AN EXAMINATION OF INVESTORS’ PROTECTION UNDER NIGERIAN LAW
CHAPTER ONE
GENERAL INTRODUCTION
1.1 Background to the Study
An investor is a person who puts money into financial schemes, shares, or property with the expectation of making a profit. An investor is someone who commits capital in order to gain financial returns or a person who commits money to investment products with the expectation of financial return. An investor is a person, company, or Organization who has money invested in a venture with a hope of returns especially one that holds stock in publicly owned corporation. Generally, the primary concern of an investor is to minimize risk while maximizing return. An investor can be a shareholder or a creditor. A person who buys shares or owns shares in a company becomes an investor in that company and a person, company or organization that lends money or supplies goods on credit to a company becomes a creditor of that company.
The company is a dominant feature in every facet of the Nigerian economy from banking to oil and gas, health to recreation, construction to agriculture just to mention a few. In every company there are investors. Gone are the days when sole proprietorship was the most preferable form of business wherein the capitalists invested and earned profits out of the business for themselves. Though sole proprietorships still exist, they are not the most common forms of business today. Taste of the consumers have changed, technology has advanced manifold and production at large scale. To meet these needs the company form of business came into existence to accommodate the shift from traditional goods to capital goods and technological products which require huge amount of labour and capital, supply which was not possible for a person or handful of persons to readily make available by the sole proprietorship .
The company is a means whereby the wealth of innumerable individuals has been concentrated into huge aggregates and whereby control over this wealth has been surrendered to a unified direction. The power attendant upon such concentration has brought forth princes of industry whose position in the community is yet to be defined . The surrender of control over their wealth by the investors has effectively broken the old property relationships and has raised the problem of defining these relationships anew. The direction of industry by persons other than those who have ventured their wealth has raised the question of the motive of such direction and the effective distribution of the returns from business enterprise.
The typical business unit of the 19th century owned by individuals or small groups; was managed by them or their appointees; and was, in the main, limited in size by the personal wealth of the individuals in control4. These units have been supplanted in ever greater measure by great aggregations in which tens and even hundreds of thousands of workers and property worth hundreds of millions of Naira, belonging to several individuals, are combined through the corporate mechanism into a single producing organization under unified control and management . As the ownership of corporate wealth has become more widely dispersed, ownership of that wealth and control over it has come to lie less and less in the same hand. In theory, the company is owned and controlled by its shareholders. Directors and managers should therefore conduct its affairs in the sole interest of those shareholders. The profit motive should prevail, in the sense that decisions on the future of the company should ultimately be determined by the search of the possible long- term return on capital, even if that means the liquidation of a particular company and the reinvestment of the capital in it . The reality of course is very different, management has an obvious vested interest in the survival of the enterprise as a source of personal livelihood and may often regard the interest of shareholders as subordinate to those of the company itself as a continuing enterprise with duties to its customers, its suppliers, its employees and even to the public at large.
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