Dilemma of minority shareholders in Nigeria company law

Abstract

The Nigerian company law framework is designed to provide a legal structure that governs the rights, obligations, and relationships between various stakeholders in companies. Among these stakeholders, shareholders play a crucial role in the governance and decision-making processes. However, the Nigerian company law presents a series of dilemmas for shareholders, posing challenges to their rights, protection, and effective participation in corporate affairs. Shareholders often face challenges in accessing accurate and timely information about corporate affairs, financial performance, and risk factors. This lack of transparency undermines shareholders' ability to make informed decisions, hindering their capacity to hold management accountable and protect their investments. Moreover, the limited enforcement mechanisms within the Nigerian company law contribute to the shareholders' dilemma. Weak regulatory oversight and the slow judicial process make it difficult for shareholders to seek redress for violations of their rights or for instances of corporate misconduct. The absence of efficient dispute resolution mechanisms adds to the shareholders' predicament, discouraging their active participation in corporate governance and eroding investor confidence to address the shareholders' dilemma in Nigerian company law. Thus, the dilemmas faced by minority shareholders in Nigerian company are explored and equally shed light on their implications for corporate governance and investor confidence. It was found that the dominance of majority shareholders is a primary dilemma in Nigerian company law, as it allows controlling shareholders to exert undue influence and prioritize their interests over minority shareholders. This raises concerns regarding fair treatment, equitable distribution of dividends, and access to relevant information for effective decision-making. The absence of comprehensive protections for minority shareholders further exacerbates this dilemma, leaving them vulnerable to exploitation and dilution of their rights. Therefore, it is recommended that there is need to enhance the minority shareholder protections by strengthening disclosure requirements, improving regulatory oversight, and streamlining the legal framework for efficient dispute resolution.