*Transferor remains legal owner until Transferee is registered
*Rules unexecuted share transfer forms confer no title
The Supreme Court has held that an agreement to buy shares, standing alone, does not pass legal title to the purchaser, and that a transfer becomes complete only where the instrument of transfer has been duly executed and the transferee’s name entered in the company’s register of members.
The apex court laid down the position in Binez Hotels Limited v. Bureau of Public Enterprises & Anor, decided by a panel comprising Ogunwumiju, Jauro, Sankey, Ogbuinya and Umar, JJSC.
Binez Hotels Limited, acting through Future View Securities Limited, agreed to purchase 13,000,000 ordinary shares in Nigerian Cement Company Nkalagu Plc for ₦7,020,000.00, representing 10 per cent of the company’s issued share capital. The shares belonged to the Federal Government and were listed on the Nigerian Stock Exchange.
After the appellant paid by cheque, the Bureau of Public Enterprises conveyed the approval of the transaction by the National Council on Privatisation. The share transfer forms required to give effect to the transfer were, however, never executed.
The Council later cancelled the negotiations in exercise of its statutory powers, the shares were sold to the Ebonyi State Government under the privatisation framework, and the appellant’s cheque was returned through Future View Securities without value.
Binez Hotels commenced an action by originating summons, seeking declarations that it had acquired a valid interest in the shares and challenging the respondents’ conduct. The trial court dismissed the suit in its entirety, and the Court of Appeal affirmed that decision. The appellant then approached the Supreme Court against the concurrent findings.
The issue for determination was whether, having regard to section 151 of the Companies and Allied Matters Act, 1990, the sale was validly concluded so as to vest legal or equitable rights in the appellant.
Counsel for the appellant argued that a binding contract came into existence once the purchase price was paid and governmental approval obtained, and that execution and registration of the transfer documents were merely procedural steps of perfection. He submitted that the appellant thereby acquired an equitable interest, that the Bureau held the shares as a constructive trustee, and that the cancellation and subsequent sale amounted to a breach of that obligation.
For the first respondent, it was contended that the transaction never moved beyond negotiations, that it was lawfully terminated before completion, and that ownership remained with the Federal Government, which was accordingly free to dispose of the shares. Counsel added that no trust or fiduciary duty could arise from an incomplete and unperfected transaction.
Counsel for the second respondent similarly submitted that the transaction was never consummated, relying on the return of the cheque without presentation as showing that the consideration was never received. Any loss suffered by the appellant, he argued, sounded in damages or refund rather than in a claim of title.
The Supreme Court resolved the issue against the appellant. It held that a mere agreement for the sale of shares does not vest legal title in the purchaser; the requisite instrument of transfer must be executed and the transferee registered as a member before the transfer is complete and effective. Until then, the transferor remains the registered holder.
Applying that principle, the court found that the appellant acquired no legal or proprietary interest in the 13,000,000 Nigercem shares, the transfer forms having never been executed and the transfer never registered. The appellant could therefore neither assert title nor question the subsequent disposal of the shares.
The issue was resolved in favour of the first respondent.
Chief Chijioke Okoli, SAN, with Chief Isaac Anumudu; Lawrence Unumudu; Kingsley Ezengwoke and A. Nosagba, appeared for the appellant. Ayo Olanrewaju, with Tolani Layi-Babatunde; Kehinde Salimon and Abdulrahman M. Sani, appeared for the first respondent, while Uwaifo L. Ogedengbe appeared for the second respondent.
The decision draws a firm line between contract and conveyance in share transactions. Payment of the purchase price and even official approval of a sale do not, by themselves, move ownership; the statutory machinery of execution and registration does.
For purchasers, particularly in privatisation transactions where the seller retains statutory powers to withdraw, the practical lesson is that title remains at risk until the transfer instrument is executed and the buyer’s name appears in the register of members. A disappointed buyer in that position is left to pursue a refund or damages, not the shares themselves.
The judgment is reported at (2026) 7 CLRN in association with ALP NG & Co.
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