LEGAL PROTECTION OF MINORITY SHAREHOLDERS IN NIGERIA: A MYTH OR A REALITY

Abstract

The chequered legal position is that once a company is incorporated, it becomes an
artificial person in law, capable of suing and being sued in its corporate name. The
corollary of this is that if a company is wronged, it is only the company, and the
company alone, that can challenge or remedy the wrong. However, this position is
not without exceptions, one of which is that an individual minority shareholder may
challenge the wrong done to the company, especially in matters of fraud committed
by the majority shareholders or the company‟s directors. This paper is therefore out
to examine the issue whether minority shareholders are really protected under the
law. The methodology employed in arriving at a logical conclusion in this paper is
doctrinal, with the use of both primary and secondary sources of law such as the
provisions of the Companies and Allied Matters Act, the relevant case law and text
books.
It
has been found that the protection accorded the minority shareholder is
inadequate. It has been suggested that in order to protect the minority shareholder,
appointment of directors of companies should be based on proportional
representation method with each class of shareholders represented on the board. This
is capable of guaranteeing some equity into corporate managements. There must also
be educational or enlightenment programmes for shareholders for increased
awareness and the urge to seek improvement on the various provisions affecting
shareholder‟s rights generally and the minority in particular.