LEGAL GAPS OF SINGLE SHAREHOLDRER COMPANIES UNDER COMPANIES AND ALLIED MATTERS ACT 2020

Abstract

The creation of single shareholder companies through the Companies and Allied Matters Act 2020 has created a multitude of complex legal issues, particularly regarding business continuity, succession, and creditor protection. This article critically analyzes the ambiguities arising from the death, incapacitation, or insolvency of a sole shareholder of a company, and assesses whether existing legal provisions sufficiently protect business operations. It also seeks to analyze the increased risks that come with the death, incapacitation, or insolvency of a sole shareholder, which are attributed to a lack of internal controls and the potential for the abuse of legal personality. This article uses a doctrinal legal research methodology, which entails an in-depth examination of legal provisions, court decisions, regulatory guidelines, and comparative law, which helps to highlight the gaps and shortcomings in the existing legal framework. The article also analyzes how structured legal provisions can help in promoting transparency, accountability, and business continuity in sole shareholder companies, based on provisions in the UK, South Africa, and the European Union. Accordingly, from the analysis above, the article promotes legal reforms in Nigeria, which include succession rules, minimum capital, stronger prohibitions on asset diversion, and stronger rules on dealing with fraudulent or wrongful trading practices. In this sense, the article contributes to the international debate on corporate governance in structures of concentrated ownership, particularly in the context of Nigeria, suggesting practical solutions for improving creditor protection and ensuring the long-term viability of single shareholder companies.