Protecting Minority Investors

Protecting The Rights And Interest Of Minority Investors

As a way of protecting the rights and interest of minority investors against misuse of corporate assets by directors for their personal gain, the government has proposed reforms covering the strength of shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The reforms are facilitated by the Presidential Enabling Business Environment Council (PEBEC) in collaboration with the Corporate Affairs Commission (CAC).

Reforms that are being reviewed in the Companies and Allied Matters (CAM) Bill 2018 to be passed

Expansion of the rights of shareholders, especially minority investors


Impact

  • Existing shareholders maintain their rights of first refusal when new or unissued shares are issued/sold

Expansion of the rights of shareholders, especially minority investors

Extent of shareholders’ ownership and control of the company strengthened.

Impact

  • Approval must now be obtained from majority shareholders in cases of an intended sale of more than half of the company’s assets.

Enhancement of transparency and strengthening of corporate governance


Impact

  • Private companies must have a board of directors comprising at least three independent directors.
  • There is now a restriction on the appointment of the same person as CEO and Chairman of a private company

Enhancement of transparency and strengthening of corporate governance

REFORM OUTCOMES

Nigeria currently ranks 38 in the Protecting Minority Investors indicator on the 2018 World Bank Doing Business Index

The Companies and Allied Matters (CAM) Bill will ensure that the courts can now cancel third-party transactions that are proved to be unfair, oppressive or which may cause economic harm to the company generally

The Companies and Allied Matters (CAM) Bill will ensure that shareholders can hold the board responsible for damages caused by third-party transactions upon the grounds of conflict of interest

The Companies and Allied Matters (CAM) Bill will ensure that when a director causes financial loss to the company, s/he can be disqualified from serving on the board for up to one year

Corporate Affairs Commission (CAC)

Website - new.cac.gov.ng/home

Office address - Plot 420, Tigris Crescent, Off Aguiyi Ironsi Street, Maitama, Abuja, Nigeria.

Phone - +234-818-229-8971 / +234-818-229-9016 / +234-908-740-1600 / +234-908-740-1599 / +234-908-740-1598

Twitter - @cacnigeria1

Facebook - @cacnigeria1

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