Wakilii

In the matter of Aberdeen Real Estate Limited (Company Cause 19 of 2024)

High Court · [2024] UGCOMMC 78 · 2024 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for leave to call and conduct a meeting of a company without requisite quorum, transferred from Civil Division to Commercial Division
Decision
Application granted; Applicant permitted to call general meeting within three months to reconstitute Board and regularise company affairs

Observed later treatment

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Holding

Held that where a majority shareholder who acquired shares through court-ordered execution is locked out of company affairs by existing directors and the minority shareholder, and where one director no longer holds shares contrary to statutory requirements, it is impracticable to call meetings in the ordinary manner. The Court has jurisdiction under Section 142 of the Companies Act 2012 to order the majority shareholder to call, hold, and conduct a general meeting to reconstitute the Board of Directors and regularise company affairs.

Outcome

Application granted; Applicant permitted to call general meeting within three months to reconstitute Board and regularise company affairs

Facts

Alshafi Investments Group LLC obtained a judgment decree against Ahmed Darwish in HCCS No. 695 of 2017. In execution, the Court attached Ahmed Darwish's 99 shares in Aberdeen Real Estate Limited. The Applicant successfully bid for and purchased these shares in June 2022, becoming the majority shareholder in a company with 100 shares. The existing directors and the minority shareholder (Muhammed Khalil Darwish, holding 1 share) became hostile to the Applicant and refused to cooperate. Ahmed Darwish, who no longer held shares, remained registered as a director. The Applicant sought leave to call a meeting without the requisite quorum to appoint new directors and a secretary. A prior challenge to the Applicant's shareholding in Civil Suit No. 0732 of 2022 was disposed of in the Applicant's favour via Misc. Application 1337 of 2022, confirming the legitimacy of the share transfer.

Issues

  1. Whether it is impracticable to call a meeting of Aberdeen Real Estate Limited in the manner prescribed by its Articles of Association.
  2. Whether the Court should exercise its powers under Section 142 of the Companies Act 2012 to order a meeting to be called and conducted by the Applicant.

Orders

  • Application allowed.
  • The Applicant shall call, hold and conduct a general meeting of the shareholders of Aberdeen Real Estate Ltd within 3 (three) months from the date of this ruling to decide upon the constitution of the Company's Board of Directors and to regularize the affairs of the company.
  • The company shall fully accommodate the Applicant and accord it all of its rights as a shareholder under the law.
  • Each party shall bear its own costs.

Rules and key headnotes

Company Law — General Meetings — Court's Power to Order Meeting Under Section 142 of Companies Act 2012 — Test for Impracticability
Where it is impracticable to call a meeting of a company in the manner prescribed by the Articles of Association or the Companies Act, the Court may under Section 142 of the Companies Act 2012 order a meeting to be called, held, and conducted in such manner as the Court thinks fit, provided there is proof that it is actually impracticable to call the general meeting in the ordinary way.
Company Law — Directors — Qualification for Directorship — Requirement that Directors Hold Shares in Company Limited by Shares
Sections 192 and 193 of the Companies Act 2012 require that a director in a company limited by shares must also be a shareholder in that company. A person who has lost all shares in the company cannot lawfully continue as a director.
Company Law — Shareholder Rights — Exclusion of Majority Shareholder — Court's Power to Intervene
Where a majority shareholder who acquired shares through a lawful court-ordered process is locked out of company affairs by hostile directors and minority shareholders, and the existing management frustrates the fruits of court orders, the Court will exercise its jurisdiction to order a meeting in the interest of proper company management and to give full effect to its own orders.

Legislation cited (6)

Cases cited (1)

  • In Re Lukuli Coffee Factory Ltd (Company Cause No. 11 of 2005)

Full judgment

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In the matter of Aberdeen Real Estate Limited (Company Cause 19 of 2024) [2024] UGCommC 78 (12 April 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.