Protection of minority shareholders under Nigerian Company Law

Abstract

The protection of the minority shareholders within the domain of corporate activity constitutes one of the most difficult problems facing modern company law. The aim must be to strike a balance between the effective control of the company and the interest of the small and individual shareholders. As such, a proper balance of the rights of majority and minority shareholders is essential for the smooth functioning of the company. This study examined the provisions of Companies and Allied Matters Act 1990, on the legal protection of the minority shareholders in company management with a view of exposing its strength and weaknesses. Doctrinal method of research was used in this study which entails looking at the law as it is and considering the general principles underpinning the law. This study found out among other things that company meetings have been provided as an important tool for minority shareholders protection in Nigeria but that has been circumvented through the system of voting adopted especially in the election of directors that makes it difficult if not impossible for minority shareholders to elect their representative on the board of directors and also the shareholders or their proxies physical attendance at the meeting. It is therefore recommended among others that the Companies and Allied Matters Act should provide for mandatory cumulative voting system and electronic participation of shareholders or their proxies at the company’s meetings.

Keywords: Minority shareholders, Company Law, Nigeria, Protection, Companies and Allied Matters Act