[2017] KEHC 3940 (KLR)
The court found that the applicant, as administrator of the estate of the deceased majority shareholder, had demonstrated sufficient interest and capacity to bring a derivative action on behalf of Vineyard Valuers Ltd, but such action should be brought jointly with her co-administrator. The court further held that...
Source-derived case information.
- Citation
- [2017] KEHC 3940 (KLR)
- Parties
- Applicant: Anna Wanjiku Kinyua; Respondent: Eliud Karani Murimi
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Miscellaneous Civil Application 245 of 2017
- Procedural Posture
- Miscellaneous Application / Ruling on Application for Leave to Bring Derivative Action and Injunctive Relief
- Outcome
- Application allowed in part.
- Judges
- RB Ngetich
- Legal Topics
- Derivative Actions, Shareholder Rights, Company Management, Transmission of Shares
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Anna Wanjiku Kinyua
Applicant
Eliud Karani Murimi
Respondent
Procedural Posture
Miscellaneous Application / Ruling on Application for Leave to Bring Derivative Action and Injunctive Relief
Legal Issues
- 1 Whether the applicant has locus standi to bring a derivative action on behalf of Vineyard Valuers Ltd as administrator of the deceased shareholder's estate.
- 2 Whether the respondent should be restrained from unilaterally managing the affairs and bank accounts of Vineyard Valuers Ltd without the applicant's concurrence.
- 3 Whether the respondent should be compelled to account for monies received and withdrawn from the company's accounts.
Ratio Decidendi
The court found that the applicant, as administrator of the estate of the deceased majority shareholder, had demonstrated sufficient interest and capacity to bring a derivative action on behalf of Vineyard Valuers Ltd, but such action should be brought jointly with her co-administrator. The court further held that the respondent, having failed to respond to the application, should be restrained from unilaterally managing the company or operating its bank accounts without the concurrence of both administrators. The respondent was also directed to account for all monies received and withdrawn from the company's accounts. The court was satisfied that the applicant had established a prima...
Court Disposition
Application allowed in part.
Orders
- Leave granted to bring derivative proceedings, provided both administrators act jointly.
- The respondent is restrained from unilaterally making decisions or operating company accounts without concurrence of the applicant and Kennedy O.A.Hongo.
Full Case Text
Judgment text and source record
30 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
COMMERCIAL AND ADMIRALTY DIVISION-MILIMANI
MISC CIVIL APPLICATION NO.245 OF 2017
ANNA WANJIKU KINYUA..............................................APPLICANT
VERSUS
ELIUD KARANI MURIMI................................................DEFENDANT
RULING
This is a ruling on application dated 30th may 2017 brought under section 238 of the companies Act 2015. The applicant seeks the following orders:-
1. Leave to bring these proceedings and /or a separate suit as derivative action.
2. that the respondent be restrained from taking and making decisions, giving instructions, writing and signing letters,notices,forms,deed,minutes,resolutions,returns and any other documents in the name and on behalf of the company VINEYARD VALUERS LIMITED without consent or concurrence of the applicant
3. that the respondent by himself, his agents, servants or otherwise be restrained from accessing and operating bank accounts operated by VINEYARD VALUERS LTD listed in prayer 4
4. that the respondent be directed to account to the applicant all monies received into and withdrawn from all the accounts operated by VINEYARD VALUERS LTD as listed in prayer 5
Grounds on the face of the application are that the applicant is the wife and legal representative of the estate of GORDON ODHIAMBO NYABANDE who died on 5th October 2014; that VINEYARD VALUERS LTD was incorporated on 15th October 2004 with the deceased as majority shareholder with 8,300 shares and the respondent having 1000 shares. That the deceased’s shares have been transferred or transmitted to the applicant herein by operation of law under section 238 of the companies Act. That the respondent is operating as director without consulting the applicant and the company is in danger of being run down.
The application is supported by the affidavit sworn by the applicant herein on 30th may 2017. She attached Grant of letters of administration confirming that applicant together with Kennedy O.A.Hongo are legal administrators of the estate of GORDON ODHIAMBO NYAMBANDE.
I have also perused the letter dated 21st September 2015 from Assistant registrar of companies which confirm that the deceased had 8,300 shares and the respondent and one Geoffrey Rono Kiplangat had 600 and 400 shares respectively. Attached to the affidavit is unsigned transfer of shares by the said Geoffrey Rono Kiplangat and release letter from the company dated 24th may 2014.
The applicant has annexed letters dated 2/2/2017, 9/1/2017&3/5/2017 indicating rent arrears and service charge. Default notice from KRA dated 11/9/2016, 31/10/2016, 30/11/2016, 10/2/2017, 10/3/2017, 10/4/2017 & report showing amount due as 481,110. 76 are also attached.
Counsel for the applicant indicated that the respondent was served on 8/6/2017. Affidavit of service filed the same day confirmed that the respondent was served with the present application. The respondent has not entered appearance nor file response to the application.
From the documents attached herein, it is evident that the deceased GORDON ODHIAMBO NYABANDE owned majority shares in VINEYARD VALUERS LTD. Letters of administration also confirm that the APPLICANT herein and one KENNEDDY O.A.HONGO are administrators of the deceased’s estate. Documents attached also confirm the company is in arrears in payment of rent and tax. The above has not been controverted. Memorandum and articles of association is attached to the application herein. Article 38 provide for transmission in event of death.it recognizes of the administrators of the estate of the deceased.it is evident that the company is not running well. The applicant has the capacity and reason to bring this proceedings as derivative action but that should be done together with her co-administrator of the estate of the deceased one Kennedy O.A.Hongo.
I also find that sufficient reasons have been given to restrain the respondent from solely carrying dealings that relate to the company enumerated in prayer 3 and accessing or operating accounts listed in prayer 4. The above to be carried out in consultation with the applicant herein and the said Kennedy O.A.Hongo.
I further direct the respondent to give an account of monies received and withdrawn from accounts listed in prayer 5 to the applicant and the said Kennedy O.A.Hongo.
Costs to the applicant.
Dated and Delivered this…14TH ….…day of...…JULY 2017
………………………
RACHEL NGETICH
JUDGE
IN THE PRESENCE OF
…………………………….....COURT ASSISTANT
……………………………......COUNSEL FOR APPLICANT
……………………………......RESPONDENT