Directors battle over ownership of Savannah Cement

The Court of Appeal has reversed an order that barred two directors of a cement firm from interfering with its operations.

Justices William Ouko, Daniel Musinga and Gatembu Kairu faulted High Court Judge Farah Amin for ordering that Donald Mwaura and John Gachanga should not sit on the board of Athi River-based Savannah Cement.

Kenyans and Chinese investors own Savannah Cement. In their shareholding agreement, Kenyans own the firm through Savannah Heights while the Chinese investors hold their shares through Wanho International Limited and ACME Wanji Investment Limited.

Meanwhile, Gachanga holds his shares through Isinya Plains Limited.

Their point of departure was a board meeting in 2014 where they were informed that Seruji Company had bought off shares of the Chinese investors.

Following the meeting, Savannah Heights, Isinya Plains Limited, Mwaura and Gachanga moved to court seeking to block Seruji directors from coming on board.

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However, Justice Amin ruled that they should not interfere with the running of the company and directed the Chinese investors to provide the Registrar of Companies with board minutes and other documents to enable an interim board to run the cement maker. The interim board was to run the firm as the case was being heard.

Aggrieved, the two moved to the Court of Appeal, arguing that the judge had ended up being an appointing authority of directors, contrary to the law.

The appellate court judges agreed with Mwaura and Gachanga that the High Court judge had no such powers.

“We agree with the appellants that the appointment of interim directors by the learned judge amounted to usurping the powers of the shareholders of the first respondent (Savannah Cement). It follows therefore that the learned judge acted ultra vires,” the appellate court ruled.

“We do not agree with the second respondent’s (Seruji) submission that in making the impugned orders, the learned judge did so in exercise of the court’s inherent jurisdiction,” the judges ruled yesterday.

They set aside Justice Amin’s orders and awarded the appellants costs of the appeal.