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The short answer
Under section 394 of CAMA 2020 a small company is a private company with turnover of not more than ₦120 million, net assets of not more than ₦60 million, no foreign or government members, and directors holding at least 51% of its equity. Such a company is exempt from audit (s.402), need not have a company secretary (s.330) or hold an AGM (s.237), and may have one director (s.271).
The qualifying tests
Section 394(3) of the Companies and Allied Matters Act 2020 sets six conditions, all of which must be met:
- It is a private company.
- Turnover is not more than ₦120,000,000 (or a higher amount CAC fixes).
- Net assets value is not more than ₦60,000,000 (or a higher amount CAC fixes).
- None of its members is an alien (a foreigner).
- None of its members is a government, government corporation or agency, or its nominee.
- For a company with share capital, the directors between them hold at least 51% of its equity share capital.
Note the word "and": failing any one test means the company is not small, however modest its turnover. The Act lets CAC raise the turnover and net assets limits. We did not find a CAC notice changing them; check with CAC or your accountant if your figures are close to either line.
Timing rules
A new company is small in its first financial year if it meets the conditions that year (section 394(1)). After that, section 394(2) looks at two years: it stays small if it meets the conditions this year and last, or meets them this year and was small last year, or met them last year and was small that year. In effect, one year over the line does not immediately end small status. For a financial year shorter than 12 months, the turnover limit is scaled down proportionately (section 394(4)).
What a small company is exempt from
| Requirement | Other companies | Small company | CAMA 2020 |
|---|---|---|---|
| Audit of accounts | Required | Exempt (not banks, insurers or companies CAC prescribes) | s.402 |
| Company secretary | Required | Not required | s.330(1) |
| Annual general meeting | Every year | Not required | s.237(1) |
| Number of directors | At least two | One is enough | s.271(1) |
| AGMs held in Nigeria | Required | Exempt | s.240(1) |
| Financial statements delivered | Full | May deliver modified statements | s.393, Sixth Schedule |
Lower CAC fees
The CAC fee schedule gazetted on 29 May 2025 has a separate "small company" column. Compared with other private companies, a small company pays less for several filings:
| Filing | Small company | Private, other than small |
|---|---|---|
| Change of name | ₦10,000 | ₦20,000 |
| Post-incorporation filings (other than annual returns) | ₦5,000 | ₦10,000 |
| Voluntary striking off | ₦25,000 | ₦50,000 |
| Relisting | ₦25,000 | ₦50,000 |
| Same-day filing surcharge | ₦20,000 | ₦30,000 |
| Annual return penalty, one-off | ₦1,000 | ₦2,000 |
| Daily default penalty (other defaults) | ₦100 | ₦200 |
Worked example: in or out?
Example only. Company A: private, turnover ₦95 million, net assets ₦40 million, two Nigerian directors owning 100%. All six tests met: small. Company B: same figures, but a UK-resident investor holds 10%. Test 4 fails because a member is an alien: not small, so it needs an auditor, a company secretary, two directors and an AGM. Company C: turnover ₦130 million this year, ₦100 million last year, and it was small last year. Under section 394(2)(c) it met the conditions last year and was small then, so it can still be treated as small this year; if it is over again next year, it loses the status.
Common misunderstandings
- "Small" is not about staff numbers. Section 394 defines how employees are counted, but the qualifying conditions are turnover, net assets, ownership and directors' shareholding. A company with many staff can still be small.
- Being small does not reduce tax by itself. Tax thresholds are set by tax law, not by CAMA; check the Nigeria Revenue Service rules separately.
- A small company can choose to do more. Nothing stops a small company from appointing a secretary, holding an AGM or having its accounts audited. Lenders and investors often ask for audited accounts anyway.
- Public companies never qualify. The first test is that the company is private.
- Directors' 51% means equity shares held by directors themselves. If the founders resign as directors and keep their shares, the test can fail even though nothing else changed.
What to check each year
- Turnover and net assets from the latest accounts against ₦120 million and ₦60 million.
- The register of members: any foreign or government shareholder?
- Whether directors still hold 51% or more after any share transfers (see transferring shares).
- If status is lost, appoint a second director within one month (s.271(2)), a secretary and an auditor.
- Annual returns are due whatever the size; see CAC annual returns.
Keep a short annual note on file recording the figures you used and the conclusion, signed by a director. If CAC, a bank or a tax officer later asks why the company had no auditor or secretary, that note answers the question quickly.
For one-person companies, read single-member company rules alongside this.
Where Pryme fits
Even without an audit, a small company needs tidy books. A Pryme Business Account comes with a Finance agent that prepares reconciliations and reports for a person to approve, so year-end figures for the section 394 tests are ready when you need them.
Questions people ask
What is a small company under CAMA 2020?
A private company with turnover up to ₦120 million, net assets up to ₦60 million, no foreign or government members, and directors holding at least 51% of equity (section 394).
Does a small company need an audit in Nigeria?
No. Section 402 exempts small companies from audit, except banks, insurers and companies CAC prescribes.
Does a small company need a company secretary?
No. Section 330 requires a secretary for every company except a small company.
Can a company with a foreign shareholder be a small company?
No. Section 394 requires that no member is an alien.
Sources
- Companies and Allied Matters Act 2020, full text (2020) · accessed Oct 2026
- CAC New Schedule of Fees, Official Gazette No. 92 Vol. 112 (29 May 2025) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.