Mr Wanderi and Wachera Maina claimed that even though the agenda of the meeting would have been to discuss their conduct, they were not allowed to defend themselves. In an affidavit, they claimed that any losses incurred by the company could be attributed to the incompetence and imprudent decisions of the directors, particularly Robert Macharia and Ronald Karauri. Records indicate that they requested to have the meeting held in Kenya, where the company is domiciled, or on a hybrid basis, that is, online and physically; however, the company secretary ignored their request
Pevan East Africa Ltd has suffered a devastating blow after the High Court granted an injunction against its management, restraining it from implementing the impugned resolutions passed at the General Meeting in Dar es Salaam, Tanzania. The GM was held on October 8, 2022, in Tanzania, where a resolution was passed that Paul Wanderi Ndungu and Asenath Wachera Maina are no longer shareholders of the company and stand expelled.
Mr Wanderi and Wachera Maina argued that the general meeting and resolution to expel them as members of the company were carried out illegally and had no effect on their shareholding. In an application dated 6/1/2023 Sportpesa management sought a temporary injunction to restrain them or their agents from interfering with any business dealings of the company, making any representations, correspondences, contracts, or dealing in any assets of the company in any manner whatsoever purporting to be acting on behalf of or in the interest of the company.
Available records indicate that Pevans East Africa Ltd was incorporated on or around November 23, 2011 and was until 2018 licensed by the Betting Control and Licensing Board (BCLB) of Kenya to conduct betting business under the name “SportPesa”. Thereafter, in 2019, BCLB did not grant them a license to carry on the betting business. According to Pevans East Africa management, before 8/10/2022, Wanderi Ndungu and Asenath Wachera Maina were members of Pevans East Africa Ltd, holding 170 and 210 shares, respectively, and were both directors of the company until their resignation on November 14, 2019.
However, in a quick rejoinder, Mr Wanderi and Wachera Maina claimed that the purported resolution to expel them from the company was passed in contravention of the provisions of Section 257 of the Companies Act, which requires at least 75% shareholding to vote, yet only 40% of the shareholding was represented at the meeting on October 8th, 2022. Further, they claimed that the meeting was held in Dar es Salaam, whereas the registered office of the company is in Nairobi, and no reason was given to justify the hosting of the meeting elsewhere than in the registered office of the company.
They further claimed that even though the agenda of the meeting would have been to discuss their conduct, they were not allowed to defend themselves. In an affidavit, they claimed that any losses incurred by the company could be attributed to the incompetence and imprudent decisions of the directors, particularly Robert Macharia and Ronald Karauri. Records indicate that they requested to have the meeting held in Kenya, where the company is domiciled, or on a hybrid basis, that is, online and physically; however, the company secretary ignored their request.
Pevans East Africa, through an affidavit sworn on March 27, 2023, by Robert Macharia, its director and corporation secretary, claimed that there is evidence that Ndungu and Maina were given notice of the general meeting but failed to attend by proxy or otherwise without giving any valid notice.
The judge noted that Wachera Maina requested the plaintiff via email for relevant documents that would be discussed at the meeting and material that the board intended to present regarding the special resolutions for her to participate knowledgeably in the general meeting; however, the company secretary did not reply to that request. She also requested to attend the meeting virtually, as the meeting was to be held in Dar es Salaam, but the company secretary ignored that request.
The judge noted that Wachera Maina was kept in the dark regarding what aspects of her conduct were to be discussed during the meeting; therefore, she was not allowed to defend herself. Further, there seems peremptory to be no explanation as to why the said meeting had to be held in a place far from the registered office of the company, yet her right to attend, albeit virtually, was denied.
On the other hand, the Pevan East Africa Ltd management submitted that she was expelled from membership in the company, her shares would be sold and she would receive a fair value of the proceeds of the sale. The second respondent, Wachera Maina raised weighty questions about the legality of the general meeting held on October 8, 2022, and the resolution passed thereon, which led to her expulsion.
The ruling by Judge A. Mabeya dated October 12, 2023, reads “In any case, I find that it would be a greater inconvenience to the second defendant if the injunction were not granted at this point, as the defendants would lose their shareholding in the plaintiff company and the rights that are appurtenant thereto”.
The ruling further reads, “On the other hand, if the injunction is granted, the second defendant remains a member of the company until the suit is determined, but this would not prevent the plaintiff from continuing on with its business. The balance of convenience tilts in favor of the second defendant”.
While dismissing Pevans East Africa Ltd.’s petition for the court to uphold the expulsion of Ndungu and Maina as shareholders, the judge ruled, “In the end, I find that the application dated 6/1/2023 lacks merit and is dismissed.” The judge, on the other hand, granted orders stopping Pevans East Africa Ltd. from expelling Maina and Ndungu. The judge ruled “The application dated 14/2/2023 is granted as prayed”.