Wakilii

Muhammed ZZiwa Kizito & 3 oers v Spidiqa Umma Foundation (HCT-00-CV-CI-0012-2008) (HCT-00-CV-CI-0012-2008)

High Court · [2008] UGHC 140 · 2008 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Company cause brought under O.38 rr. 4-7, O.52 rr.(4) and (3) of the Civil Procedure Rules, Section 118 of the Companies Act and Section 98 of the Civil Procedure Act, seeking rectification of company register and restoration of original company name
Decision
Application granted; company register ordered to be rectified to restore original membership; Spidiqa Foundation's certificate of incorporation to be restored; Spidiqa Umma Foundation's certificate of title cancelled

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that the purported change of Spidiqa Foundation's name to Spidiqa Umma Foundation was unlawful and ultra vires because a group of 97 people, including non-members and resigned members, acted outside the company's constitutional framework by suspending the company constitution and effecting changes without proper authority under the Companies Act. All resolutions and dealings since 15 March 1998 were declared null and void. The court ordered rectification of the company register to restore the 11 remaining original members and restoration of Spidiqa Foundation's certificate of incorporation.

Outcome

Application granted; company register ordered to be rectified to restore original membership; Spidiqa Foundation's certificate of incorporation to be restored; Spidiqa Umma Foundation's certificate of title cancelled

Facts

Spidiqa Foundation was registered with 20 founder members to teach and propagate Islam. Following internal disagreements, 9 members resigned, leaving 11 remaining members. On 15 March 1998, 97 people including resigned members and non-members held a purported General Meeting, suspended the company's constitution, resolved to use the Quran and traditions of the Prophet as their constitution, renamed the company Spidiqa Umma Foundation, increased membership to 60, and changed proprietorship of company land (Plot 925 Kibuga Block 12 at Mengo Kisenyi). These changes were effected through a company Resolution dated 6 February 2000. The first three applicants, who were founder members, brought this action challenging the validity of all actions taken since the 15 March 1998 meeting.

Issues

  1. Whether the names of Spidiqa Foundation were lawfully changed to Spidiqa Umma Foundation.
  2. Whether the meeting mentioned in the Notice of Motion of March 1998 and all subsequent actions and meetings allegedly held on behalf of the company in question are lawful and binding on Spidiqa Foundation.
  3. Whether Spidiqa Foundation and Spidiqa Umma Foundation are the same company.
  4. Who are the members of the company and whether the register of members of the company should be rectified.

Orders

  • All resolutions and dealings by the respondent, its officers and servants and all documents lodged with the Registrar by the respondent since May 1998 in so far as they relate to property, membership and management of the Company are declared null and void and of no legal effect.
  • The company known as Spidiqa Umma Foundation is unlawfully constituted and entered in the Register of Companies to succeed Spidiqa Foundation.
  • Spidiqa Foundation and Spidiqa Umma Foundation are materially different companies.
  • Spidiqa Foundation is entitled to its certificate of incorporation, which shall be restored.
  • The Registrar of Companies shall restore the name of Spidiqa Foundation to the Company Register.
  • The company's register of members shall be rectified and/or restored to that before 15th March 1998 to reflect the proper membership of the Foundation within three months from the date of this order.
  • A meeting of Spidiqa Foundation under Section 135 of the Companies Act shall be convened and held within three months from the date of this order.
  • Permanent injunction granted restraining Spidiqa Umma Foundation, its members, servants, officials or agents from occupying or in anyway dealing with the property of Spidiqa Foundation in a manner inconsistent with the objects of its incorporation.
  • The Registrar shall cancel Spidiqa Umma Foundation's certificate of title (Instrument No. 396666 of 23/05/2008) as well as entry in the register with respect to the suit property.
  • Spidiqa Foundation's interest in the suit property shall remain unencumbered pending re-registration as owner of the suit property.
  • Application allowed with costs to the applicants but certified for the 4th applicant alone.

Rules and key headnotes

Company Law — Ultra Vires Doctrine — Acts Beyond Constitutional Powers — Effect of Nullity
A company only exists through its memorandum and articles of association, which bind the company and its members to the same extent as if they had been signed and sealed by each member. An act in excess of the authority conferred by the company's constitution is ultra vires and therefore invalid and of no legal effect, and all proceedings founded on such a nullity collapse automatically without need for a court order to set them aside.
Company Law — Change of Company Name — Special Resolution and Registrar's Approval Required
Under Section 19 of the Companies Act, a company may change its name only by special resolution and with the approval of the Registrar of Companies signified in writing. A purported name change effected by persons who are not members or who act outside the constitutional framework of the company is unlawful and of no effect.
Company Law — Membership — Persons Entitled to Vote at General Meetings
The articles of association do not constitute a contract between the company and non-members. Persons who have resigned their membership cease to be members and have no standing to participate in or vote at company meetings. Resolutions passed at meetings where non-members or resigned members purported to vote are null and void.
Company Law — Deadlock in Company Management — Court Power to Order Meeting Under Section 135
Under Section 135 of the Companies Act, where it is impracticable to call a meeting in the manner envisaged under the Articles of Association, the court may on its own motion or on application of a director or member order that a meeting be called in such manner as the court thinks fit. This is one of the most effective ways of diffusing tension in corporate bodies and should be invoked before disputes escalate.
Company Law — Rectification of Register of Members — Section 118 of Companies Act
Under Section 118(1)(a) of the Companies Act, the court has power to order rectification of the company register if the name of any person is, without sufficient cause, entered in or omitted from the register of members. This remedy is available to any aggrieved person, any member of the company or the company itself.
Company Law — Derivative Actions — Locus Standi of Individual Shareholders
While the appropriate agency to start an action on behalf of a company is ordinarily the board of directors, in certain circumstances an individual shareholder or group of shareholders can institute proceedings as plaintiffs where the acts complained of are either fraudulent or ultra vires, following the principle in Burland v Earle.
Land & Property — Cancellation of Certificate of Title — Section 177 Registration of Titles Act
Under Section 177 of the Registration of Titles Act, where a court finds that the title of the registered proprietor cannot be protected or upheld under the Act, it is empowered to order cancellation of such certificate of title and the entry in the Register Book.

Legislation cited (10)

Cases cited (6)

  • Burland & others v Earle & others [1902] AC 83
  • Besigye Kizza v Museveni Yoweri Kaguta & Another (Election Petition No. 1 of 2001)
  • Foss v Harbottle (1843) 2 Hare 461
  • Nanjibhai Prabhudas & Co Ltd v Standard Bank Ltd [1968] EA 670
  • Macfoy v United Africa Co Ltd [1961] 3 All ER 1169
  • Florence Kateeba v Geofrey Mayinja (Civil Appeal No. 129 of 1995)

Full judgment

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

Muhammed ZZiwa Kizito & 3 oers v Spidiqa Umma Foundation (HCT-00-CV-CI-0012-2008) (HCT-00-CV-CI-0012-2008) [2008] UGHC 140 (6 August 2008)
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.