Share Transfer, Share Allotment & Share Surrender

Share Transfer, Share Allotment & Share Surrender

August 25, 2022

There are various forms by which the shares of a company can be distributed to members or other interested parties, such as investors. Though they achieve the same purpose, they are quite different procedures.

SHARE SURRENDER: Share surrender occurs where a shareholder voluntarily returns or relinquishes the shares allotted to him/her by the Company back to the company. The shares are surrendered back to the Company, where the Shareholder desires not to hold the shares of the company anymore. He/She ceases to be liable as a contributor to the liabilities of the company except for past liabilities. The articles of a company must permit the company to accept a surrender of shares. To complete this process, a share surrrender form along with a signed resolution is to be filed with the Corporate Affairs Commission (CAC). The Shareholder must also write a Letter of Surrender in favour of the Company.

SHARE TRANSFER: This occurs when a shareholder gives out his/her interest in a company by way of transfer. This could either be by way of sale (where the articles of association/shareholder agreement of a company authorise such), transmission (which is an operation of law, in cases where a shareholder dies or is bankrupt) or by gift. This is done through an instrument of transfer usually executed by both the transferor and the transferee. A share transfer is complete where a share certificate is issued to the new shareholder by the company and his/her name included in the register of members. Under the CAMA 2020, share transfers do not need to be filed with the CAC but must be reflected in the company’s next filing for Annual Returns.

SHARE ALLOTMENT: This occurs either at incorporation or where the company issues or creates new shares, which can either be issued to new or existing members of the company or new investors. The shares can be allotted in exchange for cash or other consideration or as bonus shares to existing members. A private company would file a return on allotment of Shares with the CAC to register the allotment. Share allotment is often times a company’s technique to expanding its business partners or to ensure liquidity

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Frequently Asked

  • When are Annual Returns due for filing?

    A company’s first Annual Returns are due for filing after 18 months of its inception, subsequently it should be filed annually as the name implies. The filing dates could differ for each company depending on their financial year end but must be filed not later than 42 days after its Annual General Meeting.

    The Annual Returns for Business Names is due not later than the 30th of June each year except in the year the business was registered.
  • What’s the difference between a business name and an LLC?

    • A business name is a sole proprietorship, usually owned and managed by one individual only. Legally, the sole proprietor and his business are one. It simply means an individual trading with an alias. The sole proprietor is personally liable for all business related obligations.

    • A limited liability company on the other hand is a separate business entity from the individuals that hold its shares and act as directors. Legally, it’s a separate business entity and a person on its own who can transact business, own property separate from its owners and can sue or be sued. 
  • What is a testimonium clause in an agreement?

    This is the part of the agreement where the witness attests to have witnessed the execution of the agreement.
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    SON Product Registration scheme is mandatory for all SON’s regulated products as mandated by SON Act 56 of 1971, 20 of 1984, 18 of 1990 as amended.

    This is irrespective of the registration done by NAFDAC
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  • What will happen if I buy the wrong category of forms with NAFDAC?

    Nothing, the purchased form will be in your account for future use.

     
  • What’s the difference between a business name and an LLC?

    • A business name is a sole proprietorship, usually owned and managed by one individual only. Legally, the sole proprietor and his business are one. It simply means an individual trading with an alias. The sole proprietor is personally liable for all business related obligations.

    • A limited liability company on the other hand is a separate business entity from the individuals that hold its shares and act as directors. Legally, it’s a separate business entity and a person on its own who can transact business, own property separate from its owners and can sue or be sued. 
  • Why do I need a trademark?

    You need to register your trademark because if you don’t register it, someone else can! It helps identify you as the source and indicates a consistent level of quality of your products and services. Securing a registered trademark protects your brand, and provides you with tools to prevent someone else from using similar signs and riding off the back of your business.
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