RIGHT OF MINORITY

A company, though a legal fiction, operates through the actions and decisions of its shareholders and directors. The provisions of Companies and Allied Matters Act 2020 envisage democratic and inclusive processes that reflect on the interests of all shareholders. Yet, in practice, the principle that “the majority have their way and the minority have their say” often results in decisions that prejudice minority shareholders. Unarguably, it is a commonplace to see actions of majority shareholders that contradict the Act or Articles, which in result could be detrimental to the interest of the minority shareholders. Such an illegal practice impedes good corporate governance and could have a company destabilized. The landmark decision in Foss v Harbottle entrenched the majority rule doctrine, which has historically undermined minority rights. By this decision, a minority shareholder, at the expense of his legal right, is subjected to whims and caprice of the directors colluding with majority shareholders. This court decision is met with numberless criticism as it failed to insulate the corporate rights of minority shareholders. Given the wanton injustice suffered by the latter, the letters of CAMA, though, attempts to provide safeguards in exceptional cases, the discretionary power of the court and the procedural hurdles in initiating derivative actions may deter or deny minority shareholders adequate protection. This research critically evaluates the effectiveness of minority protection mechanisms in Nigeria and identifies the legal and institutional loopholes that allow collusion between majority shareholders and company directors. Drawing from comparative corporate law regimes in other jurisdictions, the study recommends reforms aimed at establishing a robust legal, institutional, and third-party framework that better secures the rights and interests of minority shareholder