Uganda Registrations Services Bureau-URSB has overturned Agaba Maguru’s appointment as director in three companies that were majorly owned by the late businessman James Garuga Musinguzi.
The stems from an application filed by Mathew Rukikaire, former Minister of Privatization in President Museveni’s government, challenging the manner in which Maguru, who is described as an advocate of the high court, was appointed as new director. In the application, Rukikaire, stated that he is a shareholder of Garuga Properties Limited holding 0.45% of the issued share capital.
On the other hand, Garuga Properties Limited holds the majority shares in Kinkizi Development Company Limited and Incafex Limited. Garuga-Musinguzi was director in all the three companies who held the majority shares. Following his death last year, there were extraordinary general meetings that installed Maguru as the new managing director.
However, Rukikaire opposed this arguing that the resolutions purportedly passed and the consequent filings made in furtherance of those actions were neither validly authorised nor lawfully adopted and were therefore incapable of conferring any legal rights to Maguru.
In response Maguru denied the allegations arguing that Rukikaire’s shares were so negligible to substantially influence how the companies run. Another director in Garuga Properties Ltd Nganwa Henry Hapa, argued that Maguru had been validly appointed to the Board.
They also argued that Rukikaire was not even a shareholder in Kinkizi Development Company and Incafex and thus, had no locus to challenge its share holdership. But in his ruling, Daniel Nasasira, the assistant registrar of companies said Rukikaire’s grievances are valid.
“As a shareholder of Garuga Properties Limited, the Applicant possesses a direct and legally recognisable interest in the second and third Respondent Companies. His interest falls squarely within the category of an “interested party,” Nasasira’s decision reads.
“I am therefore unable to accept the Respondents’ contention that the doctrine of separate corporate personality completely extinguishes the Applicant’s standing in the circumstances of this case. While that doctrine preserves the distinct legal identity of each company, it cannot be applied so rigidly as to deny a party who demonstrates a direct and legitimate interest in the impugned corporate acts access to the statutory remedy expressly created under Regulation 20.
Accordingly, I find that the Applicant has the requisite locus standi to institute the Application in respect of Garuga Properties Limited as a shareholder thereof. I further find that, by virtue of his shareholding in Garuga Properties Limited, which is the majority and controlling shareholder of Kinkizi Development Company Limited and Incafex Limited, the Applicant has demonstrated a sufficient and legally recognisable interest to qualify as an interested party.”
He therefore, declared that the extraordinary General Meeting of GarugaProperties Limited was convened without notice to Rukikaire as a member entitled to participate in it.
He declared that Maguru was illegally appointed as the director of Garuga Properties Limited and thus would be expunged from the company registration records: “It necessarily follows that the corresponding Company Form 20 filings and allconsequential filings predicated upon those unlawful resolutions were likewisewrongfully obtained and cannot lawfully remain on the Companies Register.
I therefore implore the parties to convene fresh meetings in strict compliance with the Companies Act and the respective Articles of Association of the companies, so as to regularise the governance of the companies through lawful appointment of directors and ensure the continuity of their operations.”-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
