Wakilii

Great Lakes Energy Company N V v Mss Xsabo Power Limited (Company Petition 5 of 2020)

Tribunal · [2024] UGRSB 20 · 2024 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for rectification of the register under Section 173 of the Companies Act 2012 and Regulations 8 and 9 of the Companies (Powers of the Registrar) Regulations 2016, seeking expungement of board resolutions revoking applicant's shares
Decision
Board resolutions revoking applicant's shares expunged from register; applicant's 96 fully paid-up shares restored

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Registrar held that the 96 ordinary shares allotted to the applicant company were validly issued as fully paid-up shares based on the applicant's fulfilment of obligations under an investment agreement. The shares were not liable for forfeiture or cancellation under the Companies Act. Board resolutions purporting to revoke or forfeit the shares were misleading and inaccurate. The Registrar ordered expungement of the contested board resolutions from the company register and restoration of the applicant's shareholding.

Outcome

Board resolutions revoking applicant's shares expunged from register; applicant's 96 fully paid-up shares restored

Facts

The applicant company entered an investment agreement in 2017 with the respondent company and other parties to finance a 20 MW solar power project. Pursuant to the agreement, the respondent increased its share capital and allotted 96 ordinary shares to the applicant. A return of allotment and share certificate were filed indicating the shares were fully paid. Subsequently, disputes arose regarding alleged fraud and breach of the investment agreement, leading to arbitration proceedings in London. In 2019, the respondent's board passed resolutions suspending the investment agreement and revoking the applicant's 96 shares, claiming they were unpaid and subject to forfeiture. The applicant challenged these resolutions, seeking rectification of the company register.

Issues

  1. Whether the Applicant was allotted 96 fully paid-up ordinary shares in consideration for the entry into and performance of the Investment Agreement.
  2. Whether the 96 ordinary shares issued to the Applicant were fully paid up.
  3. Whether the 96 ordinary shares allotted to the Applicant cannot be revoked or cancelled without the consent of the Applicant.
  4. Whether the cancellation or forfeiture of the shares allotted to the Applicant resulted into reduction of share capital.
  5. Whether the Applicant committed any breach of the investment agreement or the call option agreement warranting the actions taken by Dr. David Alobo.
  6. Whether the board of directors' resolution on 5 November 2019 revoking/cancelling the Applicant's shares in the Respondent is misleading, inaccurate, issued in error, contains an illegal endorsement and was illegally obtained and as such qualifies to be expunged from the register.
  7. What are the remedies available?

Orders

  • The application is allowed.
  • The 96 ordinary shares held by the Applicant in the Respondent Company were validly issued and allotted as fully paid up and were not liable for forfeiture or cancellation.
  • The board resolution dated 6 August 2019 and registered on 19 August 2019 be expunged.
  • The board resolution dated 4 November 2019 and registered on 5 November 2019 be expunged.
  • Each party bears its costs.

Rules and key headnotes

Share Allotment — Determination of Whether Shares Were Paid Up — Examination of Evidence
Determination of whether allotted shares were paid up must be done by examination of all admitted evidence as a whole, with no single piece of evidence taken as conclusive proof.
Share Certificates — Evidentiary Value — Prima Facie Evidence of Title
Under Section 90 of the Companies Act Cap 106, a share certificate under the common seal of a company specifying shares held by a member is prima facie evidence of title of the member to the shares.
Return of Allotment — Statutory Filing Requirements — Evidentiary Weight
A return of allotment filed under Section 59 of the Companies Act indicating shares as fully paid, signed by a company director and registered with the Registrar of Companies, constitutes reliable evidence of the status of the shares at the time of allotment.
Forfeiture of Shares — Applicability — Unpaid Shares Only
Forfeiture of shares under Table A Regulation 33 of the Companies Act applies only to shares that have not been paid up. Where shares have been fully paid, they are not available for forfeiture and cannot be forfeited by the company.
Reduction of Share Capital — Statutory Requirements — Court Confirmation
Cancellation of shares under Section 74 of the Companies Act can only occur where a company reduces its share capital in accordance with statutory conditions, including authorization by articles, special resolution, publication of notice, creditor consent or protection, and confirmation by a court of competent jurisdiction.
Registrar of Companies — Jurisdiction — Limitation to Company Law Matters
The Registrar of Companies has no jurisdiction to determine disputes concerning breach of contract. The Registrar's inquiry in rectification applications must be confined to company law issues within the scope of the Companies Act and related regulations.
Registrar of Companies — Jurisdiction — Matters Pending Before Courts
Under Regulation 4 of the Companies (Powers of Registrar) Regulations 2016, the Registrar is barred from hearing matters pending before Courts of Judicature. However, where a court has directed the Registrar to hear a matter, the Registrar is duty bound to comply with that order.

Legislation cited (12)

Cases cited (8)

  • Matthew Rukikaire v Incafex (Civil Appeal No. 3 of 2015)
  • O'Hagan v. Kracke, (300 N.Y.S. 351, 362, 165 Misc.)
  • Re Transtel (Company Cause No. 1 of 2021)
  • MSS Xsabo Power Ltd v Great Lakes Energy Company N.V (Company Cause No. 13 of 2022)
  • Bryan Xsabo Strategy Consultants (Uganda) Ltd and 2 Others v Great Lakes Energy Company N.V (Company Cause No. 13 of 2020)
  • Great Lakes Energy Company N.V v MSS Xsabo Power Ltd and Others (Arbitration Cause No. 2 and 5 of 2023)
  • Arbitral Cause No. 014 of 2024
  • Arbitration Cause No. 075 of 2023

Full judgment

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Great Lakes Energy Company N V v Mss Xsabo Power Limited (Company Petition 5 of 2020) 2024 UGRSB 20 (1 November 2024)
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.