AN EVALUATION OF THE PROTECTION AFFORDED MINORITY SHAREHOLDERS IN NIGERIA UNDER THE COMPANIES AND ALLIED MATTERS ACT, 2020

Abstract

The foundational principle of Nigerian corporate law, derived from the English case of Foss v Harbottle, dictates that the company is the proper plaintiff for wrongs committed against it. In that case, two members of a company alleged that its directors fraudulently sold their land to the company. The two members filed a case to compel the directors to remedy the loss suffered by the company. The Court held that the action would fail because the wrong was against the company; therefore, the company was the proper plaintiff. This rule seeks to preserve the distinct legal personality of a company, prevent a multiplicity of lawsuits, and uphold the democratic principle of majority rule. To prevent abuse of this rule, Sections 343, 344, 346 of CAMA 2020 codifies specific exceptions that allow the minority in a company to seek redress in Court.The aim of this paper is to determine the extent to which the rights of minority shareholders are protected under CAMA 2020. Using the doctrinal research methodology, this paper found that the ambiguity in some provisions of CAMA 2020 hinders the quest to balance the interests of the majority and the minority. The paper recommends, amongst others, that the Act should be made unambiguous regarding the length of pre-action notice required for Derivative Action like what obtains in other jurisdictions such as Singapore where 14 days’ notice is required. These measures would strengthen equity and justice in the internal affairs of Nigerian companies.