AN ANALYSIS OF THE EFFICACY OF MINORITY PROTECTION UNDER NIGERIAN COMPANY LAW

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ABSTRACT


This dissertation entitled „‟An Analysis of the Efficacy of Minority Protection under
Nigerian Company Law‟
which analyzed the principle of majority rule vis-à-vis remedies
for protection of minorities under Nigerian company law was aimed at ascertaining
whether the Nigerian company law had made enough protection for minority shareholders
in the face of majority rule, and whether such protection were adequate, realistic,
practically realizable and enforceable. It is trite law that a registered company is a
separate legal entity different from the shareholders or members of the company. The
officers of the company are usually appointed by the general meeting to conduct the
affairs of the company in a manner that would serve the best interest of the company and
also the members. The shareholders of the company can be categorized into two –
majority and minority shareholders. The decisions regarding the affairs of the company
and issues affecting the welfare of the shareholders were ordinarily supposed to be taken
at a general meeting in a democratic manner. In other words, where matters were put to
vote, each member was entitled to one vote, unless a poll was taken in accordance with
the provisions of the company‟s articles or the Companies and Allied Matters Act 2004.
However, most times it was found that the majority shareholders (who may also be
directors or officers of the company) would want to impose their views on the minority
shareholders, in order to have their way. Similarly, the majority often ran the affairs of the
company in an illegal, irregular or oppressive manner, just to satisfy their own selfish or
pecuniary interests, without considering the interests of the company or the minority
shareholders. In arriving at decisions at meetings and to justify the implementation of
such decisions, they usually labeled them „‟majority decisions‟‟ or „‟majority rule‟‟ in
order to stifle minority opinion. In such situations, what can the minority do to assert their
rights and redress the wrongs being perpetrated on them by the majority or is their
situation hopeless, helpless and without any remedy? It was the existence of this problem
that motivated this work. The work attempted to review the adequacy cum efficacy of the
remedies available to minority shareholders in the face of oppression of the majority vis-
à-vis current events in company transactions in Nigeria. The sources of information used
here is doctrinal method of acquiring data, thus combining several documents, including
statutes, law texts, journals, law reports, pamphlets, conference proceedings, and internet
to accomplish the work. In conclusion, the researcher found that the doctrine of minority
protection seemed not to be much of a reality under the Nigerian company law. The
research found that the lack of award of damages for personal action or representative
action as provided in Section 301 of CAMA could discourage aggrieved minorities to
pursue remedies. It was also found that in Section 300 (d) CAMA, the expression
committing „‟fraud‟‟ is strong and connotes commission of crime; so by law of evidence,
it requires a higher standard of proof, that is, beyond reasonable doubt. It was equally
found in Section 301 (4) CAMA that the provision for security for cost by the court
unnecessarily raises the standard of requirement for enforcement of rights or enjoyment
of protection afforded a minority by that provision. Accordingly, it was recommended
(among others) to provide stiffer penalties in the law and for our courts to be courageous
to apply the sanctions with full weight, without prejudice to the status of the offender. It
was also recommended that there is need to include the award of damages as one of the
remedies available to an applicant under Section 301 CAMA especially where he could
prove any financial loss suffered as a consequence of any breach by the company or
director.

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