News Column

High Court blocks former Kenya Seed chiefs from AGM

January 19, 2014


The government has won the backing of the High Court to block the participation of former Kenya Seed Company (KSC) executives at an annual general meeting. The former executives are seeking to privatise the firm and oust State-appointed directors. Justice Francis Gikonyo ruled last week that voting during the shareholder meeting slated for January 31 should not include the former executives who allegedly bought a 12.8 per cent stake in the company in 2001. This means that the government will attend the AGM with a controlling stake given that the 2001 deal had diluted its stake to 40 per cent, hence privatising the firm and denying the State absolute control. "That, meanwhile, the court cannot allow an illegal situation to continue. In that connection, KSC shall convene an AGM …and the shareholders who shall participate are only shareholders who attained their shares before 2001 and not out of the 2001 share issue," ruled Mr Justice Gikonyo . The judge was giving reasons for his December 5 order that the firm convenes an AGM within 60 days following pleas from the former Kenya Seed managing director Nathaniel Tum — who argued the seed firm was in breach of the law given that it had not held a shareholder meeting for a decade. The law requires firms not to go beyond 15 months without holding an AGM. Mr Tum called a shareholders' meeting to uphold or cancel the executive share deal and wanted to restrict the State's voting rights to 40 per cent. He also sought the election of new directors, drawing protests from the State through Agricultural Development of Kenya (ADC), which went to court to block the shareholder meeting. READ: Ex- Kenya Seed boss seeks to oust directors, privatise firm The firm's directors include chairman Peter King 'ori as well as Treasury and Agriculture principal secretaries Kamau Thugge and Sicily Kariuki respectively. Justice Gikonyo said that the dispute over the executive share sale is yet to be resolved and the owners of the contested 12.8 per cent stake cannot be allowed at the AGM in the interest of justice. The company's board under Mr Tum issued nine million new shares to the public in 2001, in a deal ADC argues did not meet requirements for disposal of public assets. In 2003, the entire board and management were dismissed. However, senior managers led by Mr Tum challenged the dismissal and asked for reinstatement, arguing that the company was no longer government-controlled. Mr Tum and his team lost a High Court suit whose verdict was upheld by the Court of Appeal in 2010. The court ruled that the company is a strategic government facility.

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Source: Business Daily (Kenya)

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