An Examination Of Investors’ Protection Under Nigerian Law
A company has over time proven to be a very viable form of business, the company has grown tremendously in size and number of shareholders base making it necessary that a few people be selected to manage the company on behalf of the investors since all of them Laws are put in place to put a check on these managers to prevent corporate abuse and ensure that the company is managed with due care and skill to the benefit of the investors. This research has shown that the government lacks the will and determination for the prompt implementation of its laws despite all the efforts made in providing the law, there are also some loopholes can through which fraudulent and dishonest persons can take advantage of for their own personal gains thereby defeating the very essence of the laws which are investors protection. An examination of some of the laws provided to protect investors in Nigeria shows their inadequacies and the fact that it has become a mere academic exercise, ink on paper and is quite different from what is obtainable in practice. Doctrinal method of research was used in this research referring to statutory laws, textbooks, journals, newspapers and internet materials.
The findings were that; there is the lack of will by the regulatory bodies to implement the law, company meetings have been provided as an important tool for investors’ protection in Nigeria but that has been circumvented through late delivery of the notice of meetings or inefficiency of the postal system, the Companies and Allied Matters Act did not provide for qualifications for people to be appointed as members of the audit committee and the inspectors to investigate the affairs of a company and also in a bid for the provision of Section 63 of the Companies and Allied Matters Act to provide for division of powers among the board of directors and the shareholders it ended up bringing in terms as’ good faith’ and ‘due diligence’ which are subjective terms.
It is therefore recommended that; The regulatory bodies should ensure prompt implementation of its laws and policies; it should be mandatory that companies should use the message alerts and emails in addition to the traditional form of notice to inform share holders of any company meeting; The Companies and Allied Matters Act should provide for people to be appointed as members of the audit committee should be people with knowledge in accounting, company law and vast experience and section 63(4)of the Companies and Allied Matters Act should be Expunged. In conclusion it can be said that investors’ protection does not lie on the Government alone but on all stakeholders, it lies on the investors sought to be protected to be vigilant, exercise all their rights provided by law and for the regulatory bodies to live up to their role and enforce the provisions of the law when there is any violation.
1.1 Background to the Study
An investor is a person who puts money into financial schemes, shares, or property with the expectation of making a profit.1An investor is someone who commits capital in order to gain financial returns or a person who commits money to investment products with the expectation of financial return. An investor is a person, company, or Organization who has money invested in a venture with a hope of returns especially one that holds stock in publicly owned corporation. Generally, the primary concern of an investor is to minimize risk while maximizing return. An investor can be a shareholder or a creditor. A person who buys shares or owns shares in a company becomes an investor in that company and a person, company or organization that lends money or supplies goods on credit to a company becomes a creditor of that company.
The company is a dominant feature in every facet of the Nigerian economy from banking to oil and gas, health to recreation, construction to agriculture just to mention a few. In every company there are investors. Gone are the days when sole proprietorship was the most preferable form of business wherein the capitalists invested and earned profits out of the business for themselves. Though sole proprietorships still exist, they are not the most common forms of business today. Taste of the consumers have changed, technology has advanced manifold and production at large scale. To meet these needs the company form of business came into existence to accommodate the shift from traditional goods to capital goods and technological products which require huge amount of labour and capital, supply which was not possible for a person or handful of persons to readily make available by the sole proprietorship.
The company is a means whereby the wealth of innumerable individuals has been concentrated into huge aggregates and whereby control over this wealth has been surrendered to a unified direction. The power attendant upon such concentration has brought forth princes of industry whose position in the community is yet to be defined. The surrender of control over their wealth by the investors has effectively broken the old property relationships and has raised the problem of defining these relationships anew. The direction of industry by persons other than those who have ventured their wealth has raised the question of the motive of such direction and the effective distribution of the returns from business enterprise.
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