Succession, Disclosure and the Open Ended Questions
The Question Behind the Question
In our last article, “Built to Outlive Us” we addressed why family businesses in Nigeria so often die of governance failure, and why each such death takes a payroll with it. Readers agreed with the premise, but their responses raised harder questions—and those questions provide the starting point for this sequel.
What happens when a founder dies before the family charter is signed? Who inherits the shares when there is no will? Why does the bank freeze the corporate account? What options are opened to a founder’s widow who is shut out of the company? And, perhaps most immediately, what becomes of the staff while the family argues over what the founder left behind?
For readers coming to the series afresh, the prequel began with a demographic fact and a legal one: Nigeria’s median age is about eighteen,1 while the government payroll cannot absorb the millions entering the labour market each year, whilst observing that many Nigerian businesses are family-owned or controlled. The failure of these businesses means lost jobs, making succession, in part, a youth-employment issue.2 It further examined how enduring family enterprises can be built and the written rules and legal frameworks that can sustain them beyond their founders.
It ultimately, addressed design: what must be put in place while there is still time to put anything in place at all. This sequel begins where that design ends—or, more precisely, where it was never completed. It asks what happens when the structures are missing and the law is left to fill the gaps, standing between a family and disaster. The theme remains unchanged: jobs survive when companies survive, but the pressure points are different, and most emerge on the worst day of a family’s life—when the founder is gone, the paperwork is thin, and the questions that follow have legal answers that nobody in the room has ever been told.
When the Law Chooses Your Heirs.
Nigerian founders assume they will have the time to plan for the continuity of their businesses. The fact remains that life is fraught with uncertainties.
Dying without a will does not leave everything to the family. It hands the choice of your heirs to a set of rules, and which set applies depends on your personal law. When you contract marriage under the Marriage Act, the state’s Administration of Estates Law of where the properties/assets (personal and real) are situated governs the distribution of the deceased property(ies).3 In cases where one lived subject to customary law, the succession rules of custom govern the deceased’s property(ies). For Muslims’ who submit to Islam, Islamic law applies. Few founders seldom give much thought over which one day applies to them at death.
For corporate entities, the consequences are immediate. Shares are property, and property passes through the estate. Until the court grants probate where a deceased dies testate or letters of administration, where the deceased dies intestate, no one has the legal authority to transfer the shares, exercise the rights attached to them or receive dividends.4 The resulting uncertainty can quickly disrupt the business: suppliers may pause dealings, contracts may lapse, and operations may stall. Typically, where a director dies intestate, the heirs must obtain letters of administration before the deceased’s interests can be dealt with. In Lagos, an uncontested grant can take more than a year, while a contested application may take considerably longer to resolve.
The banking position is more often asserted than understood, and it repays separating law from practice. The founder’s personal accounts freeze, and lawfully so. On notice of a customer’s death, a banker’s duty and authority to pay on that customer’s mandate is determined by operation of statute, and the bank will release nothing until it has seen the grant of probate, because paying into the wrong hand exposes it to liability for wrongful payment.5 That much is settled law, and it is the reason balances sit unclaimed in Nigerian banks for years while families begin the process for letters of administration, which may take years to obtain depending on the jurisdiction where the property is situated.
The company’s account is a different matter altogether, and here the common assumption is simply wrong. A company is a body corporate with perpetual succession, distinct in law from the person who founded it; it does not die when he dies, and its account forms no part of anybody’s estate.6 No rule of law freezes it. What fails is the mandate. Where the deceased was the sole or a mandatory signatory of the company, the bank holds no valid instruction and the account cannot be operated until the board resolves to change signatories and the mandate is updated, which is a matter of days or weeks wherever a functioning board survives him.
The true paralysis arrives in the one-person company, which CAMA now permits. Where the deceased was the only director and the only shareholder/member, nobody is competent to pass that resolution until his shares are transmitted, and transmission itself waits on the grant of probate.7 Payment of salaries may be halted for months. In practice, banks also place a precautionary post-no-debit on a company’s account once they learn its principal has died, pending regularisation of the mandate and fresh due diligence. That is institutional risk practice rather than law, and a properly constituted board is entitled to challenge it. The distinction matters, because a family that understands it can restore the company to operation, while a family that believes the account is frozen by law will wait on the probate registry and watch the pace of business operation die around it.
Custom once made this worse for daughters and widows. It can no longer do so. In Ukeje v Ukeje, the Supreme Court struck down the Igbo custom that barred a female child from sharing in her late father’s intestate estate.8 On the same day, in Anekwe v Nweke, it condemned the custom that stripped a widow of her late husband’s property.9 Both were held repugnant to natural justice and inconsistent with the constitutional guarantee against discrimination.10
Two lessons follow. First, the law is now settled: daughters inherit, and widows are not chattels. The second is more sobering. Those families still spent decades in court establishing what the law now states plainly. The judgments vindicated them. They did not save the businesses.
The Next-of-Kin Illusion
Ask a Nigerian who will inherit their estate, and some will point to their next of kin. The phrase appears routinely on bank mandates, employment records and pension documents, yet its legal significance is widely misunderstood. Founders are expected to understand estate planning.
A next of kin is a contact, not an heir. The Court of Appeal’s position in Joseph v Fajemilehin is instructive.11 The term describes the nearest relative, the person to be notified in an emergency, or someone who may take decisions for a person who cannot. It confers no automatic right to inherit anything. Writing a child’s name on a bank form therefore transfers not a single share to that child.
The remedy is unglamorous but straightforward. Make a will, have it drafted properly, execute it and lodge it at the probate registry. A will costs less than a single week of probate formalities, and a fraction of a contest over letters of administration.
Who Actually Owns This Company?
Ask that same founder who owns the company, and the answer almost always opens with an emphatic claim to the whole of it. Only later does it emerge that some percentage sits in another shareholder’s name, possible a relative, on the understanding that he holds it for the founder in equity, with nothing in black and white beyond what the registry shows. While another percentage sits in the name of a former employee who left the business years ago, which the member register did not reflect because the register hasn’t been updated since the former employee’s exit.
The law now leaves little room for that vagueness. Under CAMA 2020, a person with significant control must notify the company within seven days; the company must notify the Corporate Affairs Commission within one month; and the company must keep its own register of such persons.12 The Commission’s regulations supply the forms and the penalties, including daily administrative fines and the withholding of filings.13 The obligation reaches private companies and limited liability partnerships, not public companies alone.
Founders tend to file all this under paperwork. It is better understood as free succession planning. Beneficial ownership disclosure compels the family to answer, in writing and while the founder is alive, the very question that otherwise destroys estates: who owns what, and who controls it? Undocumented nominee holdings are where family businesses go to die. An accurate register is the cure.
The Widow Who Is Shut Out.
Suppose the transition happens, and happens badly, where the deceased eldest son runs the company. Accounts are never circulated. No dividend has been declared in four years. Two cousins draw salaries for work nobody can describe. The founder’s widow, a shareholder now in her late husband’s place, is told gently that the company is her son’s business now.
She is not without remedy. The general rule is that only the company may sue for a wrong done to the company, but CAMA 2020 provides exceptions.14 A member may bring a derivative action in the company’s name with the leave of the court.15 More usefully still, a member, a director, a creditor or the Corporate Affairs Commission may petition for relief where the company’s affairs are conducted in a manner that is oppressive, unfairly prejudicial or unfairly discriminatory, or that disregards a member’s interests.16 Neither remedy turns on the size of the holding. The Act sets no minimum shareholding for either, so a widow left with a single share has the same standing as one left with half the company, and the frequent assumption that a small holder must simply endure has no basis in the statute. The court’s powers are correspondingly wide, extending to regulating the company’s affairs, ordering the purchase of the petitioner’s shares, or winding the company up.17
Directors are not free agents either. CAMA 2020 codifies their fiduciary duties, requires them to avoid conflicts between personal interest and duty, sets an objective standard of care and skill, and treats them as trustees of the company’s money and property.18 In family companies the usual complaint is not outright theft. It is drift: no accounts, no dividends, no meetings, relatives on the payroll. All of that is actionable.
The point is not merely that these weapons exist. It is that his successors will inherit them, and may turn them on one another, unless he builds a company in which nobody needs to.
Trusts: The Machinery Part One Only Gestured At
A will operates only after death, and then only after probate. A properly constituted trust operates around both. Assets transferred into a living trust during the founder’s lifetime fall outside the estate for probate purposes, because the trustee already holds legal title. For an operating company, that is the difference between a brief pause and outright paralysis.
Nigeria already has the machinery. A private trust is created by deed and requires no registration to take effect. Where an institutional trustee is preferred, corporate trustees are regulated capital market operators, registered and supervised by the Securities and Exchange Commission under the Investments and Securities Act 2025, which repealed the 2007 Act.19 One caution belongs here. Incorporated trustees under Part F of CAMA are the vehicle for associations and non-profits, not for holding family wealth, and confusing the two is both common and expensive.20
Two further cautions follow. A trust is not a hiding place, because beneficial ownership rules follow the true owner and disclosure obligations do not stop at the trust deed. Neither is it a tax shelter, since trust income and gains remain within the fiscal regime consolidated by the Nigeria Tax Act 2025.21 A trust is a succession instrument. Put to any other use, it will fail.
The Payroll Is Part of the Estate.
Legacy is usually discussed in terms of what the family receives. The more important question is what the workforce receives.
Statutory obligations do not die with the founder. Unremitted pension contributions survive as liabilities of the business and, in practice, as a claim against the estate. The Pension Reform Act 2014 fixes a minimum total contribution of eighteen per cent of monthly emolument, ten from the employer and eight from the employee,22 and employer contributions to the Employee Compensation Fund are separately mandated.23 A successor who inherits goodwill inherits the arrears with it.
There is also a brighter side. An employee share scheme can convert long-serving staff into stakeholders, giving the second generation allies rather than rivals. The statute already points that way, since directors are required to have regard to the interests of the company’s employees as well as those of its members.24 Few Nigerian boards have ever discussed that provision. They should.
When It Still Goes Wrong.
Sometimes the transition fails. Older Nigerian company law had a single answer to a distressed company: wind it up. CAMA 2020 changed that.
A company voluntary arrangement lets a company agree a binding repayment plan with its unsecured creditors, supervised by an insolvency practitioner, without a prolonged court process.25 Administration goes further still. An administrator takes control of the company, and the first statutory purpose of the appointment is to rescue it as a going concern.26
This belongs in an essay about legacy for one reason. Liquidation ends employment; rescue preserves it. A second-generation board that knows these options exist has a choice its grandfather never had.
Eight Things to Do This Quarter.
1. Make the will. Have it drafted, executed and lodged at the probate registry in the state where the assets are situated, and review it after every marriage, birth or major asset acquisition.
2. Stop relying on next-of-kin forms, which are contact details, nothing more. Update your bank mandates and pension nominations, and understand what each one actually does.
3. File your PSC particulars. Then collapse nominee holdings into the true owner’s name and bring the register of members up to date.
4. Put transmission in the articles. Provide for what happens when a member dies: pre-emption rights, a valuation method, a timetable, so the company need not wait on a court to learn who votes.
5. Take proper trust advice. Compare a will-only plan against a lifetime trust, and use a registered corporate trustee where the estate justifies the cost.
6. Clear statutory arrears first. Pension and employee compensation contributions come before dividends, because these are the debts that outlive you.
7. Give the successor a real board seat. Not a title, but one carrying duties, minutes and accountability, while the founder is still there to supervise.
8. Insure the key person. Life cover written for the company’s benefit funds the buy-out that keeps the business trading through the estate’s frozen months.
Coda.
This article seeks to be the more instructive of the two. Beyond having corporate governance rules in place, a founder needs a succession plan resting on a legal framework, leaving nothing to assumption about what he intended for the next generation once he is no longer there to explain it.
A Nigerian family business rarely collapses because the market turned. It collapses because a good man died on a Tuesday and nobody could then prove who owned the shares, or who the significant controller was. The courts will not ask what he intended. They will ask what he documented. Every month of that uncertainty is a month of wages a young Nigerian does not earn.
The instruments are ordinary and the cost modest: a will, a register, a trust deed, a set of articles that anticipates death. Legacy is not built in grand gestures. It is built in the filing.
Endnotes
1. National Bureau of Statistics, Nigeria Labour Force Survey (NBS 2024).
2. SMEDAN and NBS, National Survey of Micro, Small and Medium Enterprises (MSMEs) (SMEDAN/NBS 2021).
3. Marriage Act, Cap M6, Laws of the Federation of Nigeria 2004; Administration of Estates Law, Cap A3, Laws of Lagos State 2015. The applicable statute varies with the deceased’s state of domicile.
4. Companies and Allied Matters Act 2020, ss 178–180. A personal representative may transfer the deceased member’s shares although not himself a member, but the company registers nothing without sight of the grant.
5. Bills of Exchange Act, Cap B8, Laws of the Federation of Nigeria 2004, s 75(b): the duty and authority of a banker to pay a cheque drawn on him by his customer are determined by notice of the customer’s death. See also the Administration of Estates Law (n 1) on the title of personal representatives, and Banks and Other Financial Institutions Act 2020 on the treatment of dormant balances.
6. Companies and Allied Matters Act 2020, s 42 (a registered company is a body corporate with perpetual succession, distinct from its members); Salomon v A Salomon & Co Ltd [1897] AC 22 (HL).
7. Companies and Allied Matters Act 2020, s 18(2) (one person may form a private company); read with ss 178–180 (n 2) and s 271 on the minimum number of directors.
8. Ukeje v Ukeje (2014) 11 NWLR (Pt 1418) 384 (SC).
9. Onyibor Anekwe v Nweke (2014) 9 NWLR (Pt 1412) 393 (SC), delivered the same day as Ukeje (n 6).
10. Constitution of the Federal Republic of Nigeria 1999 (as amended), s 42(1)–(2); on the repugnancy doctrine see also Mojekwu v Mojekwu (1997) 7 NWLR (Pt 512) 283 (CA).
11. Joseph v Fajemilehin O O (2012) LPELR-9849 (CA).
12. Companies and Allied Matters Act 2020, ss 119–120.
13. Persons with Significant Control Regulations 2022 (Corporate Affairs Commission), made pursuant to the Companies and Allied Matters Act 2020.
14. Companies and Allied Matters Act 2020, s 341, codifying the rule in Foss v Harbottle (1843) 2 Hare 461.
15. Companies and Allied Matters Act 2020, ss 346–351.
16. ibid ss 353–354. Standing is conferred on a member, a director, a creditor or the Commission; the sections prescribe no minimum shareholding.
17. ibid s 355; see also s 571 on winding up on the just and equitable ground.
18. ibid ss 305, 306, 308 and 309.
19. Investments and Securities Act 2025, repealing the Investments and Securities Act No 29 of 2007. Corporate trustees are registered and regulated by the Securities and Exchange Commission as capital market operators.
20. Companies and Allied Matters Act 2020, Part F, ss 823 and following.
21. Nigeria Tax Act 2025.
22. Pension Reform Act 2014, s 4(1).
23. Employee Compensation Act 2010, s 33.
24. Companies and Allied Matters Act 2020, s 305(4).
25. ibid ss 434–442.
26. ibid ss 443–444; by s 444(2), rescuing the company as a going concern is the administrator’s primary objective.
Disclaimer
This publication is provided by AEO Law Practice for general information only. It does not constitute legal advice and does not create a solicitor–client relationship. Succession, tax and corporate obligations vary by state and by personal law; readers should obtain specific professional advice on their own circumstances before acting. © AEO Law Practice 2026. All rights reserved.
Adeola Osifeko, LLB, BL, LLM, ACIS ABR
Founding Partner, AEO Law Practice| Lagos, Nigeria |
Blog: http://www.aeolawpractice.blog | LinkedIn · Instagram: @AEO Law Practice X: @aeo_lawpractice
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