LEGAL PROTECTION OF MINORITY SHAREHOLDERS: A CASE FOR THE ADOPTION OF CUMULATIVE VOTING TECHNIQUE IN NIGERIA

Abstract

Under the prevailing corporate governance system in Nigeria corporate decisions including the appointment of key managerial personnel like board members are based on the majority rule. This most often leads to minority shareholder oppression or sidelining in key corporate decisions like the election of the members of the board of directors. A robust minority shareholder protection engenders investor confidence in an economy and is a positive catalyst in attracting the much needed foreign investment at this critical period of Nigeria’s development. Following the practice in some other jurisdictions, emerging literatures in Nigerian company law are clamoring for the adoption of cumulative voting technique in Nigeria. This research aims therefore to critically analyze whether and how cumulative voting technique will improve protection of minority shareholders in Nigeria. The research adopts the doctrinal and analytical methods of research and relies on primary and secondary sources of data. The primary sources of data include statutes and case laws while the secondary sources include textbooks, journal articles, internet sources etc. The study found among other things that the Nigerian corporate culture is peculiar and will demand a more tailored approach. This paper identifies potential drawbacks and evolves practical strategies for implementing cumulative voting technique in Nigeria. It is recommended among others that enhancing minority shareholder activism and improving the existing corporate culture in Nigeria through sustained shareholder education and other measures will make the adoption of cumulative voting technique effective in improving minority shareholder protection in Nigeria.