2020 maintains the established structure of Nigerian company law: incorporation by registration with the CAC, separate legal entity and a classification of companies by liability and by access to public capital. Its reforms, including single-member private companies, higher minimum issued share capital and a simplified statement of compliance, modernise the regime while preserving the balance between entrepreneurial freedom and creditor protection. Promoters should choose the company type most suitable for their commercial objectives, bearing in mind the statutory restrictions attached to it.

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