Wakilii

Paul Kisekka Walugembe v KB Investments Limited and Others (Company Petition 27 of 2022)

High Court · [2025] UGHCCD 225 · 2025 Petition Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Company petition under Section 244 of the Companies Act alleging unfair prejudice
Decision
Petition dismissed with costs to the respondents

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed a company petition alleging unfair prejudice under Section 244 of the Companies Act. The petitioner claimed that share allotments, property sales, and management decisions were made without his knowledge or consent. The court held that the petitioner failed to demonstrate how the complained actions were prejudicial to him as a member. The court found that share transfers complied with the company's articles of association, which did not provide for pre-emptive rights. Many of the complained actions were performed by the late founder before 1999, and the petition brought in 2022 was barred by limitation and acquiescence.

Outcome

Petition dismissed with costs to the respondents

Facts

KB Investments Limited was incorporated in 1965 as a family company. The petitioner, a member and beneficiary of the estate of the late Dr Samson Babi Mululu Kisekka, alleged that between 1975 and 2019, the company's affairs were conducted in a manner prejudicial to his interests. He claimed that share capital was increased, shares were allotted and transferred to non-members without his knowledge, directors were appointed and removed without his participation, and company properties worth UGX 650,000,000 were sold without his consent. The respondents, who were also descendants of the late Dr Kisekka, contended that all actions were taken by the late Dr Kisekka and his wife to include their children in the family business, and that all transactions complied with the company's memorandum and articles of association. The petitioner conducted a company search in September 2022 and filed the petition shortly thereafter.

Issues

  1. Whether the affairs of the Company are being run in a manner that is oppressive and prejudicial to the interests of the shareholders/petitioner.
  2. What are the remedies available.

Orders

  • Petition dismissed.
  • Costs awarded to the respondents.

Rules and key headnotes

Company Law — Unfair Prejudice — Test for Establishing Unfair Prejudice under Section 244 of the Companies Act
To constitute unfair prejudice under Section 244 of the Companies Act, the value or quality of the shareholder's interest must be adversely affected. It is not necessary to show that anybody acted in bad faith or with intention to cause prejudice. Fairness is judged in the context of the commercial relationship and the contractual terms set out in the articles of association. If conduct is in accordance with the articles to which the shareholder has agreed, it will be difficult to succeed in a claim based on unfair prejudice.
Company Law — Share Transfers — Pre-emptive Rights — Articles of Association Prevail
Where a company's articles of association do not provide for members' pre-emptive rights, shares may be transferred to persons meeting the criteria specified in the articles without offering existing members a right of first refusal. A shareholder cannot claim unfair prejudice based on the absence of pre-emptive rights that are not contained in the articles.
Company Law — Unfair Prejudice — Burden of Proof — Petitioner Must Demonstrate Prejudice
A petitioner alleging unfair prejudice must demonstrate how the complained conduct was prejudicial to his interests as a shareholder. Mere assertion that actions were taken without the petitioner's knowledge or consent is insufficient without proof of actual prejudice to the value or quality of the shareholder's interest.
Company Law — Unfair Prejudice Petitions — Limitation and Acquiescence
Where a petitioner delays bringing an unfair prejudice petition for over 20 years after the complained actions occurred, the delay imputes bad faith and the court may refuse relief on the ground of acquiescence under Section 28 of the Limitation Act. Claims for an account are barred after 6 years under Section 3(2) of the Limitation Act, and actions to recover proceeds from sale of land are barred after 12 years under Section 18(1).
Succession & Estates — Testamentary Conditions — Effect on Company Articles of Association
A testator's condition in a will that beneficiaries be given first priority to purchase company shares does not override the company's memorandum and articles of association where those articles do not provide for such pre-emptive rights. The articles of association govern the internal management of the company.

Legislation cited (4)

Cases cited (1)

  • Olive Kigongo v Mosa Courts Apartments (High Court Company Cause No. 01 of 2015)

Full judgment

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

Paul Kisekka Walugembe v KB Investments Limited and Others (Company Petition 27 of 2022) [2025] UGHCCD 225 (16 December 2025)
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.