📊 Understanding Shareholders’ Rights under Nigerian Company Law

In Nigeria, shareholders are the backbone of every company. The Companies and Allied Matters Act, 2020 (CAMA) clearly spells out a framework of rights that empowers shareholders to safeguard their investments and hold management accountable. Whether you’re an individual investor or an institutional stakeholder, understanding these rights — and the remedies available when they’re violated — is essential for meaningful participation in corporate governance.

Below is a practical guide on the categories of shareholders’ rights under Nigerian company law and the legal steps available to enforce them.

🔑 Categories of Shareholders’ Rights

Under CAMA, shareholders enjoy three main classes of rights: economic rights, control rights, and remedial rights.

✅ 1. Economic Rights

These relate directly to a shareholder’s financial stake in the company:

• Right to Dividends: Shareholders are entitled to dividends declared out of the company’s distributable profits. However, dividends must be recommended by the board and approved by shareholders in a general meeting.

• Right to Residual Assets: If a company is wound up, shareholders have a right to a proportional share in any surplus assets after settling all liabilities.

• Right to Transfer Shares: Shareholders can transfer their shares freely, unless the company’s Articles of Association (especially in private companies) provide otherwise.

🗳️ 2. Control Rights

Control rights ensure that shareholders can take an active role in the company’s decision-making:

• Attend & Vote at Meetings: Shareholders must receive proper notice of meetings and have the right to vote on matters such as appointments, major transactions, or changes to the company structure.

• Appoint & Remove Directors: By ordinary resolution, shareholders can appoint or remove directors, thereby ensuring board accountability.

• Requisition Meetings: Shareholders who hold at least 10% of the paid-up share capital can demand an extraordinary general meeting to address urgent concerns.

• Access to Information: Shareholders have statutory rights to inspect certain documents, including the company’s register of members, audited financial statements, and meeting minutes.

• Pre-emptive Rights: To protect existing ownership percentages, shareholders may have the right of first refusal when new shares are issued.

🛡️ 3. Remedial Rights

Where rights are infringed or management acts improperly, shareholders have legal remedies:

⚖️ Key Legal Remedies for Shareholders

✅ Derivative Actions:A derivative action lets a shareholder sue on behalf of the company when the wrongdoers (usually directors) refuse to act. This is common in cases of misappropriation of assets or breach of fiduciary duties.

When is it available?

• The wrong must affect the company directly, not just the shareholder.

• The shareholder must first request the company to take action.

• The shareholder must act in good faith.

✅ Personal Actions:Where an individual’s rights — such as the right to vote or receive notice of meetings — are violated, they may sue personally to protect those rights.

✅ Oppression & Unfair Prejudice:Sections 353–354 of CAMA protect shareholders when the company’s affairs are conducted in a manner that is oppressive, unfairly prejudicial, or disregards members’ interests.

Common examples include:

• Exclusion from management in quasi-partnership companies.

• Misuse of company assets.

• Dilution of shares without proper justification.

Possible court remedies include:

• Regulating the company’s future conduct.

• Ordering the purchase of an aggrieved shareholder’s shares at fair value.

• Cancelling unfair transactions.

• Winding up the company as a last resort.

✅ Winding Up on “Just & Equitable” Grounds:When there is deadlock, loss of company purpose, or irreconcilable disputes, a shareholder may petition the court to wind up the company.

✅ Injunctions:Shareholders can apply for court injunctions to restrain proposed acts that could cause irreversible harm, such as unauthorized share allotments or asset sales.

🗂️ Special Protections for Minority Shareholders

CAMA 2020 strengthens the position of minority shareholders through:

• Court-sanctioned class actions for shareholders impacted by the same wrongdoing.

• The right to seek relief for oppression or unfair prejudice, regardless of how small the shareholding.

✨ Best Practices for Shareholders

• Stay informed about the company’s affairs.

• Attend meetings and exercise voting rights.

• Document concerns and communicate with the board where necessary.

• Seek prompt legal advice if your rights are threatened.

🏛️ Conclusion

Nigeria’s company law framework is built on a balance between majority control and minority protection. Whether you’re a startup founder with a few investors or a shareholder in a large corporation, your rights are enforceable under CAMA. Knowing these rights — and when to take legal action — helps protect your investments and promotes accountability in corporate governance.

🔗 Need Guidance?

At O.I.D. Legal Consult, we assist shareholders in enforcing their rights, resolving disputes, and navigating complex corporate issues.

📞 Email: oidlegalconsult@outlook.com 🌐 Website: www.oidlegalconsult.com

Disclaimer: This article is for general information only and does not constitute legal advice. For tailored legal assistance, please consult your lawyer.