How to Add a Director or Change Shareholders in a Nigerian Company after registration

Companies evolve. A co-founder joins. An investor comes on board. A director exits. Ownership changes as the business grows.

These are normal milestones in the life of any company, and they all require formal updates to your CAC registration. The mistake many Nigerian founders make is treating these changes as internal business events without realising that they carry statutory notification requirements. Operating with outdated CAC records creates legal exposure that compounds over time.

This guide explains how to correctly add a director, remove a director, and change shareholding in a Nigerian limited liability company, and what happens when these changes are not properly recorded.

WHY UPDATING CAC RECORDS MATTERS

Your CAC records are the official legal record of your company's structure. Banks, investors, corporate clients, and government agencies rely on these records when conducting due diligence. If someone searches your company on the CAC portal, what they see is what the CAC has on file. If that information is outdated, the credibility of your business is immediately in question.

A director whose appointment has not been registered with the CAC may face challenges executing agreements on the company's behalf. Shares that have been transferred without following the correct legal process may be challenged in disputes.

ADDING A NEW DIRECTOR

Step 1: Hold a Board Meeting or Pass a Written Resolution

The first step is a formal decision by the existing board of directors, documented through board meeting minutes or a written resolution signed by all directors. The resolution must clearly state the name, address, nationality, and date of appointment of the incoming director.

Step 2: Obtain the New Director's Consent

The incoming director must formally consent to their appointment. Under CAMA 2020, a director who has not consented is not validly appointed. A person is disqualified from serving as a director if they are an undischarged bankrupt, have been convicted of a fraud-related offence, or are otherwise disqualified by a court order.

Step 3: File the Appointment with the CAC

The filing requires the board resolution, the new director's consent form, a valid means of identification for the new director, and the director's residential address. Once submitted and approved, the new director's details are added to the CAC register.

REMOVING A DIRECTOR

If the director is resigning voluntarily, they must submit a formal letter of resignation to the company. The board then passes a resolution acknowledging the resignation, and it is filed with the CAC.

If the director is being removed by the shareholders, under CAMA 2020, shareholders can remove a director by ordinary resolution at a general meeting, subject to giving the director special notice and an opportunity to make representations before the vote is taken. This process must be followed correctly, as a director who is removed without due process retains legal remedies.

TRANSFERRING SHARES (CHANGING SHAREHOLDERS)

Step 1: Review Your MEMART and Shareholders' Agreement

Before any share transfer proceeds, check your Memorandum and Articles of Association and any shareholders' agreement in place. Many private companies include pre-emption rights clauses that require existing shareholders to be offered shares before they can be transferred to a third party. Ignoring pre-emption rights creates legal exposure that can be used to challenge the transaction.

Step 2: Execute a Share Transfer Form

The transfer is documented using a share transfer instrument signed by both the transferor and the transferee. It records the number and class of shares being transferred, the consideration paid, and the names and addresses of both parties.

Step 3: Update the Register of Members

The company's internal register of members must be updated to reflect the new shareholding and must remain consistent with the CAC records.

Step 4: Issue a New Share Certificate

Once the transfer is complete, a new share certificate must be issued to the transferee and the old one cancelled.

Step 5: Notify the CAC

The change in shareholding must be filed with the CAC through the post-incorporation portal. CAC updates its public record once the filing is accepted.

ISSUING NEW SHARES

New share issuances must be within the company's authorised share capital. If the proposed issuance would exceed the authorised share capital, the shareholders must first pass a resolution to increase it and register that increase with the CAC before the new shares are issued.

HOW LONG DO THESE FILINGS TAKE?

Straightforward filings with complete documentation are typically processed within five to ten working days. Outstanding annual returns block post-incorporation filings entirely. If your returns are not current, you will not be able to file any changes to directors or shareholders until they are resolved.

COMMON MISTAKES TO AVOID

Making changes informally and assuming the CAC will be updated later. The longer the gap between the actual change and the CAC filing, the more complicated the situation becomes, especially if a dispute arises in the interim.

Failing to check pre-emption rights before proceeding with a share transfer.

Using share transfer forms that have not been correctly executed by both parties.

Allowing annual returns to fall into arrears, which then blocks corporate changes at the exact moment they are most urgently needed, typically just before a funding round or a significant new contract.

HOW IDARA HELPS

At Idara, we handle director appointments, director removals, share transfers, and share allotments for Nigerian companies. We ensure every step of the process is correctly executed, filed with the CAC, and reflected accurately in your company's records.

Get started at goidara.com.