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ONE PERSON COMPANY UNDER THE COMPANIES AND ALLIED MATTERS ACT 2020: A STEP 

IN WHICH DIRECTION?* 

 

Abstract 
The Companies and Allied Matters Act (CAMA) 2020 has introduced groundbreaking reforms to Nigerian’s 

corporate legal landscape, including the recognition of One Person Company. Characterized by a single 

shareholder, director and member, One Person Company offers unparalleled flexibility and management 

simplicity, making it an attractive option for sole entrepreneurs and small business owners. Using doctrinal 

research methodology, this paper examined the One Person Company concept under CAMA 2020, exploring its 

features, benefits and challenges. Through a comprehensive analysis of the legal framework, this paper 

considered whether this innovation is a step forward or backward for Nigerian businesses and the economy. The 

findings revealed that One Person Company offers enhanced flexibility, simplicity and asset protection, but also 

present challenges, including the absence of a structured statutorily framework for One Person Company practice 

and procedure and a potential for abuse. To leverage the benefits of One Person Company, the researchers 

recommended the establishment of a comprehensive regulatory framework to govern One Person Company in 
Nigeria. 

 

Keywords: One Person Company, CAMA, Direction, Business, Nigeria 

 

1. Introduction 

The Companies and Allied Matters Act1 has introduced transformative reforms to Nigeria’s corporate legal 

framework, ushering in innovative provisions designed to enhance business efficiency, flexibility and 

competitiveness. A notable highlight of these reforms is the introduction of the One Person Company concept, 

which permits a single individual to form and own a company. This groundbreaking development marks a 

significant shift towards more business-friendly corporate regulations, enabling individuals with innovative start-

up ideas to leverage the benefits of separate legal personality. Historically, Nigerian law required a minimum of 

two persons to form a company.2 However, the One Person Company concept paves the way for modern and 
dynamic legislation, facilitating growth and greater regulation of the corporate sector. As the name suggests, One 

Person Company consists of a single member, offering a new paradigm for entrepreneurship.3 The One Person 

Company framework provides unique opportunities for individuals to establish organized businesses, accessing 

benefits of private limited companies, including credits, bank loans, limited liability, legal protection and market 

access, all under the umbrella of a separate legal entity.4 The inclusion of One Person Company concept in CAMA, 

2020 represents a historic milestone in Nigeria’s legal landscape, encouraging the incorporation of micro 

businesses, individual entrepreneurship, and solo start-ups through a simplified legal regime. This move aims to 

alleviate the burden of complex legal compliance, empowering individual entrepreneurs to contribute to economic 

growth and generate employment opportunities.  This paper therefore explores the One Person Company concept 

under CAMA 2020, examining its potential implications and challenges for Nigeria’s businesses. 

 

2. The Meaning of One Person Company 

Although the CAMA 2020 introduced the concept of One Person Company, it failed to provide corresponding 

definition. Instead, it defines a private company, which includes One Person Company, as a company stated in its 

memorandum of association to be a private company.5 The literal meaning of One Person Company connotes a 

company owned by one person.6 Section 2(62) of the Indian Companies Act 2013 defines One Person Company 

as a company with only one person as its member. Shameema and Hetha argue that the One Person Company is 

a revolutionary concept, a hybrid of sole proprietorship and company forms of business. 7 One Person Company 

resembles a sole proprietorship but differs in that it offers the status and advantages of a company. This feature of 

One Person Company is seen as a means to harness the talent pipeline of developing global business people, 

particularly start-up ventures.8  As a form of business organization, One Person Company is a private company, 

                                                             
By Meshach Nnama UMENWEKE, PhD, FICMC, ACTI, BL, Professor of Law and Former Dean, Faculty of Law, 

Nnamdi Azikiwe University, Awka, Anambra State. E-mail: mn.umenweke@unizik.edu.ng, Tel:08037090048 
*Onyeka Christiana ADUMA, LLB, LB, LLM, PhD, Senior Lecturer and Head, Department of Commercial and Industrial 
Law, Faculty of Law, Nnamdi Azikiwe University Awka, Email: co.aduma@unizik.edu.ng, Tel: 08038725994. 
1 Companies and Allied Matters Act 2020 (hereinafter referred to as CAMA) 
2 CAMA 1990, s 18 (1) 
3 C Sabarnee, ‘One Person Company and Limited Liability on its Members’ (2014) 3 Company Law Journal, 1. 
4 Salomon v Salomon & Co. Ltd. (1897) AC 22. 
5CAMA, s 22(1); s.394 categorizes certain private companies as small companies for purposes of financial statements.  
6B Miao, ‘A Comparative Study of Legal Framework for Single Member’, (2012) 5 (2) Journal of Politics and Law   312. 
7V Shameema and P Hetha, ‘One Person Company - An Ideal Approach for Transforming New Age Business’, (2016) 5 (11) 
Abhinav -International Monthly Refereed Journal Of Research in Management & Technology, 1. 
8See H Gesell and K V Hulle, European Corporate Law (Baden-Baden: Nomos, 2006) 3; T L Mary, ‘Relevance of One Person 
Company’, (2017) 2 (1) International Journal of Trend in Scientific and Research Development, 1317.  

mailto:co.aduma@unizik.edu.ng


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incorporated with an individual as its only member,9 wholly owned by one person. According to Hakim, the 

owner’s liability is limited to the allocated share capital10 One Person Company is a private company, as evidenced 

by the register of members. The operative determinant of One Person Company status is not legal or beneficial 

ownership of shares, but rather the register of members. If the register contains only one name, the company is a 

One Person Company, regardless of the number of shareholders or legal persons beneficially entitled to shares.  

Perhaps, if the register of members lists more than one member, the company cannot be considered a One Person 

Company, even if all other members except one have died or been dissolved.11 In Randhawa & Anor v Turpin & 
Anor, 12the company’s register of members listed two members, including Belvedere Estates Limited, which was 

dissolved in 1996 but remained on the register. The English Court of Appeal held that a non-existent person’s 

name on the register must be treated as a member for statutory purposes, regardless of dissolution.13 

 

3. Merits and Demerits of One Person Company 

The introduction of One Person Company as a private company in Nigeria is undoubtedly a step towards 

promoting ease of doing business in the country. However, like any noble idea, it has its advantages and 

disadvantages. The primary motivation for shareholders to incorporate a One Person Company is the desire for 

limited liability.14 By incorporating as a One Person Company, the business gains the benefits of a separate legal 

entity, including the capacity to enjoy legal rights and assume legal duties distinct from its members. This 

separation of identity enables the company to operate independently, making it an attractive option for sole 
proprietors and partners seeking to formalize their business.15 Unlike sole proprietorships, where personal assets 

are at risk, in the event of business failure, a One Person Company ensures that the sole member’s personal 

property is protected from business liabilities.16 This protection is a significant advantage, as entrepreneurs cannot 

control unfortunate events in business. Securing personal assets is crucial if the business encounters difficulties. 

A One Person Company provides this security by limiting liability. 

 

Furthermore, the company’s status provides additional opportunities to raise capital due to its improved 

creditworthiness, broadening its financial foundation. As a corporation, a One Person Company offers the benefit 

of perpetual succession, ensuring that the business can continue operating even in the event of the owner’s death 

or incapacity. This allows profitable business to persist, regardless of the owner’s circumstances.17 Thus, as a 

hybrid entity, One Person Company combines the benefits of sole proprietorship and limited liability companies, 
offering legal personality and perpetual succession. This unique structure enables the sole member to assume 

multiple roles, such as director, member, managing director and employee, without hindrance. The Privy 

Council’s ruling in Lee v Lees Air Farming Ltd18 supports this flexibility, establishing that a person can enter into 

contracts with the company in different capacities, recognizing the company and its members as separate legal 

entities. 

 

Additionally, One Person Company offers increased privacy, as the sole shareholder’s identity and business 

dealings remain confidential. Decision-making processes are streamlined, allowing for swift and efficient control 

by the sole shareholder. With fewer regulatory requirements, the compliance burden is significantly reduced. The 

formation and registration processes are straightforward and efficient, leading to lower administrative and 

compliance costs, which in turn reduce overhead expenses. 

 
The sole shareholder maintains control over business operations and decision-making, enabling swift action and 

adaptability. Moreover, One Person Company finds it easier to secure loans from banks, as financial institutions 

prefer lending to companies over proprietary firms. In fact, banks often require entrepreneurs to convert their 

firms to Private Limited Companies before approving funds, making it advantageous to register as a One Person 

Private Limited Company from the outset.    

                                                             
9 CAMA, s 18 (2)  
10D Hakim, ‘One Person Company: A new Form of Companies Introduced in the Companies’ Law No. 159 of 
1981’,<https://www.sadanykhalifa.com/en/single-blog/one-person-company-a-new-form-ofcompanies-introduced-in-the-
companies39-law-no-159- of-1981>accessed 8 August 2024.  
11 Randhawa & Anor v Turpin & Anor, (2017) EWCA Civ. 1201. 
12 (2017) EWCA Civ. 1201. 
13 Ibid, paras 83 & 84. 
14D Goyal, ‘Advantages and Disadvantages of One Person Company’, https://www.taxguru.com> accessed 8 August 2024.  
15Bauchi State Government & Ors v Arewa Ceramics Ltd & Ors (2019) LCN/13074 (CA); Companhia Brasileira De 

Infrastrututira v COBEC (Nig.) Ltd (2004) 13 NWLR (pt 890) 376, 395. 
16C E Halliday and G C Okara, The Efficacy of One Person Company Under the Companies and Allied Matters Act 2020: 
Lessons from Singapore and India’ (2021) 7 (1) UNIZIK Law Journal, 134l. 
17Z A Yun, ‘Company with the Pros and Cons of Legislation’, (2001) China Daily, June 3, p. 74; R B Cheffins, ‘Using Theory 
to Study Law: A Company Law Perspective’, (199) 58 (1) The Cambridge Law Journal, 99. 
18(1960) 3 All ER 420; B A Bukar, ‘Expanding the Scope of Business Activities under the Companies and Allied Matters Act: 
One- Person Companies and Partnerships in Focus’, (2021) 8 (1) NAU.JCPL, 16. 

https://www.sadanykhalifa.com/en/single-blog/one-person-company-a-new-form-ofcompanies-introduced-in-the-companies39-law-no-159-%20of-1981
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A One Person Company boasts a straightforward structure regarding board composition and management. With 

only one director, decision making is unhindered by the need for approval from others or the requirement to form 

a quorum. Additionally, the company is exempted from holding annual or extraordinary general meetings,19 
simplifying management and reducing administrative burdens. Instead, resolutions can be passed through written 

communication, signed and dated by the sole member.20 As a small company, a One Person Company is also 

exempted from appointing auditors, as mandated in section 401(1) of CAMA. Furthermore, there is no 

requirement for a secretary or independent directors, and the company is not obligated to maintain a minutes book 

or register of secretaries.21 These exemptions result in significant cost savings.  

 

In terms of contract formation, a One Person Company is not mandated to have a common seal, allowing for 

alternative methods of document authentication.22 This flexibility has simplified the process and reduced 

formalities, making it an alternative option for sole entrepreneurs and promoting a more inclusive business 

environment. However, as a private company, a One Person Company is restricted from soliciting public deposits 

or investments.23 Moreover, the blurred lines between ownership and control have raised criticisms about the 
practice. The secrecy afforded to single shareholder in a One Person Company can also be exploited for illicit 

activities, such as money laundering. Despite this drawback, the benefits of a One Person Company far outweigh 

the drawbacks. Accordingly, Sachin, former Minister of Indian Corporate Affairs summed the advantages of One 

Person Company as follows: 

Small entrepreneurs can now set up ‘one person companies’ to directly access target markets rather 

than being forced to share their profits with middlemen... This would provide tremendous 

opportunities for millions of people, including those working in areas like handloom, handicrafts 

and pottery. They are working as artisans and weavers on their own, so they don’t have the legal 

entity as a company. But the OPC would help them do business as an enterprise and give them an 

opportunity to start their own ventures with a formal business structure.24 

 

4. One Person Company under CAMA 2020 
CAMA is the principal legislation governing the formation and operation of business entities, as well as non-

business entities in Nigeria. To promote ease of doing business and adapt to new realities, section 18 of CAMA 

now permits a single individual to form and incorporate a company, unlike the previous requirement of a minimum 

of two persons.25 This makes it statutorily possible for one person to incorporate and own private companies in 

Nigeria.  

 

Formation of One Person Company 

One Person Company being a private Company is subject to the same formation requirements as other private 

companies. The CAMA 2020 permits a single individual to form and incorporate a private company, provided 

they meet certain criteria.26 The logical consequence of this development is that many individuals who were 

previously deterred by the requirement of two or more people coming together to register a company will now be 
encouraged to incorporate, as the burden has been lifted. This change is expected to lead to an increase in company 

registrations and promote entrepreneurship in Nigeria. This provision applies to both Nigerian citizens and 

foreigners. However, foreigners27 must also comply with relevant laws, such as immigration and investment 

promotion laws, governing their entry, residence and business activities in Nigeria.28. To incorporate a One Person 

Private Company in Nigeria, entrepreneurs must comply with the requirements of CAMA relating to private 

companies. After incorporation, all formalities and compliance provisions of CAMA applicable to private 

companies limited to shares formed by two or more people also apply to One Person Company, unless specifically 

excluded. 

 

 

                                                             
19CAMA, s 237. 
20 Ibid, s 259. 
21 One Person Companies that are small companies are exempted from having a secretary. S 330 CAMA 
22 CAMA, s 98. 
23 Ibid, s 22 (5) (b). 
24J Aashna, ‘An Expository Analysis of One Person Company Concept: Is it an Arrow Shot in the Dark or Is it Serving its 
Purpose?’ <http://lexquest.in/expository-analysis-one-person-company-concept-arrowshot-dark-serving-purpose> accessed 

10 August, 2024. 
25CAMA, s 18(2) states that ‘one person may form and incorporate a private company by complying with the requirements of 
this Act in respect of private companies’. 
26CAMA, s 18(2) The individual must be solvent, mentally sound, as least 18 years old, not disqualified under CAMA from 
being a director of a company. See s 20 CAMA. 
27Individuals or companies 
28CAMA, s 20(4). 



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Exemptions of One Person Company 

One Person Companies are subject to many of the same regulations as other companies; however, CAMA provides 

certain exemptions to encourage innovation and reduce bureaucratic hurdles. These exemptions aim to facilitate 

the growth and development of One Person Company, enabling it to thrive in Nigeria’s business landscape. Thus, 

CAMA mandates that every company, except for ‘small companies,29’ must have at least two directors30 and a 

secretary.31 However, One Person Company that qualifies as small companies are exempted from this requirement. 

In such cases, the sole member can serve as the general meeting, board of directors and secretary for all purposes 
under the CAMA, eliminating the need for additional officers and associated costs. Conversely, for One Person 

Companies that do not qualify as small companies, the requirement to have two directors and a secretary would 

be impossible. It would be absurd and costly for a company with only one member to appoint and pay two directors 

and a secretary. Notably, the CAMA permits One Person Company to have a single director, provided their annual 

turnover does not exceed N120 million and their net asset value does not exceedN60 million. 32The provision 

acknowledges the unique nature of One Person Company and offers a practical exception to the general rule. As 

a One Person Company, the sole shareholder is not required to hold annual general meetings,33 a typical 

requirement for companies. This exemption is granted because the sole shareholder is the sole decision-maker, 

eliminating the need for a platform to review financial performance, vote on resolutions, or elect directors and 

auditors. 

 
In a One Person Company, the sole shareholder can make decisions without the need for a formal meeting, 

streamlining the decision-making process. This exemption is specifically provided for under section 237(1) of 

CAMA thus: 

Except in the case of a small company or any company having a single shareholder, every company 

shall in each year hold a general meeting as its annual general meeting in addition to any other 

meeting in that year, and specify the meeting as such in the notices calling it; and not more than 15 

months shall elapse between the date of one annual general meeting of a company and the next.  

 

The provision in section 237(1) CAMA clarifies the distinction between a small company and a One Person 

Company by exempting them from holding general meetings. This exemption is reiterated in section 240(1) 

CAMA, which states: “With the exception of small companies and companies having a single shareholder, all 
statutory and annual general meetings shall be held in Nigeria”. However, section 240(2) CAMA allows 

companies to hold general meetings electronically, provided they comply with the company’s articles. Regarding 

the resolution process for Small and One Person Company, section 259 CAMA provides: ‘All resolutions shall 

be passed at general meetings and are not effective unless so passed, but in the case of a private company a written 

resolution signed by all the members entitled to attend and vote is as valid and effective as if passed in a general 

meeting’.  This provision raises a question: how does this apply to a One Person Company, which is a private 

company with only one member? The language “signed by all the members entitled to attend and vote” is unclear 

in the context of One Person Company. To address this, a more specific provision or interpretation is needed to 

ensure clarity in the resolution process for One Person Companies.  

 

Moreover, as a One Person Company operating as a small company under section 394 CAMA, the requirement 

to file financial statement is simplified. Only modified financial statements are required,34 exempting the company 
from filing a profit and loss account and balance sheet. Additionally, CAMA typically requires companies, except 

dormant and small companies, to appoint auditors to ensure the creditability of financial statements. However, for 

One Person Company that qualifies as small companies, this requirement is waived.35 The audit process is 

designed to mitigate the agency problem between shareholders and directors, but in a One Person company, this 

separation does not exist, making the audit process an unnecessary formality. By exempting One Person Company 

from audit requirements, the CAMA recognizes the unique nature of these entities and eliminates unnecessary 

costs, allowing them to focus on growth and development. This exemption is a significant advantage, particularly 

during the company’s formative stages. 

 

 

 

                                                             
29In this regard, the CAMA provides that a company qualifies as a small company in relation to its first financial year if, in 
that year: (a) it is a private company; (b) its turnover is not more than N120,000,000 ; (c) its net asset value is not more than 
N60,000,000; (d) none of its members is an alien; (e) none of its members is government or government-affiliated; and (f) the 

directors hold at least 51% of the equity share capital. See CAMA, s 394; Para. 19(3) Companies Regulations 2021. 
30CAMA, s 271(1). 
31Ibid, s 330(1). 
32 CAMA, s 394 
33 Ibid, s 237 (1). 
34 CAMA, s 396 
35Ibid, s. 402 (1) 



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5. The Impact of One Person Company on Nigerian Businesses and Economy 

The concept of One Person Company, although relatively new in the Nigerian Entrepreneurship sector, has a 

significant impact on businesses and the economy due to its progressive nature. The ease of incorporation with 

less compliance is the primary reason behind its projected success, making it an attractive option for foreign 
investors who can avoid dealing with multiple individuals and potential disparities. This simplicity encourages 

foreign investors to establish their own businesses in Nigeria by merging with a One Person Company, leading to 

an influx of foreign funds into the country. Furthermore, the straightforward ownership structure of One Person 

Company makes it easier to entrepreneurs to establish and manage businesses, promoting entrepreneurial spirit 

and the development of small medium enterprises in Nigeria. As the local business environment is highly 

populated by small medium enterprises, which contribute nearly 50% of the country’s GDP and account for over 

80% of employment, according to a 2021 survey by SMEDAN36 and the Nigerian Bureau of Statistics,37 the 

impact of One Person Company is substantial. In fact, small medium enterprises are considered the main engine 

of economic growth and a major factor in promoting private sector development, as noted by Udechukwu.38 

Moreover, Alile aptly described SMEs as the “backbone of the Nigerian economy,”39 reinforcing the crucial role 

they play in driving economic growth and development. This sentiment is further underscored by the significant 
contributions of small medium enterprises to the country’s GDP and employment rates, highlighting the 

importance of creating a conducive business environment that fosters their growth and success.  

 

In addition to their role in promoting small and medium enterprises, One Person Company also have a profound 

impact on Nigerian businesses and the economy through their business facilitation features. As described by kaur, 

they “provide more flexibility with less compliance,” 40 streamlining the process of setting up and running a 

business. This flexibility is complemented by increased privacy, protecting the identity and business dealings of 

the sole shareholder. Furthermore, One person Company have fewer regulatory requirements, reducing the 

compliance burden and associated costs and may benefit from tax advantages, such as reduced tax liabilities or 

simplified tax compliance. By promoting entrepreneurship, innovation and job creation, One Person Company 

can contribute substantially to Nigeria’s economic growth, increase competition, drive innovation and better 

services and contribute to economic diversification by reducing dependence on traditional industries. Ultimately, 
they can also generate revenue for the government through taxes and fees, thereby supporting the country’s 

economic development and reinforcing their importance in the Nigerian business landscape.  

 

6. Challenges of One Person Company in Nigeria 

The introduction of One Person Company in Nigeria, as provided for in CAMA 2020, has been widely acclaimed 

as a groundbreaking move to foster entrepreneurship and economic growth. Nevertheless, a closer examination 

reveals an intricate array of challenges that pose a significant threat to the realization of its potential advantages. 

Some of the challenges associated with One Person Company include: 

 

Potential for Abuse 

One of the significant challenges facing One Person Company in Nigeria is their potential for abuse, which stems 
from the concentration of power and control in a single individual, creating an environment where unethical or 

illegal activities can thrive without fear of detection or consequences. This lack of accountability and absence of 

checks and balances can lead to financial mismanagement, embezzlement, and conflicts of interest, where personal 

interests supersede the company’s well-being. Furthermore, One Person Company may be used to conceal income, 

assets or transactions, depriving governments of revenue through tax evasion and avoidance, and their opaque 

nature makes them vulnerable to fraudulent activities, such as money laundering, ponzi schemes, and fake 

investment opportunities.  

 

Lack of Business Experience 
Another significant challenge faced by individuals entering the world of One Person Company is a lack of business 

experience. Many sole proprietors opt for this structure without prior experience in running a business, which can 

lead to poor decision-making, inadequate planning and ineffective management. Without a solid foundation in 
entrepreneurship, individuals operating one person company may struggle to make informed decisions, mange 

                                                             
36 Small and Medium Enterprises Agency of Nigeria  
37Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), ‘NBS–SMEDAN National Survey of Micro, 
Small and Medium Enterprises (MSMEs)’ accessed 10 August 2024,http://www.smedan.gov.ng/images/PDF/ 
NATIONALPOLICY-ON-MSMEsNew.pdf>;E I John and W E Ebiri,, ‘Small and Medium Scale Enterprises (SMEs) and 

Economic Growth in Nigeria’, (2021) 2 (1) Journal of Business Management, 39. 
38FN Udechukwu, ‘Survey of Small and Medium Scale Industries and other Potentials in Nigeria,’ in Central Bank of  Nigeria 
Seminar Proceedings on Small and Medium Scale Industries Equity Investments Scheme (SMIEIS), 2003, CBN Training 
Centre, Lagos 
39O Alile, ‘Unsung Heroes: SMEs as Backbone of the Nigerian Economy’, <https://businessday.ng/columnist/article/unsung-
heroessmes-as-backbone-of-the-nigerian-economy/> accessed 10 August 2024. 
40H Kaur, Contemporary Company Law Reforms in India,’ in Handbook of Corporate Law, (London: Routledge: 2017) 212. 

https://businessday.ng/columnist/article/unsung-heroessmes-as-backbone-of-the-nigerian-economy/%3e%20accessed
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risks, adapt to changing market conditions, navigate complex financial, legal and regulatory requirements, develop 

and implement successful business strategies. The absence of diverse perspectives and expertise can also hinder 

innovation, creativity and problem-solving. Relying on trial and error can lead to costly mistakes and missed 

opportunities, ultimately threatening the success and sustainability of the business.  

 

Lack of Structured Statutorily Framework for the Practice and Procedure of One Person Company 

The lack of a structured statutory framework for the practice and procedure of One Person Company in Nigeria 
poses significant challenges. Despite the introduction of One Person Company in CAMA 2020, the regulatory 

framework is incomplete, leading to uncertainty and ambiguity. This ambiguity may result in inconsistent 

application of laws and regulations, making it difficult for owners, regulatory bodies and stakeholders to navigate 

the business landscape. The absence of clear guidelines and definitions for One Person Company increases the 

risk of abuse, misuse and fraudulent activities. Unlike in India and the Uk, Nigeria’s regulatory environment for 

One Person Company lacks clarity and structure, as the Companies Act 2013 in India clearly defines One Person 

Company.41 Moreover, only a natural person who is an India citizen and resident in India can incorporate a One 

person Company, with no person allowed to incorporate more than single One Person Company or become a 

nominee in more than one such company.42 It means that other legal entities like companies or societies or other 

corporate entities cannot form a one person company in India. 

 

Regulatory Gaps in Company Conversion and Share Capital Increase  

Nigeria’s regulatory framework poses an additional challenge, as it lacks provisions for converting a One Person 

Company or reregistering a multiple-member company as a One Person Company. Instead, section 18(2) of 

CAMA 2020 only allows one person to form and incorporate a private company, without addressing conversion 

from a multi-member structure to a One Person Company. Moreover, section 571(c) stipulates that a company 

may be wound up if the number of members falls below two, implying that conversion to a One Person Company 

is not permitted and may even be a ground for winding up. This restrictive interpretation contradicts the objective 

of CAMA 2020 to ease doing business in Nigeria, as it denies multiple-member companies the flexibility to 

convert to a one person company structure, thereby limiting their ability to adapt to changing business needs.  

 

Additionally, the inability to convert to a one person company structure under CAMA 2020 may have far-reaching 
consequences for small and medium-scale businesses incorporated before the law came into effect. Many of these 

businesses were founded by sole entrepreneur who was compelled to partner with others solely to meet the 

regulatory requirements, leading to potentially unstable relationships. In some cases, these forced partnerships 

have resulted in severed misunderstandings between members, ultimately harming the company. Prohibiting these 

companies from converting to a One Person Company structure, and even worse, making such conversion a 

ground for winding up, is not an ideal solution. In fact, the Supreme Court has cautioned against hastily 

terminating a company’s existence, emphasizing the need for care and utmost caution in such proceedings.43 

 

Furthermore, the gaps in the regulatory framework also create challenges for One Person Company in terms of 

cessation, winding up and dissolution. Unlike in India, where the Companies Incorporation Rules 2014 provide 

clear conditions for when a One Person Company may cease to operate as such, Nigeria’s CAMA 2020 lacks 

specific provisions for these processes.44 Additionally, CAMA does not provide procedures for share capital 
increase in One Person Company. Section 127 of CAMA 2020, which governs share capital increase, is geared 

towards companies with multiple shareholders, leaving a critical question unanswered on how can One Person 

Company increase its share capital? This oversight highlights the need for clarification and expansion of the 

regulatory framework to address the unique needs of One Person Company. 

 

Uncertainty in Succession upon Death or Incapacitation of Sole Shareholder 

One person company faces significant succession planning challenges due to the lack of clear provisions in CAMA 

2020. Specifically, the law does not address what happens when the sole shareholder and director passes away or 

becomes incapacitated. While the shares may be transmitted to the legal representative, it is essential to have a 

clear mechanism for appointing a nominee to take over the company. Ideally, CAMA 2020 should be amended to 

require one person company member to name a nominee in the memorandum of association, subject to the same 
eligibility conditions and consent requirements. This nominee would assume ownership of the shares, dividends, 

rights and liabilities in the event of the original shareholder’s death or incapacitation, ensuring continuity and 

minimizing uncertainty.  

                                                             
41S 2(62) of the Indian Companies Act, 2013 defines One Person Company as a company which has only one person as its 
member. 
42 Rule 3 of the Companies (Incorporation) Rules, 2014. 
43 Air Via Ltd v Oriental Airlines Ltd (2004) LPELR-272 (SC). 
44Rule 6 of the Companies (Incorporation) Rules, 2014. Provides to the effect that where the paid-up share capital of a One 
Person company exceeds fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees, 
it shall cease to be entitled to continue as a One Person Company. 



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Limited Access to Finance 

The growth, expansion and sustainability of One Person Company in Nigeria are severely hindered by limited 

access to finance, which is essential for investing in new opportunities. The perceived high risk associated with 
lending to One Person Company, coupled with their lack of collateral and inadequate financial reporting, makes 

it challenging for them to secure loans from financial institutions. This in turn, limits their ability to establish 

credible relationships with lenders, further constraining their access to finance. As a result, One Person Company 

face constrained growth and expansion, reduced competitiveness, inability to invest in technologies, reduced 

ability to respond to financial shocks and increased vulnerability to business failure.  In summary, the challenges 

of One Person Company include potential for abuse, lack of structured framework, succession planning issues, 

limited access to finance and regulatory hurdles. These challenges underscore the need for careful consideration 

and strategic planning to ensure the success and sustainability of One Person Company in Nigeria. 

 

7. Conclusion and Recommendations 

The introduction of One Person Company in the Nigeria’s legal system is a positive step towards promoting 
entrepreneurship, economic growth and a more accessible business environment, particularly for sole 

entrepreneurs, but concerns regarding its challenges need to be addressed to fully realize its benefits. To achieve 

this, the researchers recommend developing a comprehensive and robust regulatory framework to govern One 

Person Company, raising public awareness about the benefits and implications of One Person Company. This 

framework would promote informed decision-making. The researchers further recommend establishing oversight 

mechanisms to monitor One Person Company and prevent abuse, regularly reviewing and updating the company’s 

structure, governance and operations to ensure alignment with changing business needs. By implementing these 

measures, Nigeria can promote entrepreneurship, economic growth and a more accessible business environment, 

while minimizing the potential risks associated with One Person Company.  

 

 

 


