[2018] KEHC 84 (KLR)
The court found that the notice for the AGM was issued in compliance with statutory requirements, being served more than 21 days before the scheduled meeting. The applicants failed to explain their delay in seeking the court's intervention, having had ample time since 2013 or at least since the issuance of the AGM...
Source-derived case information.
- Citation
- [2018] KEHC 84 (KLR)
- Parties
- Applicant: John Nderitu Macharia; Applicant: Samuel Karimi; Respondent: Cyrus Munuhe Mwaniki
- Court
- High Court
- Court Station
- High Court at Nyahururu
- Jurisdiction
- Kenya
- Case Number
- Miscellaneous Civil Application 35 of 2018
- Procedural Posture
- Miscellaneous Application / Ruling on Interlocutory Application for Injunction and Leave to Prosecute Derivative Action
- Outcome
- Interim injunction declined; leave to prosecute derivative action granted.
- Judges
- RPV Wendoh
- Legal Topics
- Derivative Actions, Company Meetings, Shareholder Rights
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
John Nderitu Macharia
Applicant
Samuel Karimi
Applicant
Cyrus Munuhe Mwaniki
Respondent
Procedural Posture
Miscellaneous Application / Ruling on Interlocutory Application for Injunction and Leave to Prosecute Derivative Action
Legal Issues
- 1 Whether the applicants are entitled to an interim injunction restraining the Board from convening the Annual General Meeting scheduled for 5/10/2018.
- 2 Whether the applicants have demonstrated sufficient urgency and diligence in seeking the court's intervention.
- 3 Whether the company has complied with statutory requirements regarding holding of Annual General Meetings.
Ratio Decidendi
The court found that the notice for the AGM was issued in compliance with statutory requirements, being served more than 21 days before the scheduled meeting. The applicants failed to explain their delay in seeking the court's intervention, having had ample time since 2013 or at least since the issuance of the AGM notice to address their grievances. The court held that it would be inequitable to grant an injunction at the last minute, as the applicants had not acted with the requisite urgency or diligence. The application to stop the AGM was therefore declined, but leave to prosecute the derivative action was granted, with directions for its filing within 21 days.
Court Disposition
Interim injunction declined; leave to prosecute derivative action granted.
Orders
- Application for interim injunction to stop AGM is declined.
- Applicants to file derivative action within 21 days.
Full Case Text
Judgment text and source record
30 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NYAHURURU
MISC. CIVIL APPL. NO.35 OF 2018
JOHN NDERU MACHIRA
SAMUEL KARIMI................................................APPLICANTS
V E R S U S
CYRUS MUNUHE MWANIKI &
8 OTHERS..........................................................RESPONDENTS
R U L I N G
The applicants John Nderitu Macharia and Samuel Karimi filed this matter seeking leave of this court to prosecute a derivative action on behalf of Muhotetu Farmers Company Ltd and that the said leave do operate as stay. In the alternative, the applicants pray that the court grants an interim injunction restraining the Board of Directors from convening an Annual General Meeting on 5/10/2018. The court granted prayer 1 but asked the applicants to serve the application for hearing of the other prayers.
Today, some of the parties are before the court. So far, only the 1st, 2nd and 6th respondents have appeared. The other respondents are not yet served.
Because of time constraints, it is understandable why the respondents may not have been served. The court therefore directed that the court be addressed on the urgency of the matter only.
I have considered the issues raised.
The applicants contend that though the notice for the meeting of 5/10/2018 was issued on 6/9/2018, the applicants did not become aware of it till 27/9/2018. The applicants have not stated how they became aware of the notice so late in the day. Whatever the case, it seems the notice was issued in good time, well over 21 days before the meeting in accordance with the law and this court would have expected the applicants to move the court with speed if they felt aggrieved.
The other issue raised is that the respondents have not held any AGM since 2013, as required by the law. Mr. Nderitu has shown the court an affidavit sworn by one Ms. Koech, Company Registrar, annexture to the replying/affidavit, which indicates that the company has held AGMs and complied with the law. Unfortunately, the minutes of the said meetings are not annexed.
However, the question is why the applicants have waited for 5 years till 4 days before a scheduled AGM to come and stop the AGM. The applicants have rights as shareholders in which they can address such issues of failure to hold an AGM, but not wait till a scheduled AGM to come at the last minute to try and stop it.
As regards the issues of registration and membership, these are matters that should not have necessarily waited for an AGM to be raised.
Although the applicants raise pertinent issues, they had ample time from 2013 to address them. Alternatively, after issuance of the AGM notice, they should have moved with speed to the court to address them but not wait till 5 days before the AGM so that pressure is put on the court to issue an order of stay/injunction.
The court declines to grant an order stopping the holding of the Annual General Meeting.
The applicants should proceed to prosecute this action against them.
Court:
Derivative action be filed within 21 days.
Dated, Signed and Delivered at NYAHURURU this 4th day of October, 2018.
………………………………..
R.P.V. Wendoh
JUDGE
PRESENT:
Mr. Muhoro for applicants and Wamalwa
Mr. Nderitu for respondent
Soi – Court Assistant