History of Company Law in Nigeria: From Trade by Barter to CAMA 2020

Long before a single ordinance was drafted, before any company was registered, before the term “corporate personality” entered the Nigerian legal vocabulary, commerce existed. The Yoruba marketplace, the trans-Saharan trade routes of the Hausa-Fulani north, the Igbo long-distance trading networks: these were sophisticated systems of exchange, credit, and commercial trust operating entirely outside any written legal framework. Trade was by barter. Obligation was enforced by custom, community, and reputation. There was no concept of a company. There was no need for one.

That world was not inferior. It was simply different. And it was this world that colonial contact transformed, first by introducing new commodities and new trading partners, then by introducing the legal machinery that those partners brought with them. The history of company law in Nigeria is ultimately the story of that transformation: how an imported legal framework was received, adapted, and eventually reshaped to serve a country that has spent over a century making it its own.

Pre-Colonial Commercial Life

The indigenous peoples of the territory now known as Nigeria had developed complex commercial arrangements long before European contact.¹ In the north, trans-Saharan trade routes connected the Hausa states and the Kanem-Borno Empire to North Africa and the broader Islamic commercial world. Kano and Katsina were major trading cities whose merchants operated networks of credit and agency across vast distances. In the south, Yoruba markets at towns like Ibadan and Oyo-Ile were organised around institutionalised trading roles and customary rules of exchange. Igbo communities in the southeast developed the ofo system of customary authority and the long-distance aro trading network, which linked communities from the Niger Delta hinterland to the coast.²

None of these arrangements involved anything recognisable as a company in the modern legal sense. There was no separation of business assets from personal assets, no concept of limited liability, and no formal registration with any state authority. But the underlying commercial impulses, the pooling of resources, the sharing of risk, the extension of credit, and the use of agents, were present. The legal infrastructure to give them formal expression had simply not yet arrived.

The Arrival of European Traders and the Need for Legal Regulation

Portuguese traders reached the West African coast in the fifteenth century, and British traders followed in the sixteenth and seventeenth centuries.³ The articles of trade were raw materials from Nigeria, principally palm oil, groundnuts, cotton, and later cocoa, exchanged for manufactured goods from Europe. The slave trade, until its abolition, was also a major feature of this commercial contact.

As European trading activity intensified, it became organised into formal trading companies operating under Royal Charters. The Royal Niger Company, originally incorporated as the United African Company, received a Royal Charter in 1886 and exercised quasi-governmental authority over much of what is now Nigeria, collecting customs, maintaining a constabulary, and concluding treaties with local rulers.⁴ When the Charter was revoked in 1900, the territory passed to the direct control of the British Crown, and the process of integrating Nigeria into the British colonial legal system began in earnest.

The General History of Company Law: The English Foundations

Because Nigerian company law is received English law, any account of its history must begin in England. The trajectory of English company law from the seventeenth century to the mid-nineteenth century created the framework that was eventually transplanted into Nigeria.

Joint Stock Companies

The joint stock company emerged in the seventeenth century as a vehicle for large-scale commercial ventures. Rather than every investor contributing directly to a trading voyage and bearing all personal risk, capital was pooled into a common stock, and investors held shares proportionate to their contribution. The East India Company, incorporated by Royal Charter in 1600, was the most famous of these enterprises.⁵ The model demonstrated that long-distance, capital-intensive commerce could be organised and financed in ways no individual merchant could achieve alone.

The Bubble Act 1720 and Its Repeal

The early eighteenth century produced notorious speculative excesses, culminating in the collapse of the South Sea Company in 1720 in what became known as the South Sea Bubble. Parliament responded with the Bubble Act 1720, which prohibited the formation of joint stock companies without a Royal Charter or Act of Parliament.⁶ The effect was to stifle legitimate commerce for over a century. The Act was repealed in 1825, and a period of legislative reform followed.

The Joint Stock Companies Act 1844

The Joint Stock Companies Act 1844 introduced, for the first time, the principle of incorporation by registration.⁷ A group of persons could now form a company simply by registering with a public official, without the need for a Royal Charter or Act of Parliament. This was a genuine revolution in commercial law. It democratised access to the corporate form.

However, the 1844 Act did not grant limited liability. Shareholders remained personally responsible for company debts. The Limited Liability Act 1855 addressed this gap, and the Joint Stock Companies Act 1856 consolidated both developments.⁸ The Companies Act 1862 then brought all of these reforms into a single comprehensive statute, establishing the foundational framework for modern company law.⁹

It is the Companies Act 1862 that is of direct relevance to Nigerian legal history. When English law was received into Nigeria in 1900, this Act was in force and became part of Nigerian law.

The Development of Company Law in Nigeria

Phase One: The Era of Received Law (Before 1912)

The year 1876 marked the beginning of formal legal regulation in Lagos. When Lagos was ceded to the British Crown, the Supreme Court Ordinance 1876 was promulgated for the Lagos Colony. Section 14 of the Ordinance provided that the common law of England, the doctrines of equity, and the statutes of general application in force in England as at 24 July 1874 should apply within the jurisdiction of the court.¹⁰

This reception clause brought the body of English company law into the Lagos legal system. Companies operating in Lagos could now rely on the provisions of the received English statutes, including the Companies Act 1862, even in the absence of any local Nigerian legislation on the subject.

As British authority expanded beyond Lagos, further proclamations extended the reception to new territories. The Supreme Court Proclamation 1900, covering Southern Nigeria, and the Supreme Court Proclamation 1902, covering Northern Nigeria, each applied English common law, equity, and statutes of general application as they stood on 1 January 1900.¹¹ The significance of this date is that it brought the Companies Act 1862, as amended to that point, fully into Nigerian law. Following the amalgamation of the two protectorates in 1914, the Supreme Court Ordinance 1914 made a unified provision for the whole country on the same basis.¹²

The consequence was that English company law, with all its judicial interpretations, became part of Nigerian law by reception. The principle of corporate personality established in Salomon v A Salomon & Co Ltd¹³ in 1897 entered Nigerian jurisprudence through this channel. This is why Nigerian courts still cite nineteenth-century English company law decisions as binding or persuasive authority. Their relevance to Nigeria flows directly from the mechanism of legal reception. The significance of the Salomon principle in Nigerian law is examined further in our article on corporate personality in Nigerian law.

Before 1912, there was no Nigerian statute specifically governing the formation of companies. Foreign companies operating in Nigeria carried their foreign legal status. Nigerians who wished to form a company had to engage with English law directly, and disputes often required engagement with English courts.¹⁴

Phase Two: The Companies Ordinance 1912

The first piece of legislation specifically enacted to govern the formation of companies within Nigeria was the Companies Ordinance of 1912.¹⁵ It was applied initially to the Colony of Lagos in Southern Nigeria and, following the Companies (Amendment and Extension) Ordinance 1917, extended to the whole country.¹⁶

The 1912 Ordinance was modelled on the English Companies (Consolidation) Act 1908, which was the current English statute at the time.¹⁷ Its stated object was to provide for the formation of limited companies within the colony and protectorate, with the hope of fostering the principles of cooperative trading and effort.¹⁸ For the first time, persons wishing to form a company in Nigeria could do so by local registration, without relying on foreign legal status or travelling to England.

The 1912 Ordinance provided for the memorandum and articles of association, the certificate of incorporation, and the basic incidents of corporate existence. These concepts, introduced into Nigeria in 1912, remain central to Nigerian company law today. The rules on the memorandum of association and the articles of association that students study under CAMA 2020 trace their lineage directly to this first Ordinance.

Phase Three: The Companies Ordinance 1922

The Companies Ordinance of 1912 and its 1917 amendment were repealed and replaced by the Companies Ordinance of 1922, which drew more substantially on subsequent English company legislation.¹⁹ The 1922 Ordinance was subsequently amended in 1929, 1941, and 1954. Following Nigerian independence on 1 October 1960, it was redesignated as the Companies Act in 1963, though its substantive provisions remained essentially unchanged.²⁰

The 1922 Ordinance served as the principal companies legislation in Nigeria for over four decades. Its longevity reflects both its relative adequacy and the sluggishness of legislative reform in the colonial and early post-independence periods.

Phase Four: The Companies Act 1968

The Companies Decree No. 51 of 1968, promulgated during the military government of General Yakubu Gowon, replaced the 1922 Ordinance.²¹ It was modelled substantially on the English Companies Act 1948, itself a major reform following the recommendations of the Cohen Committee.²² The 1968 Act introduced far more detailed provisions on directors’ duties, company accounts, shareholder protection, and winding up, responding to the rapid growth of commercial activity in post-independence Nigeria. It was redesignated as the Companies Act in 1980.

The 1968 Act also reflected the political context of its time. The Nigerian Enterprises Promotion Acts of 1972 and 1977, which sought to reserve certain sectors for Nigerian citizens and require Nigerian equity participation in foreign-owned enterprises, created tensions with the 1968 Act that a more integrated legislative approach would have resolved.²³ These unresolved tensions added further pressure for comprehensive reform.

Phase Five: CAMA 1990 and the 2004 Revision

The Companies and Allied Matters Decree No. 1 of 1990, which came into force on 2 January 1990, represented the most comprehensive overhaul of Nigerian company law since the colonial era.²⁴ It was the product of a thorough review by the Nigerian Law Reform Commission and consultations with practitioners, academics, businesspeople, and regulators across the country.

The Act’s scope was broader than any predecessor. Part A governed the registration and regulation of companies. Part B governed the registration of business names. Part C governed incorporated trustees. The Act created the Corporate Affairs Commission as the autonomous regulatory body for all registered entities. It codified common law and equitable principles previously applied only by judicial practice, abolished the old ultra vires doctrine in its most restrictive form, reformed the rules on pre-incorporation contracts, prohibited non-voting shares and weighted votes, and introduced detailed statutory fiduciary duties for directors.²⁵

The 2004 revision, which produced the Companies and Allied Matters Act Cap. C20 Laws of the Federation of Nigeria 2004, updated and renumbered the 1990 Act without making substantial substantive changes.²⁶

Phase Six: The Investment and Securities Act

Running alongside the CAMA framework, the Investment and Securities Act 1999, revised in 2007, established the regulatory regime for Nigeria’s capital markets, governing public offers, mergers and acquisitions, insider trading, and the Securities and Exchange Commission’s functions.²⁷ The two statutes operate in a complementary relationship: CAMA governs internal corporate affairs, while the Investment and Securities Act governs a company’s external market activities.

Phase Seven: CAMA 2020 — The Current Law

The Companies and Allied Matters Act 2020, signed into law by President Muhammadu Buhari on 7 August 2020, is the most significant reform of Nigerian company law since 1990.²⁸ It was driven explicitly by the Nigerian government’s commitment to improving the ease of doing business in Nigeria, a commitment institutionalised through the Presidential Enabling Business Environment Council (PEBEC) established in July 2016.²⁹ Nigeria’s position on the World Bank Ease of Doing Business Index had been a source of national concern, and CAMA 2020 was one of the primary legislative responses.

The 2020 Act contains 870 sections, compared to 613 in the 2004 Act, and is divided into seven parts. Its most significant changes are examined in the highlight below.

 

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CAMA 2020 Highlight: What Changed and Why It Matters

Students and practitioners transitioning from the 1990/2004 regime to CAMA 2020 must be alert to the following key changes:

Single-member private companies. Section 18(2) of CAMA 2020 allows one person to form and incorporate a private company. Under the old CAMA, a minimum of two subscribers was required, a rule that forced sole entrepreneurs to include nominal co-subscribers with no genuine interest in the business.

Authorised share capital abolished. CAMA 2020 replaces the concept of “authorised share capital” with “minimum issued share capital.” Under the old regime, companies declared large amounts of authorised capital on paper while issuing only a fraction to shareholders. Under CAMA 2020, all share capital must be fully issued. The minimums are ₦100,000 for private companies and ₦2,000,000 for public companies (section 27(2)(b)).

Statement of Compliance. Section 40(1) replaces the old statutory declaration of compliance, which had to be signed by a legal practitioner, with a statement that may be signed by the applicant or the applicant’s agent. This removed a procedural barrier to self-incorporation for small businesses.

Virtual meetings. Section 240(2) allows private companies to hold their general meetings virtually, provided this is done in accordance with the company’s articles of association. This provision, fortuitous given the COVID-19 pandemic already underway when the Act was signed, aligned Nigerian practice with global standards.

Electronic filing and electronic share transfer. Section 861 provides that certified true copies of electronically filed documents are admissible in evidence with equal validity as original documents. Section 176(1) provides for electronic instruments of transfer of shares.

Limited liability partnerships and limited partnerships. Parts C and D introduce these hybrid business forms into Nigerian federal law for the first time, combining partnership flexibility with corporate limited liability.

Common seal made optional. Section 98 removes the previously mandatory requirement for companies to have a common seal. A company may now execute deeds and authenticate documents through the signatures of authorised officers.

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Why This History Matters

Understanding the history of Nigerian company law is not an academic indulgence. It is a practical necessity. It explains why Nigerian courts cite English cases from the 1890s as binding or persuasive authority: those cases were decided under statutes that became part of Nigerian law through the reception of 1900. It explains why the concepts introduced in the 1912 Ordinance, the memorandum, the articles, the certificate of incorporation, still appear in CAMA 2020: they have been carried forward through every generation of legislation. And it explains the specific choices made in CAMA 2020: each reform responds to a specific failure or inadequacy in the regime it replaced.

The law student who grasps this history reads statutory provisions differently. Instead of isolated rules to be memorised, they become the current stage in a conversation that began long before independence and will continue long after.

For those beginning their study of Nigerian company law in detail, the articles in this series cover each of the major doctrines and institutions in depth: the Corporate Affairs Commission, corporate personality, the types of business organisations, the conditions for registering an LLC, promoters, pre-incorporation contracts, the memorandum of association, the articles of association, membership, share capital, company meetings, directors, and winding up.

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Footnotes

¹ SC Udemezue, ‘A Compendium of the Historical, Legal and Institutional Framework for Company Law and Corporate Governance in Nigeria’ (2021) 8(2) NAU Journal of Commercial and Property Law 79, 80.

² J Olakunle Orojo, Company Law and Practice in Nigeria (4th edn, Mbeyi & Associates 1992) 1.

³ Udemezue (n 1) 80.

⁴ ibid 81; the Royal Niger Company’s Charter was revoked by the British Crown on 1 January 1900.

⁵ C M Schmitthoff and J H Thompson, Palmer’s Company Law (21st edn, Stevens & Sons 1968) 5.

⁶ Bubble Act 1720 (6 Geo I c 18).

⁷ Joint Stock Companies Act 1844 (7 & 8 Vict c 110).

⁸ Limited Liability Act 1855 (18 & 19 Vict c 133); Joint Stock Companies Act 1856 (19 & 20 Vict c 47).

⁹ Companies Act 1862 (25 & 26 Vict c 89).

¹⁰ Supreme Court Ordinance 1876, s 14; Orojo (n 2) 15.

¹¹ Supreme Court Proclamation 1900 (Southern Nigeria); Supreme Court Proclamation 1902 (Northern Nigeria).

¹² Supreme Court Ordinance 1914, s 14.

¹³ [1896] UKHL 1, [1897] AC 22 (HL).

¹⁴ LawGuru, ‘The History of Nigeria Company Law’ (LawGuru, 12 May 2016).

¹⁵ Companies Ordinance 1912; Udemezue (n 1) 82.

¹⁶ Companies (Amendment and Extension) Ordinance 1917; Wingrass, ‘History of Nigerian Company Law’ (Wingrass Blog, February 2013).

¹⁷ Udemezue (n 1) 82; English Companies (Consolidation) Act 1908.

¹⁸ Companies Ordinance 1912, Objects and Reasons; Orojo (n 2) 16.

¹⁹ Companies Ordinance 1922; LawGuru (n 14).

²⁰ Companies Act 1963 (redesignation); Udemezue (n 1) 83.

²¹ Companies Decree No 51 of 1968; LawGuru (n 14).

²² Board of Trade, Report of the Committee on Company Law Amendment (Cohen Committee Report, Cmd 6659, HMSO 1945).

²³ Nigerian Enterprises Promotion Act 1972; Nigerian Enterprises Promotion Act 1977.

²⁴ Companies and Allied Matters Decree No 1 of 1990 (CAMA 1990); Orojo (n 2) 20.

²⁵ Orojo (n 2) 21–24.

²⁶ Companies and Allied Matters Act Cap C20 LFN 2004.

²⁷ Investment and Securities Act 1999; Investment and Securities Act 2007 (revision).

²⁸ Companies and Allied Matters Act 2020 (CAMA 2020), long title; BusinessDay, ‘New CAMA: Here are what Nigeria’s most significant business legislation implies’ (BusinessDay, 8 August 2020).

²⁹ Presidential Enabling Business Environment Council (PEBEC), established July 2016; TheCable, ‘CAMA 2020: The good and not-so-good provisions you should know’ (TheCable, 30 August 2020).