The Imperative of Shareholders Participation in Promoting Corporate Governance: Minority Protection and Majority Rule in Focus

Abstract

The basic principle governing the operation of shareholders’ democracy is that the rule
of majority must prevail. Essentially, this is to ensure that the power of the majority is placed
within reasonable bounds and does not result in the oppression of the minority and
mismanagement of the company. The minority interests, therefore have to be given a voice to make
their opinions count at the decision making level. Therefore, the law must balance the need for
effective decision making on corporate matter on the basis of consensus without permitting the
person in control of the company, being the majority to run the company in unfairly prejudicial
and oppressive manners which may ultimately result in corporate failure. This paper seeks to
consider the protection of the minority under the Companies and Allied Matters Act, 2020, as the
remedies available to minority shareholders in the Act have been expanded to include damages
and injunction while conditions for filing derivative action have been made stringent. While
nothing that in taking critical corporate decisions all members of the company must be involved
through resolution in their meetings, this paper concludes that balance must be struck between the
rule by the majority and the rights of the minority in order to promote good corporate practice.