Wakilii

Abed Farug v Al Samawi Fares Ali Hamood and Another (Company Petition No. 11230 of 2026)

Tribunal · [2026] UGRSB 32 · 2026 Petition Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Petition to the Registrar of Companies alleging member oppression under Section 243 of the Companies Act Cap 106
Decision
Petition granted. Petitioner's shares to be bought out at fair value determined by independent valuer. Respondents have first option to purchase; Company has second option if Respondents decline.

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Holding

The Registrar held that the Respondents' sustained course of conduct in excluding the Petitioner from the company premises, denying him access to financial records, and frustrating attempts at independent audit constituted oppression within the meaning of Section 243 of the Companies Act. The Petitioner, holding 35% of shares against the Respondents' combined 65%, was in a practical minority position. The relationship had irretrievably broken down. The appropriate remedy was a buy-out of the Petitioner's shares at fair value determined by an independent valuer, with the Respondents having first option to purchase.

Outcome

Petition granted. Petitioner's shares to be bought out at fair value determined by independent valuer. Respondents have first option to purchase; Company has second option if Respondents decline.

Facts

Abed Farug, holding 350 shares (35%) in Bright Dental Solutions Limited, petitioned the Registrar alleging member oppression. The company was incorporated in November 2023 with three shareholders: Farug (350 shares), Al Samawi Fares Ali Hamood (300 shares), and Bakayana Margaret (350 shares). Farug claimed he contributed substantial capital (approximately UGX 583,486,595) and was initially the sole signatory to company bank accounts. He alleged the Respondents excluded him from management, denied him access to company premises and financial records, frustrated an independent audit by ESMAC & Associates, and subjected him to harassment and physical confrontation when he attempted to serve notice of an Extraordinary General Meeting in November 2025. The Respondents denied the allegations, contending Farug acted unilaterally, failed to cooperate, visited premises at unusual hours, and brought strangers to the premises. They admitted restricting his access and rejecting the auditors but claimed justification based on his conduct. Settlement discussions in September and October 2025 regarding a buy-out failed. The relationship between the parties had completely broken down.

Issues

  1. Whether the conduct of the Respondents, in view of the acts complained of, constitutes oppression within the meaning of Section 243 of the Companies Act Cap 106?
  2. What remedies, if any, are available to the parties?

Orders

  • It is declared that the affairs of Bright Dental Solutions Limited were conducted in a manner oppressive to the Petitioner within the meaning of Section 243 of the Companies Act.
  • The Respondents shall cease and desist from any act of exclusion, harassment, or intimidation directed at the Petitioner.
  • The Respondents shall grant the Petitioner access to all Company records within seven days of any written request.
  • The Petitioner's 350 shares shall be bought out at their fair value by the Respondents in the first instance and, failing that, by the Company.
  • A qualified and independent valuer shall be appointed within thirty-one days by mutual agreement or by court appointment.
  • The valuation shall be conducted as at the date of delivery of this ruling without applying any discount for lack of control or want of marketability.
  • The valuer shall submit a written report within ninety days of appointment.
  • The purchase price shall be paid in full within one hundred eighty days of receipt of the valuation report.
  • Any sum remaining unpaid after that period shall attract interest at fifteen percent per annum.
  • Payment and transfer of shares shall be effected simultaneously through an escrow arrangement.
  • Pending completion of the buy-out, the Petitioner shall continue to be recognized as a shareholder and director.
  • The costs of the valuation shall be borne by the Company.
  • Each party shall bear its own costs of the Petition.

Rules and key headnotes

Member Oppression — Meaning and Scope — Section 243 Companies Act
For conduct to constitute oppression under Section 243 of the Companies Act Cap 106, a petitioner must demonstrate that: (a) the affairs of the company were conducted in a manner that was oppressive; (b) the oppressive conduct affected the petitioner in his or her capacity as a shareholder or member of the company; (c) the oppressive conduct constituted a continuous course of conduct rather than isolated or sporadic acts; and (d) the circumstances are such that they would otherwise justify the winding up of the company on the just and equitable ground, but that such winding up would unfairly prejudice the petitioner.
Member Oppression — Minority Shareholder Status — Practical Assessment
The determination of whether a shareholder is in a minority position for purposes of Section 243 of the Companies Act is not a rigid arithmetic exercise but must be assessed by reference to the shareholder's practical capacity to participate in and influence the governance of the company. Where two shareholders act as an allied bloc against a third, their combined shareholding must be treated as a single controlling bloc for purposes of the oppression analysis, and the third shareholder is in a position of practical minority if unable to influence any ordinary resolution or day-to-day management decision without the concurrence of at least one member of the controlling bloc.
Member Oppression — Exclusion from Management — Denial of Access to Records
The denial of a shareholder's access to company premises where the affairs of the company are conducted, coupled with the withholding of financial records and the frustration of attempts at independent audit, constitutes conduct capable of amounting to oppression within the meaning of Section 243 of the Companies Act, particularly where such exclusion is sustained and affects the shareholder in his capacity as a member seeking to participate in the affairs of the company and exercise his rights.
Member Oppression — Self-Help Remedies — Impropriety of Unilateral Exclusion
Where disputes arise regarding the conduct of a shareholder or director, the law does not permit parties to take unilateral action that infringes the proprietary and participatory rights of that shareholder or director. The appropriate recourse is to invoke the procedures prescribed by the Companies Act, the company's Articles of Association, resort to alternative dispute resolution mechanisms, or seek the intervention of a competent court. Any alleged misconduct must be addressed through due process and not by arbitrary exclusion from the company's affairs.
Member Oppression — Remedies — Buy-Out of Shares — Valuation Principles
Where an irretrievable breakdown in the relationship between shareholders has been established and oppressive conduct proven, a buy-out of the petitioner's shares at fair value determined by an independent valuer is the most practical and appropriate remedy under Section 243 of the Companies Act. The valuation should be conducted on a pro-rata basis of the company as a whole, without applying any discount for lack of control or want of marketability, it being inappropriate that the petitioner's exit value should be reduced on account of the very minority position that gave rise to the petition.
Member Oppression — Remedies — Pre-Emption Rights — Sequential Buy-Out Options
In a closely held company, where a buy-out is ordered as a remedy for oppression, existing shareholders should be afforded the first option to acquire the shares of the departing member before the shares are acquired by the company or offered to any other person. This principle preserves the existing ownership structure, protects the legitimate expectations of the continuing shareholders, and avoids the introduction of changes to the company's shareholding that may further disrupt its management and operations. Should the existing shareholders decline or be unable to exercise that option, the company may have a second option to purchase the shares, provided such acquisition is undertaken in accordance with the provisions of the Companies Act governing a company's acquisition of its own shares.
Member Oppression — Costs — Discretion to Withhold Costs Despite Success on Merits
Although costs ordinarily follow the event, a Registrar exercising the broad discretion conferred under Section 243 of the Companies Act may decline to award costs to a successful petitioner where the petitioner's own conduct contributed to the deterioration of the parties' relationship and to the events giving rise to the petition, and where an award of costs risks deepening acrimony between parties who remain bound to cooperate in completing a buy-out. The relief available under Section 243 is fundamentally remedial rather than punitive in character, and a costs award in such circumstances would introduce a punitive consequence not justified by the matters before the Registrar.

Legislation cited (3)

Cases cited (7)

  • Rukikaire Mathew v Incafex (U) Ltd (Civil Appeal No. 03 of 2015)
  • Re Nakivubo Chemists (U) Ltd [1977] HCB 311
  • Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
  • Elder vs Elder & Watson Ltd. [1952] SC 49
  • Re: Five Minutes Car Wash Services Ltd. [1966] 1 ALL ER 242
  • Cliff Masagazi v Afriland First Bank Uganda Ltd (Company Cause No. 08 of 2020)
  • Re Elgindata Ltd (No 2) [1992] 1 WLR 1207

Full judgment

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Abed Farug v Al Samawi Fares Ali Hamood and Another (Company Petition No. 11230 of 2026) [2026] UGRSB 32 (19 June 2026)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.