PROTECTION OF SHAREHOLDERS’ AND INVESTORS’ RIGHTS VIDEEFFECTIVE CORPORATE GOVERNANCE: AN APPRAISAL

Abstract

The  concept  of  lifting  the  veil  of  incorporation  is  an  important  element  in the  effective  governance  of  corporate entities  worldwide.  Natural  persons  rather  than  corporate  entities  are  held  liable  for  negligent  acts  performed during their day to day operations as Executives and Management staff of companies. The principal objective was to carry  out  their  functions  with  due  care,  diligence  and  utmost  good  faith  but  the  reverse  has  been  the  case  being entitled to bonus salaries and emoluments even when the investor’s interests and shareholders’ interests have not been  duly  considered.  This  act  of  negligence  on  management  passes  the  financial  brunt  of  wrong  decisions, uncalculated management risks, and avoidable losses incurred by the company to the shareholders. This article took a  journey  from  several  jurisdictions,  dissecting  their corporate  governance  rules  and  pin  pointing  particular regulations  that  were  aimed  at  protecting  the  interests  of  shareholders  and  investors.  Of  particular  emphasis  was the  corporate  governance  laws  of  Nigeria,  and  recent  developments  in  the  Nigerian  LegalSystem,  which  ensured adequate  protection to shareholders and investors in the  day  to day decisions making by the  management of these companies.  Areas  where  the  opinions  of  shareholders  were  sought  before  major  decisions  were  taken  were highlighted. Avenues offered by these rules and regulations to aggrieved shareholders who may want to contest the decisions by the management of these companies where they are minority or majority shareholders were discussed.  The  study  compared  the  different  rules  guiding corporate  governance  in  different  jurisdictions  and  suggested  the best applicable rules. The Methodology used was the doctrinal research method which required the use of primary and secondary  research materials. It was recommended that the  relevant regulatory  periodically issued laid down codes of governance to guide corporate businesses