AN ANALYSIS OF THE EFFICACY OF MINORITY PROTECTION UNDER NIGERIAN COMPANY LAW
When a company is incorporated, it acquires legal personality and it becomes a separate legal entity different from the members of the company. However, since the company is an artificial person, it can only act and function through natural persons. These persons may be members in general meeting or the board of directors or other officers of the company, who are entrusted with the day-to-day management of the affairs of the company.
In the conduct of company affairs, the management team is supposed to act in the best interest of the company. Accordingly, decisions are supposed to be reached through a democratic consensus. In other words, the issues are to be discussed at the general or board meeting, and resolutions passed by a unanimous consensus or by majority decision upon taking a vote. Even where, the majority shareholders will ultimately have their way, it is always important that the minority shareholders are allowed to have a say in the matter, before a decision affecting the company or the minority interest is reached.
In some instances, you find majority shareholders (who may be directors) who are in control of the company running the company in an illegal or irregular manner, without regard to the provisions of the law. At times they run the company in an oppressive manner to the detriment of the minority shareholders, under the cover of „majority rule‟ simply because they are in the majority.
Under such circumstances, is the minority helpless and without any remedy? Even where the law has provided for some remedies, are the shareholders aware of these remedies? In any event, how often are these remedies being utilized by minority shareholders? Also, how often are they being enforced by the courts? What is the adequacy of such remedies? It is also important to review the efficacy of these remedies vis-a-vis current events in company transactions. Can these remedies afford adequate protection to minority shareholders considering the current intrigues and realities associated with boardroom politics and struggle for control of company affairs amongst shareholders and/or directors?