Mwereri v Kenyana & Another (Company Complaint 35330 of 2024) [2024] UGRSB 10 (11 June 2024)

Full Case Text

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## IN THE MATTER OF THE COMPANIES ACT 2012 AS

## **AMENDED**

### AND

# IN THE MATTER OF JINJA KAZI-MINGI MILLERS (U) LIMITED

#### **AND**

### IN THE MATTER OF APPLICATION FOR RECTIFICATION OF THE

### REGISTER OF JINJA KAZI-MINGI MILLERS (U) LIMITED

### **COMPANY COMPLAINT NO. 35330 OF 2024**

LUKEMAN MWERERI::::::::::::::::::::::::::::::::::

### **VERSUS**

### 1. JOSELINE KENYANA

### 2. BUWAGI AGRO TRADERS LIMITED::::::::::::::::::::::::::::::::::::

### **RULING**

### BEFORE: MULIISA SOLOMON, REGISTRAR OF COMPANIES

1. This application was filed on 15th April 2024, seeking rectification of the register under Regulation 8 of the Companies (Power of Registrar) Regulations, 2016. The applicant contends that the documents listed

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below were executed and registered illegally, erroneously, are an illegal endorsement and constitute an error continuing on the register within the meaning of Regulation 8 of the Companies (Powers of Registrar) Regulations, 2016. The documents sought to be rectified by striking off from the register include the following;

- $i.$ a share transfer form transferring a total of 50 shares to **BUWAGI AGRO TRADERS LIMITED;** - a board resolution filed 24th December 2020, effecting the transfer ii. of 50 shares from Lukeman Mwereri to Buwagi Agro Traders Limited and also removing the applicant as a director; - a return of allotment (form 10) filed on 24th December 2020 iii. allotting the said Buwagi Agro Traders Limited 50 shares; - a form 20 ( Notification of Appointment of Directors and iv. Secretary) filed on 27th September 2022 leaving the said Joseline Kenyana as the sole director and a special resolution registered on the same date amending the Memorandum and Articles of Association to reflect Buwagi Agro Traders as a shareholder in the company. - The annual return made up to 31st December 2022 reflecting the $V$ . respondents as the shareholders of Jinja Kazi-Mingi Millers (U) Limited. - 2. The applicant contends that he and the $1st$ respondent are the original shareholders and directors of the company, with each holding 50

shares as at the time of incorporation. The original memorandum and articles filed on 10th February 2015 and a form 20 filed on 10th February 2015 confirms this. The applicant contends that in 2020, without his knowledge and participation, the $1st$ Respondent illegally executed and filed the documents listed in para 1 (i) $-(v)$ contrary to the provisions of the company's articles of association as well as the provisions of the Companies Act, 2012 (as amended).

3. For example, the applicant avers that an undated resolution filed on $24th$ December 2020, titled "board resolution" that transferred the 50 shares, and approved his removal as director was never passed as there was no meeting on the 24th December 2020, that he was never served a notice calling the meeting held at the company premises on the said date as mentioned in the opening paragraph of that resolution. The applicant also contends that there is no evidence of recorded minutes to prove that such a meeting actually took place. In absence of minutes, Counsel for the applicant contended that such a meeting did not actually take place and that the decisions purportedly arising from it are illegal. The applicant also denies signing the impugned documents and contends that the documents were illegally executed in a series of actions orchestrated to introduce Buwagi Agro Traders Limited to the company, who it is contended, and not denied by the $1^{st}$ respondent, that she is the sole owner of Buwagi Agro Traders Limited.

- 4. In a statutory declaration filed on $17th$ May 2024, the $1st$ Respondent contends that the documents were executed legally with the participation of the respondent; that Buwagi Agro Traders Limited rightly acquired the 50 shares and the applicant was properly and legally removed as director. The respondent further avers that after completing the objective for which for which the company resolution of $24$ th December, 2020 was intended for, the company on 10th July 2023 resolved that the 50% shares of the company that had been hitherto allotted to Buwagi Agro Traders Limited be transferred back to the applicant and he was also re appointed as a director of the company. At the hearing, the applicant was represented by Bazira Anthony and the respondent was represented by Kigongo Kassim. - 5. During the hearing held on the $21st$ May 2024, the following issues were framed for determination. - Whether the applicant lawfully transferred shares to BUWAGI $(I)$ AGRO TRADERS LIMITED - $(II)$ *Whether the instant application is overtaken by events and therefore* $moot?$ - $(III)$ *Whether the application is entitled to the remedies sought.*

#### *Resolution of issues*

- 6. I will start by resolving issue 2 Issue 2: Whether the instant application is overtaken by events and *therefore a moot?* - 7. The respondents' counsel submitted that the remedies sought by the applicant have been overtaken by events since the respondent is now a shareholder and director in Jinja Kazi-Mingi Millers Limited. That by a resolution dated 22nd September, 2023 it was agreed that the applicant be reinstated as a shareholder with 50 shares and corresponding documents effecting the same were filed with this good office. Therefore, that applicant wants this good office to venture into an academic exercise of expunging documents that were already rectified. That the application is overtaken by events and there is no longer any controversy between the parties based on company application No. 35330 of 2024 before this good office. Counsel for the applicant submitted that by a board resolution filed on 24th December, 2020 with the company registry, the applicant was illegally removed as a shareholder on the basis of a forged signature purportedly attributed to him. This was further buttressed by the share transfer Form "Annexure $E$ " to the application where his shareholding was transferred to Buwagi Agro Traders Limited. Counsel for the applicant

contended that he was not aware of the rectifications since they were brought to his attention during the hearing.

#### *Analysis*

8. Jinja Kazi-Mingi Millers Limited was incorporated on 10th February, 2015 with Mwereri Lukeman and Joseline Kenyana as its initial subscribers/shareholders with each holding 50:50 shares. On 24th December, 2020 aboard resolution was filed wherein Mwereri Lukeman transferred his 50 ordinary shares to Buwagi Agro Traders Limited and also ceased being a director in the company. The corresponding instruments effecting this transfer were also filed including a share transfer form, Form 10 (Return of allotment) and the amended memorandum and articles of association reflecting the said changes were also filed later in 2022 by a special resolution dated $27th$ August, 2022 and registered on 27th September 2022.

On $10th$ July 2023, the company by a Special Resolution resolved that Buwagi Agro Traders Limited transfers its 50 ordinary shares in the company back to Mwereri Lukeman and instruments effecting this transaction like the share transfer form and certificate on transfer of share stock were also filed. To date, the shareholding structure in Jinja Kazi-Mingi Millers Limited stands as follows; Mwereri Lukeman 50 Ordinary shares and Joseline Kenyana 50 ordinary shares who are also double as the directors of the company. - 9. The present application falls in the mootness doctrine which bar court and administrative bodies from deciding moot cases; that is cases in which there is no longer any actual controversy. The exercise of judicial power depends upon existence of a case or controversy. The function of a Court of law or a quasi-judicial body is to decide an actual case and to right actual wrongs and not to exercise the mind by indulging in unrewarding academic casuistry or in pursuing the useless aim of jousting with windfalls. The said a normally was rectified by a Special Resolution dated 10th July, 2023 and filed on 22nd September, 2023 where the applicant was reinstated as a shareholder in Jinja Kazi-Mingi Millers Limited and he actually signed the corresponding transfer form receiving back the 50 ordinary shares and in my view, the earlier transaction perpetrated in 2020 is no longer the refection of Jinja Kazi-Mingi Millers Limited, then it is useless to waste this good office's time in hearing this application. The doctrinal basis of mootness is that courts or quasi-judicial bodies do not decide cases for academic purposes because court orders must have a practical effect and be capable of enforcement. Ref: High Court Civil Suit No 248 of 2012: Abdu Katuntu -vs- MTN Uganda Limited and Others. - 10. Similarly, Justice Musota (as he then was) in the case of Julius Maganda vs NRM. H. C. M. C No. 154/2010, held that; "Courts of law do not decide cases where no live disputes between parties are in existence. Courts do not decide cases or issue orders for academic

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purposes only. Court orders must have practical effects. They cannot issue orders where the issues in dispute have been removed or merely no longer exist." Additionally, in the case of **Pine Pharmacy Ltd and 8** others v National Drug Authority Misc. Application 0142 of 2016 Hon. Justice Stephen Musota cited Joseph Borowski vs Attorney **General of Canada (1989) 1 S. C. R** in which it was held that;

"*The doctrine of mootness is part of a general policy that a court may decline* to decide a case which raises merely a hypothetical or abstract question. An appeal is moot when a decision will not have the effect of resolving some controversy affecting or potentially affecting the rights of the parties. Such a live controversy must be present not only when the action or proceeding is *commenced but also when the court is called upon to reach a decision."*

Accordingly, if, subsequent to the initiation of the action or proceeding, events occur which affect the relationship of the parties so that no present live controversy exists which affects the rights of the parties, the case is said to be moot. The counsel for the $1st$ respondent submitted that the reinstatement of Mwereri Lukeman as a shareholder in the company with 50 ordinary shares rendered this application a moot cause, I agree with counsel's submission that the reinstatement of Mwereri Lukeman as a shareholder in Jinja Kazi-Mingi Millers Limited leaves this good office with no issue for determination between the applicant and the respondent. It is this office's view that the reinstatement of the applicant as a shareholder in

the company changed the case and the case cannot stand where the applicant is currently a shareholder in the company because the applicant in his complaint seeks to be reinstated as a shareholder in the company. The applicant's contention that the circumstances under which his shares were transferred in 2020 were unlawful is equally secondary and would not require this office to make pronouncements if the applicant is currently a shareholder in the company. The remaining claims or remedies sought are basically academic in nature with no guided target rather than making general and wide claims of forgery which have not been substantially proved.

11. A suit is academic where it is merely theoretical, makes empty sound, of no practical utilitarian value to the plaintiff even if judgment is given in his favor and if it is not related to practical situation of human nature and humanity. A suit is speculative if it is based on speculation and if it is not supported by facts or very low on facts but very high on guesses. As courts of law are not established to adjudicate on guesses but on facts, such actions are struck out and this good office while administering justice follows the same principle. A suit is hypothetical if it is imaginary and not based on real facts, if it looks like a mirage to deceive the other party and the court as to the reality of the real cause of action and if it a semblance of the actuality of the cause of action or relief sought. Therefore, when the respondents reinstated the applicant as a shareholder and director in the company this application became

moot or academic and it totally metamorphosed from the original claim and the same cannot be determined in the same manner by this good office.

12. The applicant under paragraph K of the application stated....(2) "*the*" Petitioner complained and it was agreed between him and Joseline Kenyana as per a resolution dated $22^{nd}$ September 2023 that Buwagi Agro Traders Limited transfers back the 50 ordinary shares to him." (3) That secondly, despite agreeing that Buwagi Agro Traders Limited TRANSFERS back 50 ordinary shares, the company documents were again forged to reflect Joseline Kenyana and Buwagi Agro Traders *Limited with 50 ordinary shares each.*

My understanding of the above is that the applicant got to know of the said transfers in 2020, notified the $1^{st}$ respondent and the parties agreed to have same rectified by the $2nd$ respondent transferring back the 50 ordinary shares to Lukeman Mwereri. This was done through a resolution dated 10th July 2023 and registered on 22nd September 2023. However, when the applicant conducted a search on $15th$ March, 2024 the search results showed the shareholders of the company as Buwagi Agro Traders Limited with 50 shares and Kenyana Joseline 50 shares which is not the correct position to date because the applicant was reinstated as a shareholder in the company with 50 ordinary shares.

13. This application was therefore, overtaken by events of reinstating the applicant back in the company with his 50 ordinary shares which

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leaves the company with **Mwereri Lukeman** and **Joseline Kenyana** as the shareholders of Jinja Kazi-Mingi Millers Limited at a ratio of **50:50**

- 14. Therefore by the time of making this ruling, the record reflects Mwereri Lukeman and Joseline Kenyana as the shareholders of Jinja Kazi-Mingi Millers Limited with each holding 50 ordinary shares which is the correct shareholding of the company. - 15. I so order - $16.$ Each party to bear its own costs.

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