The Companies and Allied Matters Act 2020 was a radical departure from CAMA 2004 in many respects. One of such departure was the requirement for all shares in the capital of all limited liability companies to be fully issued, thus effectively outlawing the concept of “authorised share capital.”
Regulation 13 of April 16, 2021 as amended has, in the past couple of months, acquired notoriety, as many companies struggled with the implications of this, and how to ensure compliance. As far as one knows, there were several high – level individual and group engagements with the Corporate Affairs Commission with a view to understanding the full import of this regulation, possibility of a further extension of time for compliance, and indeed what options are available.
By Sec 127 already referred to, a company can only increase its share capital at the general meeting and at the time of the increase, it must be allotted for the increase to be valid. In fact, Regulation 14 of 2021 amplified this provision very clearly by stating that “”.
The position with public companies is a lot more concerning. One is mindful of Regulation 14 which provides that directors of a public company may allot shares if they have been so authorized by their articles, or specifically by the general meeting for a specific offer. This appears an attempt by the regulators to place a bridge over what patently is troubled waters.