[2010] KEHC 3622 (KLR)
The court found that the plaintiffs had not demonstrated a prima facie case to warrant the issuance of an injunction against the first defendant. Official company records indicated that the plaintiffs were no longer directors of Link Forex Bureau Kenya Ltd, and the law permits a private company to operate with only...
Source-derived case information.
- Citation
- [2010] KEHC 3622 (KLR)
- Parties
- Plaintiff: Kaddu Kideru; Plaintiff: Yunus Kamulegeya; Plaintiff: Naiga Matovu; Plaintiff: Seremba Sulaimani; Plaintiff: Harun Sebaggala; Plaintiff: Isa Lukwago; Defendant: Iga Saidi Bukenya; Defendant: Kennedy O. Odera; Defendant: David Oyatta t/a Oyatta & Associates
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Case 154 of 2007
- Procedural Posture
- Civil Case / Ruling on Interlocutory Injunction Application
- Outcome
- application dismissed with costs
- Legal Topics
- Company Directorship, Shareholder Rights, Injunctive Relief, Corporate Governance
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Kaddu Kideru
Plaintiff
Yunus Kamulegeya
Plaintiff
Naiga Matovu
Plaintiff
Seremba Sulaimani
Plaintiff
Harun Sebaggala
Plaintiff
Isa Lukwago
Plaintiff
Iga Saidi Bukenya
Defendant
Kennedy O. Odera
Defendant
David Oyatta t/a Oyatta & Associates
Defendant
Procedural Posture
Civil Case / Ruling on Interlocutory Injunction Application
Legal Issues
- 1 Whether the plaintiffs are lawfully appointed directors and shareholders of Link Forex Bureau Kenya Ltd.
- 2 Whether the first defendant's management of the company is lawful under the Companies Act.
- 3 Whether the plaintiffs have established a prima facie case for grant of an injunction.
Ratio Decidendi
The court found that the plaintiffs had not demonstrated a prima facie case to warrant the issuance of an injunction against the first defendant. Official company records indicated that the plaintiffs were no longer directors of Link Forex Bureau Kenya Ltd, and the law permits a private company to operate with only one director. The first defendant's management of the company was not contrary to the Companies Act. Furthermore, the company itself was not before the court to defend its interests, and any loss suffered by the plaintiffs could be compensated by damages. The balance of convenience favored the first defendant, who was in possession of the company's assets and managing its...
Court Disposition
application dismissed with costs
Orders
- The application for injunction is dismissed with costs.
- Parties to set down the suit for hearing.
Full Case Text
Judgment text and source record
34 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT NAIROBI (MILIMANI COMMERCIAL COURTS)
Civil Case 154 of 2007
KADDU KIDERU.......................................................... 1ST PLAINTIFF
YUNUS KAMULEGEYA .............................................2ND PLAINTIFF
NAIGA MATOVU......................................................... 3RD PLAINTIFF
SEREMBA SULAIMANI.............................................. 4TH PLAINTIFF
HARUN SEBAGGALA...................................................5TH PLAINTIFF
ISA LUKWAGO............................................................. 6TH PLAINTIFF
VERSUS
IGA SAIDI BUKENYA................................................ 1ST DEFENDANT
KENNEDY O. ODERA............................................... 2ND DEFENDANT
DAVID OYATTA t/a OYATTA & ASSOCIATES....3RD DEFENDANT
R U L I N G
Chamber Summons dated 26/03/07 filed under Order XXXIX (39) Rule 1, 2, 3 and 9 Civil Procedure Code, Section 3 and 3A Civil Procedure Act. The applicants say they are directors and shareholders of a company called Link Forex Bureau Kenya Ltd. They accuse the first defendant of denying them access to the premises of the company and to bank accounts and they are not able to participate in the running of the company.
They say the first defendant is not a lawfully appointed director of the company.
According to Notification of Change of Directors and Secretaries in their particulars Form 200 P filed on 16/7/2004. It is recorded that from 9/6/2004, Harun Sebagalla, Isa Lukwago, Abdul Hamid, and Juba Masagazi ceased to be directors and new directors; Nsibambi Yusufu, Hahaya Segnya and Katende Rashid were appointed.
Therefore the plaintiffs in this case namely;
1. Jumba Musagazi
2. Harun Sebaggala
3. Isa Lukwago
are no longer directors.
The provisions as to directors of a private company must be at least one. But this company has Kaddin Kideru, Yunus Kamulegeya, Naiga Matovu, Seremba Sulaimani, Nsibambi Yusuf, Yahaya Segnya and Katende Rashid. This is in accordance with documents filed in the office of the Registrar of Companies in Kenya. The law does not demand that directors have shareholding in the company except where the Articles of Association demands no evidence is shown here that the directors hold any shares.
Regarding the validity of actions of directors, Section 181 Companies Act provides that such acts shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification. It is not disputed that the first defendant has been running the company since 2004. However, it is trite law that the affairs of the company are managed with the authority of Board of Directors.
It appears here that the first defendant has been managing the company affairs single handedly for 4 years. He does not show any notice to the other directors to attend any meeting of the Board. I have considered that this dispute concerns the individuals who described themselves as directors and shareholders of the company as to their positions as directors of the company.
I have also noted that a private company can operate with only one director and therefore the activities of first defendant are not contrary to provisions of the Companies Act. It is clear that if the orders sought were to be granted the business and affairs of the company would be affected. The company is not before the court to defend its interests. The money in the bank and other assets belong to the company and it alone has a right to sue in that respect. It is my opinion that the applicants have not demonstrated a prima facie case to warrant issue of an injunction. Instead they are asking that court do order the removal of company’s affairs with the respondents to themselves. The remedy in such case is monetary and can be compensated in damages and the balance of convenience tilts in the favour of the first defendant who is in possession of the companies assets and is managing its affairs.
Regarding the 2nd and 3rd defendants there are allegations of fraud and misrepresentation.
Those are issues to be subjected to trial and cross-examination. The parties should set down the suit for hearing.
The application is therefore dismissed with costs.
It is so ordered.
DATED, SIGNED and DELIVERED at Nairobi this 9th day of October 2009.
JOYCE N. KHAMINWA
JUDGE