A long-running shareholder dispute at Victoria Motors Limited has ended in defeat for businessman Samuel John Kibuuka and his firm, Mercantile Executive Services Ltd, who had wanted to take control of the business.
Victoria Motors is the authorized distributor of Mitsubishi cars and Renault trucks in Uganda.
In a ruling, Daniel Nasasira, the Assistant Registrar of Companies, dismissed Kibuuka’s petition and upheld the appointment of the company’s current board of directors.
The dispute is centred on a shareholders’ meeting held on February 23, 2021 which Kibuuka and his company, both shareholders in Victoria Motors, claimed they were never notified of.
They argued that the directors appointed on that day were therefore “irregularly” and “illegally” installed.
They wanted the registrar to expunge the February 23, 2021, resolution from the company’s registry.
In their petition, they insisted the meeting was convened in breach of Article 57 of the company’s Articles of Association, which requires at least 21 days’ written notice to shareholders.
They said they “were not duly notified of the said shareholders’ meeting, did not receive the requisite notice of agenda,” and were not given copies of any resolutions passed there.
They further alleged that the resolution falsely indicated that the directors were “unanimously passed”, yet that was not the case.
The row deepened when they accused the new directors of using the resolution to appoint themselves and others as authorised signatories to the company’s bank accounts.
But Victoria Motors, through its lawyers, Dentons Advocates, and a statutory declaration sworn by director Gad Wilson, the company argued that the petition was without merit and ought to be dismissed with costs.
The company produced proxy forms dated February 8 and February 22, 2021, that showed that Kibuuka and his company had appointed Joshua Ogwal and Daniel Iga, respectively, “to vote for and on behalf” of them at the annual general meeting scheduled for February 23, 2021.
Minutes of the Zoom meeting were also attached, recording that the proxies attended.
Crucially, the proxies themselves swore statutory declarations acknowledging that they had indeed attended the meeting.
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In his ruling, Nasasira first addressed the key issue of whether the board was properly appointed in accordance with the prescribed procedures.
He noted that while Kibuuka attacked the validity of the minutes, “the substance of the minutes is corroborated by the statutory declarations sworn by the respective proxies”.
He found that the evidence demonstrated that Kibuuka and Mercantile were duly notified of the AGM scheduled for 23rd February 2021 and, through their appointed proxies, participated in the same.
On the issue of the 21-day notice, the registrar took a pragmatic view.
He cited Article 57, which allows a meeting called on shorter notice to be valid if all members entitled to notice agree.
He ruled that even if the notice was shorter than 21 days, the act of appointing proxies and participating amounted to implied consent.
“Had the petitioners been dissatisfied with the notice period, they would have raised an objection at the time,” Nasasira wrote.
“Their failure to object to the notice, taken together with their participation through appointed proxies, amounted to implied consent to the notice given.”
The registrar also pointed out that the petitioners had continued to deal with the same board for more than five years. They even applied to that board to approve share transfers.
“This conduct is inconsistent with the claim that the Board was unlawfully constituted,” he observed.
On that basis, he said the board appointments arising from the shareholders’ meeting of Victoria Motors held on 23rd February 2021, and the resulting resolution, are valid.
Victoria Motors accused Kibuuka, who served the company for decades in various capacities, of filing the petition in bad faith as part of a broader battle over control of the company and rejected share transfers.
However, Nasasira confined himself to the procedural question before him. He reminded the parties that under the company’s Articles of Association, directors retire at every annual general meeting.
If dissatisfied, shareholders may raise concerns at the next AGM or move an ordinary resolution with special notice to remove a director before the expiry of the term.
In the end, Nasasira dismissed Kibuuka’s petition in its entirety.
