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.

Title page  ..  .i 

Declaration    ii 

Certification   ..iii 

Dedication    .iv 

Acknowledgement   .v 

Abstract    . vi 

Table of content    .vii 

Table of cases   viii 

Table of statute    - ix

1.1      Background to the study        .. 1

1.2      Statement of the problem        - ..5

1.3      Aims and objectives of the study        .5

1.4      Justification  ..  5

1.5      Scope of the study ..  ..6

1.6      Research methodology - .6

1.7      Literature review  ..  6

1.8      Organisational layout   ..     .9

2.1      Introduction    -        10

2.2      The Evolution of Company        - 11

2.2.1   The Joint Stock System .13

2.2.2   The Beginning of Public Dealings       14

2. 2.3  The Companies Act of 1844        .. 18

2.2.4    The Introduction of Limited Liability        - 19

2.2.5    The Consolidation of Company law    -   . ..20

2.3      The Evolution of Company in Nigeria       ..23

2.4      The Capital Market   27

2.5      The Stock Exchange  ..29

3.1      Introduction    - 35

3.2      The Companies and Allied Matters Act 1990 (CAMA)     36

3.2.1   Division of corporate powers       37

3.2.2   Investigation of companies affairs      - - ..38

3.2.3   Disclosure    .45

3.2.4  Company accounts       . - 48

3.2.5  Financial statement  - 51

3.3      The Investment and Securities Act 2007      ..66

3.3.1   Disclosure under the Investment and Securities Act 2007   ..67

3.3.2  Public issue and the disclosure system    ,   70

3.3.3  Investigation under the Investment and Securities Act   ,, ..  74

3.3.4  Investors protection fund     ,,   75

3.4      Nigerian Investment Promotion Commission Act 1995    ..77

3.4.1  Investment Protection Assurances       . ..78

3.5      The Trustees Investment Act 1990    - .79

4.1      Introduction  ..       82

4.2      Lack of effective corporate governance      - 83

4.3      Corporate powers       .  -    ..85

4.4      The poor performance of auditors and the audit committees    - 88

4.5      The directors control of general meetings and shareholders apathy  93

4.6      Directors control of proxy instrument        - 96

4.7      High illiteracy rate in Nigeria       97

4.8      The postal system in Nigeria       .. .100

4.9      Corruption in Nigeria ..101

5.1      Summary    ..105

5.2      Conclusion        - .108

5.3      Findings    - 110

5.4      Recommendations  - 111