Lukaaga v Nabirinzi & 2 Others (Company Application 36863 of 2024) [2025] UGRSB 2 (6 January 2025)

**THE REPUBLIC OF UGANDA**

**THE COMPANIES ACT, CAP 106**

**PETITION AGAINST OPPRESSION**

**AND**

**IN THE MATTER OF AN APPLICATION FOR RECTIFICATION OF THE REGISTER OF NSANJA AGRO – CHEMICALS LIMITED**

**COMPANY APPLICATION NO. 36863 OF 2024**

LUKAAGA MARTIN::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT

VERSUS

1. NABIRINZI MULLO EASTER

2. KABAZI COSMA

3. NABUYONDO JANE FRANCESCA::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENTS

**RULING**

*Before Daniel Nasasira, Ass. Registrar of Companies*

**A. Background**

1. This application was submitted pursuant to Regulations 3, 8, 23, and 32 of the Companies (Powers of the Registrar) Regulations No. 71 of 2016. Counsel Mwanje Lawrence from M/S Imran Advocates & Solicitors represented the applicant, while Counsel Richard Lubaale from Sendege & Co Advocates represented the respondents.

2. The succinct background of this matter is that the applicants' deceased mother, Rosemary Mullo, the first respondent, Nabirinzi Mullo Easter, and the late Billy Cosmas Mullo were the original subscribers of Nsanja Agro Chemicals Limited, with Billy Cosmas Mullo possessing 60 shares, Rosemary Mullo holding 20 shares, and Nabirinzi Mullo Easter also owning 20 shares. These siblings commenced the establishment of Nsanja Agro Chemicals Limited together. On October 18, 1999, a resolution and transfer documents were submitted, transferring 18 shares from Rosemary Mullo and 20 shares from Nabirinzi Easter Mullo to Billy Cosmas Mullo. A subsequent transfer form was filed, transferring the remaining two shares from Rosemary Mullo to Billy Cosmas Mullo. This meant that both Rosemary Mullo and the first respondent Nabirinzi Easter Mullo ceased being members of Nsanja Agro Chemicals Limited. The first respondent, Nabirinzi Easter Mullo, who is the only living original subscriber, acknowledges the legitimate transfer of their shares to their brother, the late Billy Cosmas Mullo; nevertheless, the applicant disputes the transfer of her late mother's twenty (20) shares.

3. The applicant, as the son and administrator of his deceased mother’s estate, contends that the transfer of shares from his late mother, Rosemary Mullo, represents an illegal endorsement, thus granting him the right to reclaim these shares in his role as the estate's administrator. The twenty shares were originally not part of Rosemary Mullo’s estate and the deceased never mentioned to the applicant that she owned any shares in Nsanja Agro Chemicals Limited prior to her death in 2015.

4. The respondents assert that there are transfer forms and a resolution regarding the transfer of shares from the late Rosemary Mullo to Billy Cosmas Mullo, which were properly executed by the late Rosemary Mullo, who held no claim to these shares until her death. The applicant only became aware of these shares solely because the second respondent was obligated to provide Rosemary Mullo’s death certificate to update the company's records in the new URSB Online Business Registration System, as she remained listed as an initial subscriber on the subscription page of the memorandum and articles of association. Amendments of the memorandum and articles of association were never made after the transfers, indicating that the late Rosemary Mullo and Nabirinzi Easter Mullo still appeared as initial subscribers and this prompted them to include these two as subscribers for the completion of the data update, which they acknowledge was an error on their part. The respondents argue that the applicant cannot exploit this error to assert ownership of shares transferred by his deceased mother.

5. The applicant sought for orders that the Registrar of Companies:

1. Declares that the resolution dated 18th October, 1999 registered with the Registrar of Companies, purportedly transferring shares from the late Mullo Rosemary to Billy Cosmas Mullo is illegal, constitutes an endorsement entered in error, is erroneous and irregular and the same did not have the effect of transferring the said shares 2. Expunge the resolution referred to in paragraph (a) above pursuant to the powers under regulation 8 of the Companies (Powers of the registrar) Regulations No 71 of 2016 3. Direct the respondents to effect a transmission of shares to the Applicant who is the legal representative and beneficiary of the late Mullo Rosemary within 5 days from the date of the directive pursuant to Regulation 3 (a) (b) and Regulation 23 (c) and 32 of the Companies (Powers of the registrar) Regulations No 71 of 2016 or the Registrar be pleased to remit the said twenty (20) shares to the applicant. 4. Grant costs of the application to the applicant.

**B. Applicants Case**

6. The Applicant is the son and administrator, as well as the sole beneficiary of the estate of the late Mullo Rosemary, who was a subscriber in Nsanja Agro Chemicals Limited, possessing twenty (20) ordinary shares in the company. The Applicant claims that in 2023, the second respondent, a company director, requested the Applicant to furnish his mother’s death certificate, which the Applicant complied with; however, upon inquiring about its intended use, the second respondent asserted it was required for a family related matter.

7. In 2024, the second respondent once more sought a copy of the grant of letters of administration for the estate of the late Mullo Rosemary, which aroused the Applicant's suspicion and led him to request a detailed explanation from the second respondent regarding the need for his mother's estate documents. The Applicant stated that he discovered his late mother, Mullo Rosemary, possessed twenty (20) shares in the company at that time and this is why the second respondent was requesting for these documents. The Applicant contends that, as he possesses the letters of administration for the deceased Rosemary Mullo, the shares ought to be transmitted to him.

8. The Applicant contends that the resolution claiming to transfer his late mother’s shares only transferred 18 percent of the 20 shares, and that the respondents failed to provide certified transfer forms to substantiate that this share transfer was authentic and legitimate. The Applicant contends that the resolution dated 18th October 1999 is illegal and irregular, since it fails to specify whether it is a board, special, or ordinary resolution. The Applicant requests that this be declared an illegal endorsement on the register.

9. The Applicant further contends that the respondents listed the deceased Rosemary Mullo as a shareholder in the firm's URA and URSB annual returns and included her in the URSB company data update share information, demonstrating that the Respondents were fully cognizant of her ownership rights as a holder of twenty (20) shares in the company.

**C. Respondents Case**

10. The Respondents, conversely, contest the applicant's claim that the late Mullo Rosemary is a shareholder, asserting that she transferred her shares in 1999 to the late Billy Cosmas Mullo. The Respondents contend that the 20 shares over which the applicant asserts rights were transferred by the late Rosemary Mullo and they availed transfer forms in respect to eighteen (18) and two (2) shares respectively and a resolution in respect to the eighteen (18) shares.  The respondents claim that mistakes occurred during the update of the company data in the Online Business Registration System, leading to the inclusion of both Rosemary Mullo and Easter Nabirinzi Mullo as shareholders, despite their share transfers occurring in 1999. They argue that an error during the data update process in the URSB online system in 2023 cannot be used by the applicant to assert ownership rights over shares that were validly transferred in 1999.

11. The respondents claim that the current shareholders of the company include Billy Cosmas Mullo with 73 shares, Kabazi Cosma with 5 shares, Jane Francesca Nabuyondo with 5 shares, John Bakulumpagi with 5 shares, Mary Claire Ndagire with 5 shares, Geoffrey Seruwo with 5 shares, and Christine Mullo with 2 shares. The annual returns and allotment forms post-1999 do not indicate Rosemary Mullo as a shareholder until an error occurred during the update of company data on the Online Business Registration System that included Rosemary Mullo and the first respondent as shareholders which they admit was an error on their part. The respondents assert that the applicant is exploiting an error made during the company data update to assert ownership of her late mother’s shares, of which he was previously unaware until the second respondent contacted him to provide his late mother's details for the purpose of completing the company update. The system still listed her as the initial subscriber in the memorandum and articles of association, which had not been amended following the registration of the transfers and resolution regarding the 20 shares.

**D. Issues Raised**

1. Whether the late Rosemary Mullo transferred her shares in the company to Billy Cosmas Mullo 2. Whether the estate of the late Rosemary Mullo is entitled to the shares in the company 3. What are the remedies available to the parties

**E. Resolution of issues**

Ass. Registrar Solomon Muliisa heard the parties and is currently indisposed. From the evidence and submissions on record, I do not find it necessary to require the parties to appear before me again. I have therefore read the pleadings thoroughly and perused the company file extensively. I have also relied on the pleadings, evidence, record of proceedings and written submissions that are already on file to arrive at this ruling.

***Issue One***

***Whether the late Rosemary Mulo transferred her shares in the Company to Billy Cosmas Mullo?***

12. The original shareholding of this company was Billy Cosmas Mullo 60 shares, Rosemary Mullo 20 shares and Nabirinzi Easter Mullo 20 shares. The contention in this matter surrounds a transfer of 20 shares from the late Rosemary Mullo to the late Billy Cosmas Mullo. For purposes of resolving this issue, I will discuss the transfer of the two (2) shares and eighteen (18) shares in the company independently.

1. *Transfer of the late Rosemary Mullo’s two (2) shares*

13. The respondents availed a transfer form of two (2) shares from Rosemary Mullo to Billy Cosmas Mullo. However, there is neither a resolution on file approving this transfer nor did the respondents adduce any evidence that sanctioned this transfer. While there is a resolution on file in respect to the 18 shares that was signed by both Rosemary Mullo and Billy Cosmas Mullo in their capacity as director and secretary, there is none in respect to the two shares.

14. The procedure on a transfer of shares as clearly articulated by Article 11 of the Articles of Association of the company stipulates that, **‘*transfer of any share shall always be made through and approved by the Board.’*** This means that a board resolution was a key requirement in execution of this share transfer; however, no such resolution was presented by the respondents, nor is one available on the URSB file regarding the two shares. While the parties took an effort to draft one in respect to the eighteen (18) shares, I find it quite interesting that they decided to omit it in respect to the two (02) shares. Court in ***Noble Builders (Uganda) Limited v Balwinder Kaur Sandhu Civil appeal no.70 of 2009 pg. 19*** relied on Kato, JA, in ***Civil Appeal No.41 of 2001: Noble Builders (U) Ltd and Raghbir Singh Sandhu Vs Jaspal. S. Sanhhu***, where the learned justice relying on Section 73 then now Section 83 Cap 106 noted that, ***‘That section in fact requires shares to be transferred in accordance with the Articles of Association of the company.’*** In this case, Article 11 of the company’s articles of association required that transfer of any share be made through and approved by the Board.

15. Notwithstanding the fact that the signed transfer form for the two shares has been tendered in evidence, there is no resolution that has been adduced in evidence that authorizes this transfer which is contrary to Article 11 of the Company's Articles of Association. I consequently rule in favor of the applicant concerning the two shares.

1. *Transfer of Rosemary Mullo’s eighteen (18) shares*

16. The Applicant's counsel asserts that the case of ***Guangzhou DongSong Energy Group Co. Ltd and 4 Ors Vs. Fang Min Civil Appeal No. 170 of 2020*** relied on by the Respondents is distinguishable from the present matter because, in that case, the second appellant acknowledged signing the transfer form to transfer 15 shares to the respondent and claimed fraud due to not receiving the full consideration. In contrast, the applicant's deceased mother did not admit to signing the transfer forms or receiving any consideration. The Applicant contended that the respondents failed to provide any certified copies of the transfer forms, in violation of Regulation 11 of the Companies (Powers of the Registrar) Regulations, 2016, rendering them inadmissible. A review of the URSB file reveals the presence of the original transfer form and resolution in which Rosemary Mullo transfers 18 shares to Billy Cosmas Mullo. The referenced Regulation 11 promotes the submission of certified document copies in legal proceedings but does not prohibit a party from filing a registered copy of a document, particularly if the original copy of such a document is available on the URSB file.

17. The applicants attempt to rely on affidavits from ***Company Cause no. 25 of 2000*** to demonstrate that the late Rosemary Mullo did not consent to signing the transfer form is untenable, as the applicants in that case abandoned their claims, leading to the court's dismissal of the matter on 12th September 2004, as noted in a letter dated 7th July 2024 submitted by the applicants' lawyer. The co-applicant in Company cause no.25 of 2000, who is the first respondent in this application, Nabirinzi Easter Mullo, states in her sworn declaration submitted as evidence that both she and the late Rosemary Mullo transferred their shares in the company to their brother, Billy Cosmas Mullo, as noted in paragraph six of her declaration. In paragraph eight, she asserts that she and Rosemary Mullo filed Company cause no. 25 of 2000 in the High Court due to personal family issues involving their brother. She asserts in paragraph ten that she is certain that at the time of the death of Billy Cosmas Mullo in 2005 and Rosemary Mullo in 2015, she and Rosemary Mullo had no interest in the company as shareholders whatsoever. The applicant relied on ***Ismail Dabule Vs. Golden Leaves (U) Limited and 2 Ors HCCS No.215 of 2020*** at page 112 to discredit Nabirinzi Easter Mullo’s declarations resulting from the inconsistency in her testimony where she contends that she had not transferred her shares in a sworn affidavit in company cause No. 25 of 2000 yet she contradicts herself in the declaration with the above sworn details in this matter. While I take cognizance of this inconsistency, I wish to refer the applicant to the case of ***Oryem David Vs. Omory Phillip HCCS No.100 of 2018*** cited in the case of ***Bintubizibu Vs. Sekibamu (Civil Appeal) No.9 of 2019*** where it was held that; ‘*It is trite law that grave inconsistencies and contradictions unless satisfactorily explained will usually* ***but not necessarily result in the evidence of a witness being rejected****….****what constitutes a major contradiction will vary from case to case.****’ (Emphasis mine).* WhileNabirinzi Easter Mullo's testimony is not the sole basis for my conclusion on this issue, I find that it is persuasive considering the circumstances of this matter, as she is the sole living individual with firsthand knowledge as an initial subscriber to the company. In any case, if the late Rosemary Mullo was confident that her 18 shares were unlawfully transferred, she should have pursued Company Cause no. 25 of 2000 to its conclusion, as this was an opportune moment to rectify the register, which, regrettably, did not occur.

18. I concur with the respondent's assertion in section 3.4 on page 2 of the written submissions that, in the absence of the applicant demonstrating to the requisite standard that the late Billy Cosmas Mullo fraudulently transferred the late Rosemary Mullo's interests in the company, the transfer form and resolution cannot be expunged. This pertains to the 18 shares for which a resolution was registered to support the transfer. Moreover, a review of the URSB file reveals that the late Rosemary Mullo did not endorse any company resolutions pertaining to this company from the year 1999 until her demise in 2015. The last resolution she signed in respect to Nsanja Agro Chemicals Limited was for a change of name on 13th December 1999. In fact a perusal of the register shows that she later moved on to start her own company Nsanja Farm Stores Limited which she registered on 27th November 2008 with the applicant as an initial subscriber.

19. Although I acknowledge the elaborate arguments presented by the applicant's counsel concerning the procedure preceding the registration of share transfers at the Registry of Companies, as well as the absence of specification regarding whether the resolution signed on 18th October 1999 was a Board, Special, or Ordinary resolution, I am persuaded that, given the circumstances of this case, the lack of clarity in the resolution's title is insignificant and does not warrant its annulment, particularly since the three shareholders concurrently served as directors at that time. Moreover, the resolution was endorsed by the late Rosemary Mullo in her role as secretary, as indicated by the title beneath her signature, and the late Billy Cosmas Mullo in his capacity as director.

20. In regards to the company URA returns and URSB returns, a perusal of the URSB file shows that the company continued filing URSB annual returns and resolutions without Rosemary Mullo as a member. She only seems to reappear on the register during the company data update exercise which required that she be stated as subscriber since the memorandum and articles of association were not amended after the transfer. The officer responsible for approving the data update evidently did not review the entire file, relying solely on the original memorandum and articles of association available on record. I am reluctant to depend on the URA returns due to apparent discrepancies concerning the shareholding, which are not corroborated by the share information present in any of the company documents submitted to the Registrar of Companies. The URA returns submitted in evidence indicate that Rosemary Mullo possesses 30 shares rather than the original 20 shares. Additionally, Easter Nabirinzi Mullo holds 50 shares instead of the original 20 shares, which she does not contest as having been transferred to Billy Cosmas. Furthermore, Billy Cosmas Mullo is recorded as owning 20 shares instead of the original 60 shares, as documented in the initial subscription page of the company memorandum and articles of association. Dependence on these returns to expunge the resolution and transfer form concerning the 18 shares recorded on the URSB file from 18th October 1999 to date would be unconscionable.

21. ***Section 101 (1)***of the ***Evidence Act Cap 8***stipulates that any individual seeking a court's judgment regarding a legal right or obligation contingent upon the presence of asserted facts must demonstrate the existence of those facts. The contested transfer form regarding the 18 shares and the resolution are all available on the URSB file, and the onus to demonstrate that these documents are forgeries or involve an illegal endorsement lies with the applicant. The reliance on the updated company data, a single year of URSB returns excluding all prior returns, URA returns that have inconsistencies in share information, company cause no 25 of 2000 that was dismissed for want of follow up by the applicants and the search report is, in my opinion, inadequate to warrant the removal of the transfer form in respect to the 18 shares and resolution from the register.

***Whether the estate of the late Rosemary Mullo is entitled to the shares in the Company?***

22. There is no resolution regarding the two shares. However, there is a resolution on file that transfers 18 shares and a transfer form dated October 18th, 1999 that pertains to these shares. The resolution dated 18th October 1999 clearly shows that the shareholding stood at Billy Cosmas Mullo with ninety eight (98) shares and Rosemary Mullo with two (2) shares. The circumstances regarding the subsequent transfer of the two shares are marked by inconsistencies in the dates as submitted by the applicant and admitted by the respondent as an error. Additionally, the respondents did not submit any resolution pertaining to the transfer of the two shares and indeed none exists on the URSB file. The company's Articles of Association clearly state that "transfer of any share shall always be made through and approved by the Board." This provision is included in Article 11 of the company's Articles of Association. The transfer form in respect to the two shares was therefore procedurally defective for lack of a resolution, and as a result, it ought to be expunged from the register.

23. According to ***Article 2 (d)*** of theCompany’s Articles of Association, shares of deceased subscribers are to devolve to the successors. The company adopted ***Articles 29 to 32*** of Table A of the Companies Act. ***Article 29 (1)*** of Table A provides that, ‘*In case of the death of a member, the survivor or survivors where the deceased was a joint holder, and the personal representative of the deceased where he or she was a sole holder, shall be the only person recognized by the company as having title to his or her interest in the shares*.’ In accordance to these articles, the two shares of the late Rosemary Mullo will pass to the personal representative of the deceased due to the incomplete transfer resulting from the absence of a resolution authorizing the transfer. The respondents did not provide any proof indicating that the resolution concerning the two shares was ever submitted, and in fact, none is present on the URSB register.

24. However, I find that the applicant has failed to meet the burden of proof, even on a balance of probabilities, that the late Rosemary Mullo did not transfer her 18 shares in the Company. Consequently, the estate is not entitled to the 18 shares, as they were validly transferred to the late Billy Cosmas Mullo, as evidenced by the resolution and transfer form on the URSB register dated 18th October 1999. The omission of the respondents during the data validation process may have been recognized by the officer approving the update had they meticulously reviewed the entire file, a shortcoming that cannot be justly solely attributed to the respondents. Nevertheless, the respondents as directors of Nsanja Agro Chemicals Limited are advised to safeguard against errors when making company filings, as these can significantly impact a company.

***Issue 3***

***What remedies are available to the parties?***

25. Regulation 8 (1) of the Companies (Powers of the Registrar) Regulations 2016 provide that the registrar may rectify and update the register to ensure that the register is accurate. In light of the above findings regarding issues one and two, pursuant to regulation 32 of the Companies (Powers of the Registrar) Regulations, 2016, I make the following orders;

1. That the transfer of two (2) shares from the late Rosemary Mullo to the late Billy Cosmas Mullo did not follow the requisite procedure as it was not sanctioned by a resolution 2. Two (2) shares from the late Billy Cosmas Mullo’s shares are transmitted to the Applicant in his capacity as the administrator of the estate of the late Rosemary Mullo. 3. The transfer form transferring two (2) shares from the late Rosemary Mullo to the late Billy Cosmas Mullo be expunged from the URSB register. 4. That the eighteen (18) shares of the late Rosemary Mullo were validly and lawfully transferred to the late Billy Cosmas Mullo. 5. Each party to bear its own costs.

*I so order.*

*Given under my hand, this \_\_\_\_\_\_\_\_\_ day of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 2025.*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*DANIEL NASASIRA*

*Ass. Registrar of Companies*

Ruling delivered on 06/01/2025

In the presence of Counsel Mwanje Lawrence for the Applicant, Applicant present

Counsel Richard Lubaale for the respondents