Court rejects special meeting at troubled CMC

November 16, 2011
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, NAIROBI, Kenya, Nov 16 – The supremacy battle for the control of auto dealer CMC Holdings will drag on a little longer after the High Court rejected an application lodged by its largest shareholder Andy Forwarders services to hold an Extra General Meeting.

This comes after Andy Forwarders, the largest shareholder in CMC with a 24 percent stake, went to court opposing the Capital Markets Authority’s move to block the EGM arguing it would interfere with ongoing investigations.

In her ruling, Lady Justice Mumbi Ngugi rejected the application lodged by Andy Forwarders seeking to call for the meeting on ground its stands to lose billions of shillings.

Justice Ngugi ruled that there needed to be a balance in the rights of one shareholder against the other 10,000 shareholders in the company.

The judge maintained the status quo to allow the main petition to be heard before any orders by the court can be granted.

The case was put off to December 6 when it will be mentioned for further directions.

Andy Forwarders, led by its chairman and Chief Executive Officer Peter Muthoka had called the meeting on November 21, in which the top agenda was to be the removal of the current Managing Director as well as replace three directors.

The CMA had sought to suspend the EGM scheduled for November 21 as it was carrying an audit into the company over revelations of clandestine off shore bank accounts in Jersey (United Kingdom) operated by two former directors for many years.

While investigations are still ongoing as to how much had been siphoned off shore, one account is said to have Sh240 million.

Lawyer Fred Ojiambo acting for the petitioners had urged the court to allow the firm to hold the meeting arguing the EGM will not impede or interfere with ongoing investigations into the company’s operations.

He accused CMA not playing the position of an honest regulator but has taken a partisan position of other shareholders in CMC.

Andy forwarders had contended that as a result of conflicts within the CMC board it has progressively performed below par and that is why it sought to hold the EGM to pass resolutions.

The firm said the move by CMA was an interference with the petitioner’s right and a deprivation of its proper rights.

In giving her ruling, justice Ngugi said that the move by the CMA would set a precedent where it could step in more effectively to enforce its regulatory authority and supersede the interests of a few shareholders for the best interest of all shareholders.

In an emailed statement to newsrooms, CMA said it considered the conservatory orders granted by the courts to be an important statement on ensuring the rights of all shareholders in public listed companies are balanced.

“The ruling as a whole appears to be a fair and even reflection on the application of company law and the Constitution to the rights of investors in the capital markets,” the statement reads.

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