A long-running family dispute over control and management of KB Investments Limited, a company linked to the estate of former Vice President Dr Samson Kisekka, has ended in defeat for one of his sons, Paul Kisekka Walugembe.
Walugembe had accused his siblings and other directors of running the company in an illegal, fraudulent and oppressive manner.
The court found that he had failed to prove that the company’s affairs were conducted in a way that unfairly prejudiced him as a shareholder and beneficiary of the late Dr Kisekka’s estate.
KB Investments Limited was incorporated in 1965 as a family company. It originally had a share capital of Shs 60,000 divided into 600 ordinary shares. According to court records, the initial shareholders were also the first directors of the company.
Walugembe is a member of the company and a beneficiary of the estate of the late Dr Samson Kisekka. But trouble began in September 2022 when he searched the Uganda Registration Services Bureau (URSB). He told the court that he discovered major changes in the company which, he said, were made without his knowledge or consent.
He complained that the company’s share capital had been increased, shares allotted and transferred to non members, directors appointed and removed, and several company properties sold without involving him or other shareholders.
So at the heart of Walugembe’s legal challenge was a family disagreement over how Dr Kisekka’s business empire was managed after his death. Walugembe argued that his siblings and other directors had sidelined him and stripped him of his rights as a shareholder.
He said shares were allotted and transferred to non members without giving him a chance to buy them first.
He also complained about the sale of prime family land in areas such as Kagugube, Kasubi, Kalangala and Gayaza. He argued that the late Dr Kisekka’s will required beneficiaries to be given first priority whenever company property or shares were being sold.
In addition, Walugembe claimed that directors failed to account for money from property sales worth about Shs 650 million and that annual general meetings were not properly held.
But the lawyers for KB Investments and other directors rejected Walugembe’s claims. They argued that the company’s memorandum and articles of association allowed shares to be transferred to family members and that there was no provision for preemptive rights as claimed by Walugembe.
They also argued that many of the transactions complained of happened decades ago, some before Dr Kisekka died in 1999, and that the case was brought too late.
Justice Simon Peter Kinobe agreed with the other shareholders. He explained that unfair prejudice, as alleged by Walugembe, must go beyond mere dissatisfaction and must show real harm to a shareholder’s interest.
On the issue of share transfers, Kinobe found that the company’s articles allowed shares to be transferred to family members and did not grant Walugembe the preemptive rights he claimed.
“Contrary to the petitioner’s claims, the article does not provide for member’s preemptive rights,” Kinobe ruled.
Regarding the sale of land, the court ruled that the management of company assets was entrusted to the board and that the conditions in Dr Kisekka’s will did not override the company’s governing documents.
On allegations of missing accounts and self enrichment by directors, the court was blunt. “No evidence was led to prove these allegations,” Kinobe ruled
The court also found that many of Kisekka’s complaints were barred by limitation laws because they related to actions that occurred more than six or twelve years ago.
In the end, Justice Kinobe concluded: “Having found that all the actions complained of by the petitioner did not amount to unfair or prejudicial conduct, this petition fails and is dismissed.”
