Wakilii

Seremba Mark v Isanga Emmanuel (Company Cause No. 24 of 2005)

High Court · [2006] UGCOMMC 58 · 2006 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application by way of notice of motion for rectification of company register of members and declaratory relief regarding shareholding and resolutions
Decision
Application partly allowed. General meeting of 15 August 2002 declared illegal and resolutions void, but no rectification of register ordered. Court directed single-member meeting under s.135 of the Companies Act to address company governance matters.

Observed later treatment

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Holding

The court held that the general meeting of 15 August 2002 was improperly convened and illegal because the applicant was not duly served with notice and quorum requirements were not met, as only one of two subscribers attended. All resolutions passed at that meeting were declared null and void. The 2nd and 3rd respondents did not become members or shareholders. However, the applicant failed to prove he paid for his 40 shares at incorporation. The court found only the 1st respondent remained as a fully paid-up shareholder and exercised its discretion under section 135 of the Companies Act to direct a meeting with one member as quorum.

Outcome

Application partly allowed. General meeting of 15 August 2002 declared illegal and resolutions void, but no rectification of register ordered. Court directed single-member meeting under s.135 of the Companies Act to address company governance matters.

Facts

On 4 August 1999, Greenvine College Ltd was incorporated with the applicant (Mark Seremba) allotted 40 shares and the 1st respondent (Emmanuel Isanga) allotted 60 shares. The school was previously operated under a constitution dated 3 September 1997. Following deterioration of relations, the applicant resigned as Deputy Principal in December 1999, providing forwarding address to the District Service Commission Masaka and his lawyers. On 15 August 2002, a general meeting was purportedly held at which amended memorandum and articles were adopted, allotting 90 shares to the 1st respondent, 2 shares each to newly introduced 2nd and 3rd respondents (William Muwaya and Steven Isabirye), and 1 nominal share to the applicant. Notice of this meeting dated 25 July 2002 was posted on the school notice board and filed at the Registrar of Companies but not served directly on the applicant. The applicant challenged the validity of this meeting and sought rectification of the register of members.

Issues

  1. Whether the register of members of Greenvine College Ltd should be rectified by deleting the names of the 2nd and 3rd Respondents.
  2. Whether resolutions purportedly passed at the general meeting held on 15 August 2002 were null and void.
  3. Whether the applicant and 1st respondent were holders of 40% and 60% of shares respectively in the company.
  4. Whether the general meeting of 15 August 2002 was properly convened.
  5. Whether the applicant paid for his 40 shares at incorporation.

Orders

  • The general meeting of 15 August 2002 is declared to have been improperly convened and illegal.
  • All resolutions passed at the meeting of 15 August 2002 are declared null and void.
  • William Muwaya (2nd Respondent) and Steven Isabirye (3rd Respondent) did not become members, shareholders or office bearers of the company.
  • No rectification of register of members is ordered as no proper register was presented to court.
  • A meeting of the company is directed under Section 135 of the Companies Act, with quorum of one member (Emmanuel Isanga, 1st Respondent).
  • The meeting shall be called by the Registrar of Companies and held at his office at the cost of the company.
  • The meeting shall cover: (a) rectifying and providing proper duplicate company file; (b) establishing proper register of members; (c) establishing proper share register; (d) inviting new members and allotting shares; (e) receiving audited accounts for years 1999-2005 prepared by independent auditor; (f) such other matters as Registrar deems necessary.
  • Applicant awarded 2/3 of his taxed bill of costs.

Rules and key headnotes

Company Law — General Meetings — Notice Requirements — Service of Notice
Where a member of a company has provided a forwarding address and the address of his lawyers in prior correspondence, notice of a general meeting posted only on the company notice board and filed at the Registrar of Companies without direct service on that member does not constitute due service of notice under Article 50 of Table A of the Companies Act.
Company Law — General Meetings — Quorum Requirements — Two-Member Company
In a company incorporated with only two subscribers as members, both subscribers constitute the quorum for a general meeting, and a meeting attended by only one member is inquorate and irregular regardless of that member's majority shareholding, unless the court exercises its discretion under section 135 of the Companies Act.
Company Law — Pre-Incorporation Contracts — Effect of Incorporation
A company once incorporated is not bound by pre-incorporation contracts or agreements made on its behalf by its promoters. A constitution signed by promoters before incorporation has no legal effect on the incorporated company and promoters incur personal liability on such pre-incorporation contracts.
Company Law — Share Subscription — Proof of Payment
A member claiming entitlement to shares on the basis of payment in cash and in kind bears the onus of proving payment. Testimony of contributions without receipts, acknowledgments, or corroborating documentation, and reliance on qualified audited accounts, does not satisfy this burden of proof.
Company Law — Meetings — Section 135 Discretion — Single Member Meeting
Where it is impracticable to call a meeting of a company because only one fully paid-up shareholder is recognized, the court may exercise its discretion under section 135 of the Companies Act to direct a meeting with a quorum of one member, called by the Registrar of Companies, to address company governance matters including establishment of proper registers and invitation of new members.

Legislation cited (10)

Cases cited (2)

  • Mark Xavier Wamalwa and Another v Stephen Aisu (Company Cause No. 27 of 2005)
  • Jubilee Cotton Mills v Lewis [1924] AC 958

Full judgment

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Seremba Mark v Isanga Emmanuel (Company Cause No. 24 of 2005) [2006] UGCommC 58 (3 December 2006)
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.