Once upon a time, two corporate “cousins” in Uganda found themselves locked in a standoff that nearly brought their company to its knees.
At the centre of the storm was Medical Concierge Group Limited, a health technology company operating in Uganda. Its majority shareholder was Rocket Health Africa Corporation, which held 199,999 shares.
The remaining single share belonged to Dr. Davis Musiimenta Musinguzi, and this would later become the source of the standoff.
Why?
Because under the company’s rules, at least two shareholders were required to form a quorum, and Dr. Musiimenta had stopped participating in company meetings.
The fallout started in 2024. Dr. Musiimenta had been managing director of the company, and his employment was terminated.
He then filed a claim before the Labour Court, challenging his dismissal, but at the same time said he was not willing to be involved in any of the company’s affairs until his demands were met.
Yet the company had urgent business to do. First, there was a proposed transfer of shares and assets to My Dawa Holding Company Limited. Second, there were plans to wind up Rocket Health Africa Corporation. Third, there were changes to directorships to be approved.
All these required resolutions passed in a properly constituted meeting, yet Dr. Musiimenta always kept away.
Medical Concierge Group took the matter to court and argued that in the continued absence of Dr. Musiimenta, the company couldn’t convene a shareholders’ meeting. They said Dr. Musiimenta was trying to hold the company hostage to his whims.
Dr. Musiimenta fought back and enlisted the legal services of Signum Advocates, a reputable law firm in Kampala.
His lawyers told the court that there was a share swap agreement signed in June 2024 between Rocket Health Africa Corporation and My Dawa Holding Limited.
Under Clause 26 of that agreement, any disputes were to be resolved by arbitration in London under the London Court of International Arbitration Rules, not in a Ugandan court.
They argued that the issues raised in this application were disputes arising from that agreement and should therefore go to arbitration. They also said Dr. Musiimenta was entitled to Shs 360 million ($100,000) for his one share under the deal.
They insisted that the High Court in Kampala had no jurisdiction and that the matter should be dismissed.
Medical Concierge Group said it was not a party to the share swap agreement. Their lawyers from Mushanga & Associates Solicitors & Advocates argued that arbitration is consensual and does not extend to non-parties.
They stood as sureties for a friend. He disappeared. Now they’ve to pay Shs100 million
Justice Isaac Teko agreed with the arguments put forward by the lawyers of Medical Concierge Group.
He said that meetings, which Dr. Musiimenta was trying to avoid, are the tools for operations and management of companies.
“Without meetings, the companies would not be able to make decisions and pass resolutions,” Justice Teko said.
On the issue of jurisdiction, Justice Teko ruled that since Medical Concierge Group was not a party to the share swap agreements, it could not be forced into arbitration in London.
He said Dr Musiimenta had held the company hostage by deliberately denying it a quorum. He said this amounts to denying the company the source of its existence.
Justice Teko said it was evident that Dr. Musiimenta had “repeatedly manifested a deliberate intention to avoid holding the members’ meeting” in the belief that this would strengthen his claim for $ 100,000.
“I see a classic case of arm-twisting the company to bend to his whims,” the judge said of Dr. Musiimenta.
In the end, the court dismissed all objections raised by Dr. Musiimenta and granted Medical Concierge Group leave to convene and hold a members’ meeting with Rocket Health Africa Corporation, constituting a quorum.
Justice Teko said the resolutions passed in the meeting will have to be registered with the Uganda Registration Services Bureau (URSB).
Justice Teko said Dr. Musiimenta was free to attend the meeting if he wished, and he could pursue his $100,000 claim in the appropriate forum.
