What is the minimum authorized capital for incorporating a company in Cameroon

In Cameroon, there is a minimum authorized capital requirement for private and public limited liability companies. Authorized capital, also known as share capital, authorized share capital, registered capital, stated capital, or nominal capital, plays a crucial role in the formation and operation of companies.

What is Authorized Capital?

Authorized capital, or registered capital, is the maximum amount of share capital that a company can issue to its shareholders. This amount is specified in the company’s Articles of Association under the “Capital” clause and is established before the company is incorporated.

The authorized share capital can be increased at any time with the approval of the shareholders, following specific legal procedures. It serves as a limit to the company’s ability to issue new shares, thereby controlling the dilution of ownership and ensuring that the company operates within its financial framework.

Paid-up Capital

Many people often confuse authorized capital with paid-up capital. While authorized capital represents the maximum amount a company can issue, paid-up capital is the amount that has actually been issued and paid for by shareholders.

The portion of the authorized capital that has been issued to shareholders is referred to as issued share capital. Once the shareholders have paid for these shares, the total becomes the paid-up capital. The paid-up capital can be less than or equal to the authorized capital but never exceed it. This ensures that the company remains within its legally defined capital structure.

The Importance of Authorized Capital in Cameroon

The authorized capital serves as a regulatory mechanism, limiting the ability of company executives to issue new shares at will. In some countries, the requirement for a basic authorized capital has been abolished. However, in Cameroon and other member states of OHADA (Organisation for the Harmonization of Business Law in Africa), there are still mandatory minimum authorized capital requirements for limited liability companies.

Minimum Authorized Capital in Cameroon

Cameroon has specific minimum authorized capital requirements for both private and public limited liability companies.

Private Limited Liability Company

The minimum authorized capital for a private limited liability company in Cameroon was originally set at one million (1,000,000) francs CFA, according to OHADA regulations. However, a significant change was made through a Presidential Act on December 14, 2016, issued by President Paul Biya, which reduced the minimum registered capital to one hundred thousand (100,000) francs CFA.

This reduction was aimed at making it easier for entrepreneurs to start businesses. The law also stipulates that the minimum nominal value per share must be five thousand (5,000) francs CFA. This means that the total authorized capital must be divided into equal shares, each with a minimum nominal value of 5,000 francs CFA.

Public Limited Liability Company

For public limited liability companies in Cameroon, the minimum authorized capital is set at ten million (10,000,000) francs CFA. Unlike private companies, the nominal value of shares in public companies can be freely set in the company’s Articles of Association, provided it is a whole number.

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