Must a company allot all its shares at incorporation?

Must a company allot all its shares at incorporation?

June 14, 2019

A share can simply be explained as the power, rights, interest, and obligations that its holder have over a company. It is what determines the profit that a holder is entitled to in a company.

During incorporation, a company usually subscribes to a certain amount of shares as it deem fit. These shares are usually divided among the shareholders and the minimum number of shareholders for a company is two.

It is however not a requirement that a company must allot all its shares during incorporation. An allotment of shares is when a company issues its shares to an already existing shareholder or a third party.

In Nigeria, a company must allot up to 25 percent of the shares it subscribes to during incorporation. The remaining shares will be kept on reserve.

The advantages of this is that a company can use shares in reserve to raise funds, bring in investors, to convert loans to capital, etc

 

 

 

The information in this blog post (“post”) is provided for general informational purposes only, no information contained in this post should be construed as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through this post without seeking the appropriate legal or professional advice from the particular facts and circumstances at issue from a lawyer. This post is protected by intellectual property law and regulations. It may however be shared using appropriate sharing tools provided that our authorship is always acknowledged and this Disclaimer Notice attached.

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    • 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. 
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