Batenze v Liberation Community Finance Limited (Company Cause 1 of 2025) [2025] UGHCCD 52 (5 May 2025)

# THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA

## (crvrL DrvrstoN)

## COMPANY CAUSE NO. OOO1 OF 2025

## IN THE MATTER OF THE COMPANIES ACT CAP.106

## IN THE MATTER OF THE LIBERATION COMMUNITY FINANCE LIMITED

(THE COMPANY)

#### AND

### IN THE MATTER OF AN APPLICATION BY PATRICK BATENZE

# BEFORE: HON. JUSTICE SIMON PETER M. KINOBE(SC)

#### RULING

### BACKGROUND

The Applicant brought this application under Order 38 Rule 6(h) and 31 of the Civil Procedure Rules S.l 71-1 as amended Section 98 of the Civil Procedure Act Cap. 282 and, Section 138 of the Companies Act Cap.106 for orders that;

Liberation Community finance Limited be granted leave to call, hold and conduct a members'meeting with only Patrick Batenze constituting quorum and pass <sup>a</sup> resolution increasing the share capital appointing directors of the company.

a

2. The costs of the application be provided fo r.

The grounds of the application are specifically set out in the affidavit of the applicant but briefly are tha! the company has only two shareholders and who are also directors, the Applicant owns 70 percent and Chuanmin Wang, a Chinese national with 30 percent. That in 2020 during the Covid -19 pandemic, Mr. Wang left the country but his whereabouts remain un known to date. That he tried to trace him and communicate through his last known phone numbers and email in vain. That it had become impracticable to conduct the company's business like meetings without the missing shareholder. That he had been advised by his lawyers that there were restrictions in the company's memorandum and articles of association, necessitating the grant of an order of court authorizing him to conduct meetings and to appoint directors and increase the company's share capital. That it was in the best interest of the company that a members' meeting with only himself constituting quorum be allowed, in the interest of progressing the company' business.

#### REPRESENTATION

The applicant was represented by Kyazze Joseph and Bridget Nambooze .

#### ISSUE FOR DETERMINATION

Whether, in the circumstances of this cose, the opplicont is entitled to the grant oI on order gronting leove to coll, hold, ond conduct o members' meeting and poss <sup>a</sup> resolution increasing shore capitol ond appointing directors of the compony.

### DETERMINATION

I have had the benefit of reading the submissions of the applicant. I also had the opportunity of interacting with the applicant on zoom for purposes of identification and clarity on the facts leading to this application. I take note of the fact that all;

- 1. Efforts to trace the second director, including an advert in the newspapers have not yielded any results. - 2. A company makes decisions through its resolutions and a two-director company may not function properly in the absence of one of the directors. ln this particular application the absence of Mr. Chaunmin Wang, the other member and director of the company has made it impossible to call a meeting in the manner in which meetings of the company may be called or to conduct a meeting in the manner prescribed by the company's constitution. - 3. Article 26 of lhe Company's Articles of Association which provides that the quorum for general meetings shall be two members. - 4. The proposed meeting aims to increase the company's share capital and appoint new directors, which are critical actions for the company's growth and stability. For these reasons my decision is as herein below.

### Section 138(1) of the Companies Act cap. 106 provides that;

"Where for ony reoson it is improcticable to coll o meeting of a compony in ony manner in which meetings of thot compony moy be called or conduct the meeting of the company in the monner prescribed by the orticles or this Act, the court may, of its own motion or on the opplicotion of ony director of the compony or of ony member of the compony who would be entitled to vote ot the meeting, order a meeting of the compony to be colled, held and conducted in the manner the court thinks fit."

Further, subsection 2 and 3 provide that;

"Where on order is mode under this section the court moy give such oncillary or consequentiol directions as it thinks expedient and it is declored thot the directions thot may be given under this subsection include o direction that one member of the company present in person or by proxy sholl be token to constitute o meeting.

(3)a meeting colled, held ond conducted in occordonce with an order under subsection (1) shall for oll purposes be token to be o meeting of the compdny duly called, held ond concluded

This provision gives court jurisdiction to make orders or directions to overcome difficulties faced by a company, so that its affairs can be conducted where they might otherwise be stymied. (!ee Grocelond Gordens Limited Compony Cause No.0016 ol 2023).

ln the present case, the company has two shareholders who are also the directors, namely Chuanmin Wang (a Chinese National) holding 30% of the shares and the applicant holding 70% of the shares in the company. That during the Covid-19 pandemic, Chuanmin Wang left the country indicating that he was returning to his home country, China. The applicant states that he has since tried to trace and communicate with Mr. Chuanmin Wang on his last known phone numbers and email but the calls remain unreturned and emails unanswered. Despite recourse to all diligent efforts by the applicant to communicate with Mr. Chuanmin Wang, these efforts remained futile. As a result, the operations of the company and its business have come to a standstill. The absence of Mr. Chuanmin Wang, has rendered it impracticable for the applicant as a shareholder, to convene a company meeting in accordance with the company's constitution. This absence has made it impossible for the company to make critical decisions essential for its growth and proper governance.

This in my opinion creates a situation warranting the issuance of an order pursuant to Section 138 ol the Companies Act, Cop 106. ln the circumstances it would also be in the interests of justice and equitable to issue the said order (See, Section 98 of the Civil Procedure Act Cap 282, and Section 37 of the Judicature Act Cap 16 on the inherent power of this cou rt).

Once a member or an officer of a company disappears and can no longer be traced, it is reasonable for the Court to allow the available members and, or officers to conduct the affairs of the company as they deem fit to further the company's objectives. (see ln the Matter of Kosito Estote Ltd (1982) HCB 107 os cited by ln the Mdtter of Uganda Boati Limited dnd ln the Motter of on Applicotion to Rectify the Company Register by Ugondo Booti Limited (Compony Couse 023 ol 2024)

ln Emmous Foundotion lnvestment Ugondo Limited v Giuseppe Giommono Compony Couse No,2 of 2O18 ond Emmous Foundation Limited & Others V Emmous loundotion & Others (Miscellaneous Cause No.74 ol 2020) 2021 UGHCCD 23 (30 April 2027), court granted the applicant, who was the only member left in the company, leave to conduct a general meeting of the company in the absence of the second member of the company.

Itherefore grant the orders and prayers sought in this application with no orders as to costs.

lso order

stMoN PETER M. KTNOBE (SC) JUDGE

DATE: 5th May,2025

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