Minority Shareholders’ Rights and the Majority Rule under Corporate Governance: An Appraisal

Authors Oluwasegun Isaac Aderibigbe

ISSN: 2521-2605
Affiliations: Law lecturer and researcher, Faculty of Law, Bowen University, IWO, Nigeria
Source: Journal of Comparative Law in Africa, Volume 3 Issue 1, p. 100 – 113


This article examines minority shareholders’ rights under corporate governance; what those rights are and what they should be, particularly in developing jurisdictions like Nigeria. The article subscribes strongly to the quest for the recognition and enforcement of minority shareholders’ rights under corporate governance. Once a company is incorporated, it assumes a legal status distinct from its subscribers; it can sue and be sued in its corporate name. Consequently, whenever the company has been wronged it is only the company that can seek redress; this is founded on the doctrine known as the majority rule as laid down in Foss v Harbottle [fn1]. The courts and a number of corporate laws in developing jurisdictions have over the years laid down several exceptions to this rule, thereby giving the minority shareholders right to seek redress against the majority shareholders in certain circumstances. This article interrogates the rationale behind the exceptions to the majority rule, with a special focus on developing jurisdictions. The article concludes that the majority rule is tainted with oppressive intentions rather than being a strategic imperative, particularly in respect of the right of minority shareholders to seek redress in court and that the strict application of the majority rule may create some intricate practical and legal problems. The success of the free market economy depends on the success of companies which rely on the leadership and performance of directors. The success of companies depends on directors bringing enterprise and integrity into their relationships with all shareholders, particularly minority shareholders. This research paper makes a modest contribution to knowledge in the sphere of minority shareholders’ rights and discusses how to facilitate a robust regime of the recognition and enforcement of minority shareholders rights under corporate governance in developing countries. footnote 1: (1843) 2 HARE 461