[2019] UGCA 2119

[2019] UGCA 2119

The Court of Appeal held that the trial Judge erred in ordering the appellant's shares to be purchased at nominal value without a proper valuation. The correct approach, where a minority shareholder is found to have been unfairly prejudiced, is to compensate her based on the undiscounted value of the company as a...

Source-derived case information.

Citation
[2019] UGCA 2119
Parties
Appellant: Olive Kigongo; Respondent: Mosa Courts Apartments Ltd
Court
Court of Appeal of Uganda
Jurisdiction
Uganda
Case Number
Civil Appeal No 91 of 2016
Procedural Posture
Civil Appeal / Judgment on Appeal and Cross Appeal
Outcome
Appeal allowed; cross-appeal dismissed.
Judges
Madrama Izama, JA, Kiryabwire, JA, Kakuru, JA
Legal Topics
Minority Shareholder Rights, Share Valuation, Oppression and Unfair Prejudice, Company Petitions, Remedies in Company Law
Source Language
en
Commercial and Corporate Civil Procedure Minority Shareholder Rights Share Valuation Oppression and Unfair Prejudice Company Petitions Remedies in Company Law

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Summary, issues, holding and outcome

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Parties

Olive Kigongo

Appellant

Mosa Courts Apartments Ltd

Respondent

Procedural Posture

Civil Appeal / Judgment on Appeal and Cross Appeal

  1. 1 Whether the trial Judge erred in ordering the appellant's 15 shares to be purchased at nominal value rather than market value.
  2. 2 Whether the appellant was a member and shareholder with locus standi to file the petition.
  3. 3 Whether the affairs of the respondent company were conducted in a manner unfairly prejudicial to the appellant.

Ratio Decidendi

The Court of Appeal held that the trial Judge erred in ordering the appellant's shares to be purchased at nominal value without a proper valuation. The correct approach, where a minority shareholder is found to have been unfairly prejudiced, is to compensate her based on the undiscounted value of the company as a whole, reflecting her proportionate shareholding. The appellant was a member and shareholder by virtue of being a subscriber to the memorandum of association, and the company's own filings confirmed her status. The trial court's finding of unfair prejudice was upheld, as the appellant was excluded from management and denied her legitimate expectations as a shareholder. The...

Court Disposition

Appeal allowed; cross-appeal dismissed.

Orders

  • Order for appointment of an expert by the High Court Registrar within one month to value the appellant's shares as at the time prejudice began, using the undiscounted value of the company as a whole.
  • The expert's costs to be borne by the respondent.