Wakilii

Kirima Limited & 4 Others v Kabushenga (Civil Suit 18 of 2022)

High Court · [2024] UGCOMMC 200 · 2024 Preliminary Objection Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Preliminary objection to jurisdiction on ground that plaintiffs' advocates acted without authority from 4th and 5th plaintiffs
Decision
Preliminary objection dismissed; matter to proceed to hearing on merits

Observed later treatment

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Holding

Held that MMAKS Advocates was duly authorised to represent the 4th and 5th Plaintiffs. PW1 and PW2 were lawfully appointed directors of the companies and remained in office at the time the suit was filed. The purported removal of PW1 and PW2 did not comply with section 195 of the Companies Act as no special notice was issued and they were not given an opportunity to be heard. A resolution to commence legal proceedings is not mandatory where directors acting in good faith instruct advocates. Preliminary objection dismissed.

Outcome

Preliminary objection dismissed; matter to proceed to hearing on merits

Facts

The Plaintiffs filed Civil Suit No. 18 of 2022 through MMAKS Advocates on 12 January 2022. The Defendant raised a preliminary objection that the suit was commenced without board authority from the 4th and 5th Plaintiffs, alleging that MMAKS Advocates had no instructions to represent them. The Defendant contended that PW1 (Honest Natukwasa) and PW2 (Eleanor Nyamishana), who gave instructions, had been suspended as directors at an extraordinary meeting on 30 October 2021. PW1 had been appointed director of the 4th and 5th Plaintiffs on 10 June 2020 through resolutions registered with URSB. PW2 had been appointed director in 2016. The Defendant produced URSB Form 20 notifications filed on 3 November 2021 and 26 October 2022 notifying changes in directorship, but did not produce the underlying company resolutions removing PW1 and PW2. PW1 and PW2 testified they were never notified of any resolution removing them and never resigned. They instructed MMAKS Advocates verbally without a written resolution.

Issues

  1. Whether MMAKS Advocates was duly authorised to represent the 4th and 5th Plaintiffs in filing and prosecuting the suit.
  2. Whether PW1 and PW2 were lawfully directors of the 4th and 5th Plaintiffs at the time the suit was filed on 12 January 2022.
  3. Whether the purported removal of PW1 and PW2 as directors complied with section 195 of the Companies Act 2012.

Orders

  • The preliminary objection is dismissed.
  • MMAKS Advocates was duly authorised to file and prosecute the suit on behalf of the 4th and 5th Plaintiffs.
  • The suit shall be set down for hearing on its merits at the earliest.

Rules and key headnotes

Company Law — Removal of Directors — Compliance with Statutory Procedure
A company may remove a director by ordinary resolution before expiry of his or her period of office, but special notice is required and must be sent to the director concerned, who is entitled to be heard on the resolution at the meeting. Removal without complying with these mandatory requirements under section 195 of the Companies Act 2012 is void.
Civil Procedure — Authority of Advocates — Company Representation
A resolution to commence legal proceedings is not a mandatory pre-requisite for an advocate to file suit on behalf of a company. Provided the directors who are the day-to-day managers of the company agree to instruct a law firm to commence proceedings in good faith, the instructions are lawful.
Company Law — Directors — Power to Bind the Company
Under section 52(1) of the Companies Act 2012, the power of the board of directors to bind the company or authorise others to do so in favour of a person dealing with the company in good faith is not limited by the company's memorandum. Directors have power to authorise others to bind the company in good faith and to give instructions on behalf of the company to commence legal proceedings.

Legislation cited (8)

Cases cited (7)

  • Fang Min v Uganda Hui Neng Mining Ltd and Others (High Court Civil Suit No. 318 of 2016)
  • Serembe Mark v Isanga Emmanuel and 3 Others (Companies Cause No. 27 of 2004)
  • Kenya Commercial Bank Limited v Stage Coach Management Limited (Civil Case No. 45 of 2012)
  • East African Safari Air Limited v Anthony Ambaka and Another (Civil Appeal No. 42 of 2007)
  • Rev Dr Hamlet Kabushenga Mbabazi and Another v Great Lakes Regional University (Miscellaneous Application No. 904 of 2021)
  • Moneylenders Association of Uganda Limited and Mk Financiers Limited v Uganda Registration Services Bureau (High Court Miscellaneous Application No. 1 of 2019)
  • Rubaga Building Company Limited v Gapal Devsi Vekari and Another (Civil Suit No. 534 of 2014)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Kirima Limited & 4 Others v Kabushenga (Civil Suit 18 of 2022) [2024] UGCommC 200 (6 May 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.