The Development of Company Law in Nigeria: Ordinances, Acts, and the Road to CAMA

Before tracing its development, it helps to be clear about what company law actually governs. At its core, company law is the body of rules that determines how groups of persons may organise themselves for business purposes, how such organisations acquire legal personality, how they are governed and managed, how their members’ interests are protected, and how they come to an end.¹

In the Nigerian context, the subject is inseparable from the broader question of how the economy is organised. Every registered company, from a small private firm with two shareholders to a publicly listed conglomerate traded on the Nigerian Exchange Group, exists and operates within the framework that company law creates. Understanding that framework requires understanding how it came to be.

It is worth noting at the outset that company law is not indigenous to Nigeria. As explored in our article on the history of company law in Nigeria, it arrived as part of the received English law that came with colonial administration.² The challenge for each generation of Nigerian legislators has been to adapt that inherited framework to Nigerian realities, to make it serve Nigerian economic development rather than simply mirror English practice.

Phase One: Before 1912 — The Era of Received Law

Lagos and the Supreme Court Ordinance 1876

The legal history of company regulation in Nigeria begins in 1876, when Lagos was formally ceded to the British Crown. The Supreme Court Ordinance promulgated that year for the Lagos Colony contained a critical reception clause: the courts of the colony were directed to apply the common law of England, the doctrines of equity, and the statutes of general application that were in force in England on 24 July 1874.³ Section 14 of the Ordinance made this direction explicit.⁴

The immediate practical effect was that English company law, as it stood in 1874, became the law of Lagos. The Companies Act 1862, which was the foundational English companies statute at that time, was received into Nigerian law.⁵ Companies operating in Lagos could either be incorporated under its provisions or rely on their existing status as English or foreign companies.

The limitation of this arrangement was obvious. The Companies Act 1862 had been drafted for English conditions and English commerce. It said nothing about the specific circumstances of West African trade, about the participation of indigenous Nigerians in commercial life, or about the regulatory needs of a colonial economy. But it provided a legal framework where none had existed before.

The Supreme Court Proclamations of 1900 and 1902

As British authority extended beyond Lagos into the interior, fresh proclamations were needed to extend the legal framework to new territories. The Supreme Court Proclamation of 1900 covered Southern Nigeria, while the Supreme Court Proclamation of 1902 covered Northern Nigeria.⁶ Each contained a reception clause applying English common law, equity, and statutes of general application as they stood on 1 January 1900.⁷

The significance of this date cannot be overstated. The statutes of general application received into Nigerian law in 1900 included the Companies Act 1862 as it then stood, together with the judicial interpretations that had accumulated since 1862. The landmark decision of the House of Lords in Salomon v A Salomon & Co Ltd,⁸ decided in 1897, entered Nigerian law through this reception. Every English case decided under the Companies Act 1862, including Salomon, became part of Nigerian company law by extension.⁹ This explains why, to this day, Nigerian courts cite nineteenth-century English company law decisions as binding or highly persuasive authority. The doctrine of corporate personality in Nigerian law that students encounter in their company law lectures has its roots in precisely this mechanism of legal reception.

When the two protectorates were amalgamated in 1914, a further proclamation extended a unified legal framework to the whole country, again receiving English law as at 1 January 1900.¹⁰

The Absence of Indigenous Regulation

What is notable about this entire pre-1912 period is the complete absence of any legislation specifically designed for Nigeria. Companies operating in the territory were either foreign companies carrying their home-country status, or companies relying on the received English framework. There was no procedure for incorporating a Nigerian company by registration within Nigeria. There was no Nigerian companies registry. There was no regulatory body with any specific responsibility for the supervision of companies in the territory.¹¹

This was not oversight. It reflected the colonial administration’s view of Nigerian commercial life as something to be facilitated for foreign trading interests rather than developed as an indigenous capacity. The change came in 1912.

Phase Two: The Companies Ordinances — 1912 to 1968

The Companies Ordinance 1912: The First Local Statute

The Companies Ordinance of 1912 holds a unique place in Nigerian legal history as the first piece of legislation enacted specifically to govern the formation of companies within Nigeria.¹² It was initially applied to the Colony of Lagos and later, following the 1914 amalgamation of the protectorates, extended across the country.¹³

Its stated purpose was direct: to provide for the formation of limited companies within the colony and protectorate, in the hope of fostering the principles of cooperative trading and effort.¹⁴ For the first time, a procedure existed for incorporating a company by registration in Nigeria, rather than relying on foreign legal status or the abstract provisions of received English law. The 1912 Ordinance was modelled after the English Companies (Consolidation) Act 1908.¹⁵

What the Ordinance did not do, and could not do given its colonial context, was address the question of indigenous Nigerian participation in corporate commerce. The companies it envisaged being formed were predominantly foreign trading enterprises. The indigenous Nigerian as a company promoter, shareholder, or director was not a primary concern of the legislation. That gap would take decades to address.

The Companies Ordinance 1922: A More Comprehensive Framework

The end of the First World War brought significant changes to global commerce. The volume and complexity of business activity in Nigeria had grown substantially since 1912, and the 1912 Ordinance was recognised as increasingly inadequate.¹⁶ The Companies Ordinance of 1922 replaced it, again first applied to the Lagos Colony and later extended nationwide. It drew more directly on the English Companies Act of 1908 and its successor, providing a considerably more detailed framework for incorporation, the internal management of companies, share capital, meetings, directors’ duties, and winding up.

The 1922 Ordinance was the principal companies legislation in Nigeria for over four decades, spanning the colonial era, the years leading to independence in 1960, and the first years of the independent Nigerian republic. In 1963, reflecting Nigeria’s new status as a republic, it was redesignated as the Companies Act, though its substantive provisions remained largely as they had been in 1922.¹⁷

By the mid-1960s, Nigeria’s economy had grown and diversified far beyond anything the drafters of the 1922 Ordinance had anticipated. Public corporations had been established in key sectors. The oil industry was emerging as an economic force. Foreign investment had increased dramatically. A modern companies legislation had become urgently necessary.

Phase Three: The Companies Act 1968 — A Post-Independence Reform

The Context and Scope of Reform

The Companies Decree No. 51 of 1968 was promulgated by the military government during the Civil War period under General Yakubu Gowon. The choice to press ahead with company law reform during such a turbulent period reflects how pressing the need had become. The 1922 Ordinance, redesignated as an Act but substantively unchanged, was simply no longer capable of serving the needs of a developing economy.¹⁸

The 1968 Act drew substantially on the English Companies Act of 1948, which had itself consolidated earlier English legislation following the recommendations of the Cohen Committee.¹⁹ It introduced far more detailed provisions on every aspect of company law: the content of the memorandum and articles of association, the duties of directors and secretaries, the procedures for meetings and resolutions, the regulation of share capital, the rules on accounts and audit, and the grounds and procedures for winding up.

One of the significant features of the 1968 Act was its codification of requirements that had previously existed only as common law rules or as judicial practice. By putting these requirements into statutory form, the Act made the law more accessible and more certain. The Act was redesignated as the Companies Act in 1980 when Nigeria returned to civilian government under President Shehu Shagari.²⁰

Limitations of the 1968 Act

Even before the civilian redesignation, the Act’s limitations were becoming apparent. It had not fully addressed the question of indigenous Nigerian participation in the economy. The Nigerian Enterprises Promotion Acts of 1972 and 1977, passed separately, attempted to reserve certain sectors of economic activity for Nigerian citizens and to require Nigerian equity participation in others, but interacted awkwardly with the Companies Act and created interpretive difficulties.²¹

The Act also had not kept pace with international developments in company law. Nigerian company law was falling behind. The need for a comprehensive overhaul was clear.

Phase Four: CAMA 1990 — A Revolutionary Departure

The Nigerian Law Reform Commission and Its Work

The process that led to the Companies and Allied Matters Decree No. 1 of 1990 began in the early 1980s, when the Nigerian Law Reform Commission was tasked with conducting a comprehensive review of company law in Nigeria. The Commission’s approach was ambitious: it did not simply propose amendments to the existing Act but undertook a root-and-branch reconsideration of Nigerian company law from first principles.²²

The Commission examined not only English law but also the company law of other Commonwealth jurisdictions, particularly Australia and Canada, both of which had by then developed distinctive approaches. It consulted extensively with practitioners, academics, businesspeople, and regulators. As Orojo noted, the result represented the general views and consensus of users of company law in Nigeria.²³

The Scope and Structure of CAMA 1990

When the Companies and Allied Matters Decree No. 1 of 1990 came into force on 2 January 1990, it superseded everything that had come before. Its scope was broader than any previous companies legislation in Nigeria. Part A dealt with the registration and regulation of companies. Part B dealt with the registration of business names. Part C dealt with the registration of incorporated trustees. Part D contained citation and commencement provisions.²⁴

This breadth was deliberate. By bringing business names and incorporated trustees under the same statutory umbrella as companies, the Act created a comprehensive framework for all formal business and organisational activity, governed by a single regulatory body: the Corporate Affairs Commission. The Commission’s establishment, functions, and powers are examined in our article on the Corporate Affairs Commission.

The Major Innovations of CAMA 1990

The innovations introduced by CAMA 1990 were numerous and significant.²⁵ The Act enacted, for the first time in statutory form, many principles of common law and doctrines of equity that had previously applied to companies only by judicial practice.

It established minimum authorised share capital requirements and required a minimum subscription at the time of registration, provisions designed to ensure that companies entering the market were genuinely capitalised rather than mere shell structures. The detailed rules on share capital and the classes of shares available to companies under CAMA flow from this foundation.

The Act prohibited non-voting shares and weighted votes, a reform of considerable importance. Before CAMA, these devices had been extensively used since the Nigerian Enterprises Promotion Acts to frustrate the government’s objective of giving Nigerians meaningful control over businesses in which they held equity. CAMA 1990 ended this practice by requiring that every share carry one vote and prohibiting shares that carried multiple votes or no votes at all.²⁶

The Act introduced statutory rules on pre-incorporation contracts, fundamentally changing the position that had applied under the common law. Under the common law, as held by Sowemimo J (as he then was) in the Nigerian case of Caligara v Giovanni Sartori & Co Ltd,²⁷ a company is not bound by contracts purportedly entered into on its behalf before its incorporation, and cannot after incorporation ratify or adopt any such contract. The Supreme Court affirmed the same principle in Trans Bridge Company Ltd v Survey International Ltd,²⁸ holding that neither the company when formed nor the promoter whose signature was appended could sue or be sued on such a contract. CAMA 1990 reformed this position: the company may, after incorporation, ratify and adopt pre-incorporation contracts, making them binding as if the company had existed at the time of contracting.²⁹ The full implications of this reform are explored in our article on pre-incorporation contracts in Nigerian law.

The provisions on directors were substantially expanded and codified. The Act set out, in statutory form, the fiduciary duties of directors and the standard of care they owed to their companies. Directors were required to act with utmost good faith, in the best interests of the company as a whole, and with the diligence of a faithful, careful, and ordinarily skilful director. The full scope of directors’ duties is examined in our article on directors in Nigerian company law.

The 2004 Revision

The Companies and Allied Matters Act Cap. C20 Laws of the Federation of Nigeria 2004 was a revision rather than a reenactment. The principal provisions of CAMA 1990 were retained, and the statute was updated and renumbered as part of the general revision of Nigerian laws in 2004.³⁰ For most practical purposes, CAMA 2004 and CAMA 1990 refer to the same legislative text, and cases decided under either citation are treated as applying to the same provisions.

Phase Five: CAMA 2020 — Modernisation for a New Era

The Pressures for Reform

By the early 2010s, pressure for further reform of Nigerian company law had built significantly. Critics pointed to several weaknesses in CAMA 2004. The requirement for a minimum of two subscribers to form a private company was seen as artificial and burdensome, forcing sole entrepreneurs to bring in nominal co-subscribers who had no genuine interest in the business.³¹ The bureaucratic processes at the Corporate Affairs Commission were widely regarded as inefficient and costly. The Act’s silence on electronic communication and virtual meetings was increasingly problematic. And the corporate governance provisions were felt to fall short of international best practice.

The Key Reforms of CAMA 2020

The Companies and Allied Matters Act 2020, signed into law by President Muhammadu Buhari on 7 August 2020,³² addressed these concerns with a thoroughness that rivalled the 1990 reform.

Single-member private companies were permitted for the first time under section 18(2) of the Act.³³ A sole entrepreneur could now incorporate a private limited liability company without needing a second subscriber, removing one of the most artificial features of the old regime.

The Act reduced minimum share capital requirements and simplified the requirements for the allotment and transfer of shares. It introduced provisions allowing companies to hold meetings electronically and to pass resolutions without physical meetings in certain circumstances, reforms whose relevance was immediately demonstrated by the COVID-19 pandemic that was already underway when the Act was signed.³⁴

The corporate governance provisions were strengthened in multiple respects. Section 305 of CAMA 2020 restated and expanded directors’ duties, requiring directors to act in the best interests of the company and have regard to the interests of employees and members.³⁵ The protections for minority shareholders were enhanced, and the rules on conflict of interest were made more explicit. The oversight functions of the Corporate Affairs Commission were broadened and its procedures modernised.

The range of business forms available under Nigerian law, and the distinctions between them, are examined in our article on the types of business organisations in Nigeria.

CAMA 2020 as the Current Law

CAMA 2020 is the governing statute for company law in Nigeria today. Every student studying company law at 300 level, every practitioner advising a client on corporate matters, and every court adjudicating a dispute involving a company must work within the framework it creates. Understanding its provisions requires understanding the history that produced it, because that history explains the choices the drafters made, the problems they were trying to solve, and the continuities they chose to preserve from earlier legislation.

The Investment and Securities Act: A Parallel Development

Running alongside the main CAMA framework is the Investment and Securities Act, first enacted in 1999 and revised in 2007,³⁶ which governs Nigeria’s capital markets. It regulates public offers and sales of securities, the activities of capital market operators, mergers and acquisitions, insider trading, and the functions of the Securities and Exchange Commission.

The relationship between CAMA and the Investment and Securities Act is complementary. CAMA governs a company’s internal affairs: its incorporation, management, membership, and winding up. The Investment and Securities Act governs a company’s external activities in the capital market: how it raises money from the public, how its shares are traded, and how it may be merged with or taken over by another company. Together, the two statutes constitute the principal legislative framework for corporate activity in Nigeria.³⁷

Conclusion: A Law Still in Development

The development of company law in Nigeria from 1876 to 2020 is a story of incremental improvement, each generation of legislation building on and correcting what came before. The 1912 Ordinance improved on the bare reception of English law. The 1922 Ordinance improved on the 1912 Ordinance. The 1968 Act improved on the 1922 Ordinance. CAMA 1990 represented a qualitative leap. CAMA 2020 modernised and extended the CAMA framework for the digital age.

But this story is not finished. Company law is never static. Commercial practice evolves, technology changes, new problems emerge, and the law must respond. The student who understands the history of Nigerian company law is better placed to understand the law as it is today, to anticipate where it might develop next, and to contribute to that development as a practitioner, academic, or legislator in the years ahead.

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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 Supreme Court Ordinance 1876, s 14; J Olakunle Orojo, Company Law and Practice in Nigeria (4th edn, Mbeyi & Associates 1992) 15.

³ Supreme Court Ordinance 1876, s 14.

⁴ ibid.

⁵ Companies Act 1862; Orojo (n 2) 15; Udemezue (n 1) 81.

⁶ Supreme Court Proclamation 1900 (Southern Nigeria); Supreme Court Proclamation 1902 (Northern Nigeria).

⁷ ibid.

⁸ [1896] UKHL 1, [1897] AC 22 (HL).

⁹ Orojo (n 2) 15; Udemezue (n 1) 82.

¹⁰ Supreme Court Ordinance 1914, s 14.

¹¹ Udemezue (n 1) 82.

¹² Companies Ordinance 1912.

¹³ Companies (Amendment and Extension) Ordinance 1917; Udemezue (n 1) 82.

¹⁴ Companies Ordinance 1912, Objects and Reasons.

¹⁵ Udemezue (n 1) 82; English Companies (Consolidation) Act 1908.

¹⁶ Orojo (n 2) 17.

¹⁷ Companies Ordinance 1922; Companies Act 1963 (redesignation).

¹⁸ Orojo (n 2) 18.

¹⁹ English Companies Act 1948; Board of Trade, Report of the Committee on Company Law Amendment (Cohen Committee Report, Cmd 6659, HMSO 1945).

²⁰ Companies Decree No 51 of 1968; Companies Act 1980 (redesignation).

²¹ Nigerian Enterprises Promotion Act 1972; Nigerian Enterprises Promotion Act 1977.

²² Udemezue (n 1) 85.

²³ Orojo (n 2) 20.

²⁴ Companies and Allied Matters Act 1990 (CAMA 1990), Parts A–D.

²⁵ Orojo (n 2) 21–24.

²⁶ CAMA 1990, s 143 (now CAMA 2020, s 144).

²⁷ Caligara v Giovanni Sartori & Co Ltd (1961) 1 All NLR 534, per Sowemimo J.

²⁸ Trans Bridge Company Ltd v Survey International Ltd [1986] 4 NWLR (Pt 38) 576 (SC), per Uwais JSC.

²⁹ CAMA 1990, s 72 (now Companies and Allied Matters Act 2020 (CAMA 2020), s 96).

³⁰ Companies and Allied Matters Act Cap C20 LFN 2004.

³¹ Udemezue (n 1) 88.

³² CAMA 2020, long title.

³³ CAMA 2020, s 18(2).

³⁴ CAMA 2020, ss 240–241.

³⁵ CAMA 2020, s 305.

³⁶ Investment and Securities Act 1999; Investment and Securities Act 2007 (revision).

³⁷ Udemezue (n 1) 90.