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Below is a clear, practical explanation of share capital for company registration in Nigeria, written for founders, SMEs, and professionals who want to choose the right share capital—not just any amount. 1. What Is Share Capital? Share capital is the authorized value of shares a company is allowed to issue to its shareholders at incorporation. In simple terms: It shows how big the company intends to be, how ownership is shared, and how credible the company looks to regulators, banks, and investors. Important: Share capital is not money you must pay into a bank immediately. It is a legal and structural figure, not cash deposit. 2. Why Share Capital Matters in CAC Registration Share capital affects: 1. Company credibility 2. CAC filing fees 3. Stamp duties 4. Foreign ownership eligibility 5. Ability to bid for contracts 6. Future fundraising & investor perception Choosing wrongly can mean: • Paying unnecessary CAC costs, or • Being disqualified from contracts, or • Having to do a costly share capital increase later 3. Minimum Share Capital in Nigeria (Key Rules) (a) Private Company (Ltd) • Minimum: ₦100,000 (b) Public Company (Plc) • Minimum: ₦2,000,000 (c) Companies with Foreign Participation • Minimum: ₦100,000,000 (Mandatory for any foreign shareholder or director) (d) Regulated Sectors (Examples) Business Type Minimum Share Capital Oil & Gas ₦10m – ₦1bn+ Construction ₦5m – ₦100m Real Estate ₦10m – ₦100m Logistics ₦5m – ₦50m Business Type Minimum Share Capital Finance / Fintech ₦100m – ₦2bn 4. What Share Capital Represents (Practically) 1️⃣ Ownership Structure If your share capital is ₦1,000,000 divided into 1,000,000 shares: • 600,000 shares = 60% ownership • 400,000 shares = 40% ownership This makes ownership clear and legally enforceable. 2️⃣ Company Size & Perception Higher share capital often signals: • Seriousness • Capacity • Long-term vision This matters when dealing with: • Banks • Government agencies • Foreign partners • Corporate clients 3️⃣ Investor & Funding Readiness Investors look at: • Existing share capital • Unissued shares available • Ease of equity dilution Too small a share capital can: • Scare investors • Require urgent restructuring later 5. How CAC Fees Relate to Share Capital CAC fees increase as share capital increases. Example (simplified): • ₦1m share capital → lower CAC fees • ₦100m share capital → significantly higher CAC & stamp duty costs Rule of thumb: Choose the lowest share capital that still meets your business needs and regulatory requirements. 6. How to Choose the Right Share Capital (Smart Guide) Ask these questions: ✔ Do I have foreign involvement? • Yes → ₦100m minimum • No → You have flexibility ✔ Will I bid for government or large corporate contracts? • Yes → ₦10m – ₦50m+ recommended ✔ Is my business regulated? • Yes → Meet sector minimums ✔ Am I planning to raise investment soon? • Yes → Choose a scalable capital structure 7. Recommended Share Capital by Business Stage Business Stage Suggested Share Capital Startup / SME ₦1m – ₦5m Growing Business ₦10m – ₦20m Contract-focused ₦20m – ₦50m Foreign-owned ₦100m+ Investment-ready ₦50m – ₦200m 8. Can Share Capital Be Increased Later? ✅ Yes, but: • CAC filings required • Additional stamp duties payable • Board & shareholder resolutions needed That’s why it’s better to plan ahead, not under-register. 9. Common Mistakes to Avoid ❌ Choosing ₦100k just to “save money” ❌ Over-registering ₦500m without business need ❌ Ignoring foreign participation rules ❌ Not aligning share capital with growth plans 10. Simple Takeaway Share capital is a strategic decision, not a random number. The best share capital: • Meets legal requirements • Supports business growth • Avoids future restructuring costs • Matches how big you want to operate Contact us: Call/WhatsApp: +234 705 689 8048, +234 815 077 5328 Email Address: [email protected] Website: https://tosjohnconsulting.com