The Difference Between Share Transfer and Share Transmission Under Nigerian Corporate Law

By Alexander Odidi, Esq. A


In every registered company, shares represent ownership, and from time to time, that ownership changes hands. Under the Companies and Allied Matters Act (CAMA) 2020, which governs corporate practice in Nigeria, there are two distinct and often confused legal routes through which this change can happen: “Transfer” and “Transmission.” 

Although both often result in a new person holding shares, the circumstances, procedures, and legal basis behind each are very different. Understanding this distinction matters for companies, shareholders, company secretaries, and anyone involved in corporate administration.

What is Share Transfer?

Share transfer is a voluntary act. It happens when a shareholder, of their own free will, decides to sell, gift, or otherwise pass on their shares to another person while they are still alive and legally capable of making that decision. 

In clear terms, it is a deliberate transaction between a willing giver and a willing receiver.

For example, the person transferring the shares (the transferor) delivers a duly executed instrument of transfer, along with the original share certificate, to the person receiving the shares (the transferee). The transferee then also signs the instrument and submits it to the company for registration. 

Once the company registers the transfer, it issues a new share certificate to the transferee and enters their name into the company's register of members.

Note: Until the transferee's name is actually entered into the register of members, the law still treats the original shareholder (the transferor) as the legal owner of the shares.

Under CAMA 2020, electronic instruments of transfer are also recognized, reflecting the growing digitization of corporate processes in Nigeria. Also, while share transfers no longer need to be filed with the Corporate Affairs Commission (CAC) as a standalone document, they must be reflected in the company's next Annual Returns filing.

It is also worth noting that under Section 22(2) of CAMA, private companies are permitted to place restrictions on share transfers through their Articles of Association. This might include, for example, requiring board approval before shares can be transferred to an outsider, or giving existing shareholders a right of first refusal (a pre-emptive right) before shares are offered to a new person.

What is Share Transmission?

Share Transmission is not voluntary. It occurs as a result of operation of law, typically triggered by the death or bankruptcy of a shareholder. 

Since the original shareholder can no longer personally deal with their shares, ownership passes automatically to another party by legal necessity rather than by choice.

In the case of a deceased shareholder, the shares pass to their personal representative. This could be an executor named in a will, or an administrator appointed where the shareholder died without a will (intestate). Section 154 of CAMA 2020 gives this personal representative an important choice: they may either

  • Have themselves registered as the new holder of the shares, or

  • Transfer the shares directly to a beneficiary or another person, even though they themselves were never registered as a member of the company.

This flexibility is unique to transmission and does not apply to ordinary transfers, where only an existing shareholder can pass on shares.

In the case of bankruptcy, the shares typically vest in the trustee or receiver responsible for administering the bankrupt shareholder's estate, who then deals with the shares in line with insolvency rules.

Why the Distinction Between the Two Matters

Getting this distinction right is not just an academic exercise. Company secretaries and registrars must know which process applies before updating the register of members, since the documentation required differs significantly. 

A transfer requires evidence of the transferor's and transferee's consent; a transmission requires legal proof of death or bankruptcy and the transmittee's authority to act (such as letters of administration or a grant of probate).

Both processes ultimately protect the integrity of company ownership records. The company's register of members and register of transfers remain the definitive legal evidence of who owns what shares in a Nigerian company, whether that ownership arrived by transfer or by transmission.

Conclusion

As a recap, share transfer is a matter of choice, while share transmission is a matter of circumstance. One reflects the shareholder actively deciding to part with their shares; the other reflects the law stepping in to determine what happens to shares when a shareholder can no longer act for themselves. 

Both are essential mechanisms recognized under CAMA 2020, and together they ensure that company ownership can always move forward smoothly, whether by design or by necessity.



Disclaimer: This article is for general informational purposes only, and does not serve as legal advice. LegalBizPro is not an affiliate or part of CAC.

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