Share transfers in Nigeria are governed primarily by the Companies and Allied Matters Act, 2020 (CAMA 2020), the company’s Articles of Association, and any Shareholders’ Agreement regulating the relationship among shareholders.
3.1. In Public Companies — Yes
For public companies, shares are freely transferable, and a shareholder generally cannot stop another from selling their shares.
3.2. In Private Companies — It Depends
CAMA 2020 allows private companies to impose restrictions on the transfer of shares. These restrictions are usually contained in:
This means that in many Nigerian private companies, the “owner” or majority shareholder may have mechanisms to delay, restrict, or condition a transfer — but cannot completely prohibit it without lawful justification.
Under Nigerian corporate law, the following restrictions are valid:
4.1. Right of First Refusal (ROFR)
Before selling to an outsider, the selling shareholder must first offer the shares to existing shareholders.
4.2. Directors’ Power to Refuse Registration
Directors may refuse to register a transfer if the Articles expressly give them that power, and reasons must be provided.
4.3. Lock-In or Non-Transfer Agreement
Common in start-ups and investments — shareholders may agree not to transfer shares for a specific period.
4.4. Conditions Precedent
E.g., board approval, investor consent, completion of valuation, etc.
The refusal becomes unlawful where:
In such cases, the aggrieved party may seek redress under Sections 354–356 of CAMA 2020 for “unfairly prejudicial conduct”.
A shareholder can explore the following legal remedies:
6.1. Petition for Unfair Prejudice
Courts may order that:
6.2. Specific Performance
Where a Shareholders’ Agreement mandates transfer, the court may compel compliance.
6.3. Arbitration or Mediation
If a dispute resolution clause exists.
6.4. Automatic Transfer Mechanisms
If agreed in advance (e.g., drag-along, tag-along, put options).
Scenario 1: Articles Allow Free Transfer
If the Articles do not restrict transfer, the owner cannot block it.
Scenario 2: Articles Give Directors Broad Discretion