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 Benue State University, Makurdi

BENUE STATE UNIVERSITY LAW JOURNAL


Extending the Ambit of Section 311 of the Companies and Allied Matters Act, 2004: The Elasticity of Unfair Prejudice and Oppressive Conduct


Nicholas Iorember Iorun*

Abstract

The corporate structure is a conglomeration of interests which are diametrically opposed to each other. The directors who are vested with the power to run the affairs of the company at times abuse the power and by law, they owe their duties to the company and not to individual shareholders. Among the investors of capital whose objective is maximization of returns, there are conflicts of interest but the controlling shareholders are not fiduciaries to the company or to the minority shareholders. Nevertheless, companies are regarded in law as democracies to be run on the democratic principle of majority rule and decisions taken by the majority more often than not, affect the minority negatively. The disaffected minority shareholders have to accept the decisions of the majority and even their domination as a fact of business life. The only way out is for the minority to turn to the law for help. But the common law courts had often shown unwillingness to interfere in internal affairs of companies or review matters of commercial judgment. As such, they interpreted Section 201 of the repealed Companies Act 1968 which provided for minority protection narrowly and failed to redress wrongs occasioned on the minority. Using the doctrinal method, this article finds that minority protection has witnessed a twist in the extant law through Section 311 jurisprudence. The section is wide to cover a variety of interests and categories of conduct that will found a petition by an aggrieved minority member of the company. However, there is need for an opentextured assessment and interpretation of the section by the courts to bring succour to minorities. It is also desirable to provide basic guidelines for the grant of some of the remedies the court is given the power to grant when a petition is successful, for example, a buy-out order, payment of compensation, and so on. The Act should also prohibit the controllers or majority using the company’s funds to defend petitions filed by the minority, and remove winding-up from the orders the court can make.

Key words: Ambit, Companies, Allied matters Act, unfair prejudice

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