Corporate treasurers and business owners in Nigeria are being reminded that a single unstamped company document can jeopardise access to bank loans, overdrafts, and factory financing.
Under the Stamp Duties Act (as amended), instruments that attract stamp duty but are left unstamped or insufficiently stamped are not admissible as evidence in any civil proceeding in Nigeria. This includes proceedings before courts, tribunals, and arbitral panels. For a company relying on a loan agreement, debenture deed, share charge, or corporate guarantee to secure credit, an unstamped instrument is effectively worthless in the eyes of the law.
Banks and financial institutions routinely insist on properly stamped documents before disbursing facilities. If a lender discovers that a document underpinning a credit request has not been stamped, the application will typically be suspended until the defect is cured. Where a facility has already been granted and a dispute later arises, the lender may find itself unable to enforce its security, and the borrower may be unable to prove the terms of the facility.
Corporate documents commonly requiring stamp duty include share transfer forms, debenture trust deeds, loan and credit agreements, guarantees, powers of attorney, and security documents such as legal mortgages and charges over assets. The duty is payable to the Federal Inland Revenue Service (FIRS), which serves as the competent authority for stamp duties on corporate instruments.
Adhesive stamps affixed to documents must be cancelled by the person executing the instrument, typically by writing across the stamp the date and the name of the person cancelling it, failing which the stamp is deemed not to have been used.
The Stamp Duties Act also imposes penalties for late stamping. Documents not presented for stamping within 30 days of execution (or within 30 days of first arrival in Nigeria, if executed abroad) attract penalties that increase the longer the delay persists. In some cases, interest and additional surcharges may apply.
Beyond access to credit, unstamped documents can create governance and compliance headaches during tax audits, mergers, due diligence exercises, and regulatory examinations. Regulators may treat unstamped instruments as evidence of weak internal controls, potentially triggering further scrutiny.
The advice for companies is straightforward: maintain a register of all executed corporate documents, confirm that each instrument has been duly stamped, retain evidence of stamping, and engage tax professionals where the applicable duty is unclear. In an environment where bank credit remains the lifeblood of Nigerian enterprises, the cost of stamp duty is negligible compared to the risk of having a facility frozen over a procedural oversight.
