Sanyu Africa Research Institute (SAFRI) NGO v Sanyu Africa Research Institute (SAFRI) Limited (Company Complaint 9524 of 2022) [2023] UGRSB 18 (5 July 2023)


## THE REPUBLIC OF UGANDA

#### IN THE MATTER OF THE COMPANIES ACT NO.1 OF 2012

#### **AND**

# IN THE MATTER OF COMPANY COMPLAINT NO. 9524 OF 2022

**SANYU AFRICA RESEARCH INSTITUTE** (SAfRI) NGO::::::::::::::::::::::::::::::::::::

#### **VERSUS**

SANYU **AFRICA RESEARCH INSTITUTE** (SAfRI) LTD::::::::::::::::::::::::::::::::::::

# **RULING**

## BEFORE: MULIISA SOLOMON, REGISTRAR OF COMPANIES.

## A. Introduction

1. The complainant's claim against the respondent is jointly and severally for declaratory orders that the respondent's name is a pass off of the complainant's business name and business and its registration was wrongfully, negligently and fraudulently done, a cancellation of the respondent from the register or rectification of the register to remove Tabitya David, Mwiraguzu Moses and Balamu Magoola the alleged illegal entrants and be replaced by Dr. Sam Ononge, Prof. Andrew Weeks, Dr. Otim Tom Charles, Dr. John Baptist Waniaye, Prof. Florence Mirembe and Mr. Michael Maweda.

## **B.** Background

2. The complainant is a Non-Governmental Organization registered in 2013 at the National Bureau of NGOs and has since been conducting business under the name and fashion of Sanyu Africa Research Institute (SAfRI). The complainant has over the 9 years acquired goodwill in its business and its business name as Sanyu Africa


Research Institute (SAfRI) as its services and business are well known to the public generally by the said name.

3. Sometime in August 2022, the complainant came to know that a company Sanyu Africa Research Institute (SAfRI) was incorporated by the respondent under a business name that is confusingly similar to its name of Sanyu Africa Research Institute (SAfRI) the NGO. The complainant raised objections to the registration of the respondent but got no positive response.

# C. Submissions

## **Complainant's Submissions**

- 4. The complainant contended that the respondent's use of the name Sanyu Africa Research Institute (SAfRI) Limited is a wrongful attempt to pass off the complainant's business name though not registered with URSB and thus mislead the public into the belief that the respondent is the complainant or otherwise related to the complainant. - 5. That Dr. James Ditai was a member of the NGO registered at the National Bureau of NGOs and the grievance was that if it were possible, the right people should have been adopted that is the founding members at the NGO Bureau to wit: Dr. James Ditai, Tom Otim, Dr. Sam Ononge, Prof. Andrew Weeks, Prof. Florence Mirembe, John Baptist Waniaye and Michael Maweda but the team that was brought to URSB comprises of four members to wit: Dr. James Ditai, Mr. David Tabitya, Mr. Moses Mwiraguzu and Mr. Balamu Magoola. That it is the complainant's contention that Dr. Ditai who was the Executive Director of the complainant acted in bad faith when he used his position as the Executive Director instead of incorporating the company as was required by the NGO Act, he abandoned his fellow founder members and adopted a new team all together. - 6. The complainant further contended that the Executive Director of the complainant then, abused the trust bestowed to him by his colleagues and furthermore, breached a fiduciary duty and misrepresented his fellow members. That his conduct of bringing a


new team on board to form a company which was later used to access NGO funds of the original Sanyu Africa Research Institute (NGO).

- 7. That this was an act of fraud and misrepresentation at its best and when such issues are brought to the attention of the Registrar, it is our honest belief that this illegality and bad faith should be treated with the contempt it deserves. - 8. That the aspect of bad faith was defined by the **Black's Law** Dictionary 8<sup>th</sup> Edition Brian A Garner at page 149 as an act of *dishonesty, belief or purpose to confuse the public.* Further in the case of Freddrick Zabwe Vs Orient Bank & Others SCCA 04 of 2006, fraud and bad faith were equally defined as;

"The intentional perversion of the truth by a person for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or her or to surrender a legal right. It is a false representation of a matter of fact whether by words or by conduct or by conduct or by false or misleading allegations or concealment of that which *deceives another so that he or she shall act upon it to his legal injury."*

- 9. That all that transpired points to the assertions in that case that is fraud, bad faith and misrepresentation and when the registrar of companies is faced with such issues, he has a remedy to offer and one of those remedies is provided for under **Regulation 3(i)** of the Companies (Powers of the Registrar Regulations), 2016. Further that it is the complainant's humble submission that owing to the Powers granted to this office, the Registrar of Companies be pleased to serve justice to have the register rectified by bringing on board the founding members with the inclusion of Dr. James Ditai remaining on the register, the 6 original founding members of the NGO be added and the other 3 members with who Dr. Ditai incorporated with be removed or substituted. - 10. That this office has such power and by doing that, the founding member and Executive Director Dr. James Ditai would not have suffered any injustice since he would have remained a member in

the company and in the NGO, this would have served justice for both parties.

11. That further on the issue of bad faith on the part of the respondent, Paragraph 6 of Magoola Balamu's Statutory Declaration states that SAfRI limited by guarantee was registered in compliance with the NGO Act of 2016, it is an aspect that the Executive Director James Ditai had that duty when the act was amended as the Executive director of SAfRI at the time to have complied and for him to have abused that duty and later purported to come with a different team all together is a clear demonstration of bad faith and misrepresentation on his part which should be fawn upon him and treated with the contempt it deserves.

## **Respondent's Submissions**

- 12. The respondent contended in his defence that they followed steps as required at URSB on how to register a local company under a reserved name, logged the required documentation, paid the required fees and were duly issued a certificate of incorporation in the names of Sanyu Africa Research Institute (SAfRI) Limited. - 13. The respondent contended that they conduct business under the style fashion of Sanyu Africa Research Institute (SAfRI) Limited and has never carried on any trade or business under a "business name" that is allegedly confusingly similar to the name of the complainant since even the complainant does not appear anywhere on the company register. - 14. The respondent in his defence further contended that the applicant's complaint is based on the fact that the respondent was not correctly entered on the register of companies and Paragraph 18 of the complainant's rejoinder further adds onto the allegations of fraud and bad faith. - 15. That it is trite law **under Section 22 of the Companies Act 2012 that** a certificate of Incorporation shall be concrete evidence of following due process and that the company is lawfully and duly registered on the register. All incorporation documents including the certificate as annexture " $E$ " having a registration number of


80020003425401 and as well as the entire process of incorporation is clearly stated in the Magoola Balamu's Statutory declaration under paragraphs 3 to 6.

- 16. That to further buttress issues of fraud and bad faith, in the case of Kampala Bottlers Ltd Vs Damanico SCCA No.22 of 1992, fraud *cannot be proven by way of a mere statutory declaration or an affidavit and* that allegations of fraud are so technical that they must be proven strictly the burden being heavier than on a balance of probabilities and therefore *require a full-blown trial to have them proved.* - 17. That fraud is a very serious allegation to make and its' always wise to abide by **Order 6 rule 2 of the Civil Procedure Rules** and plead fraud particularly stating every aspect and the complainants merely coming to allege fraud and bad faith without strictly proving each and every single aspect that constitutes to be fraud is a waste of Courts' time and it is therefore, the respondents application that the claims of fraud against the respondent are misconceived and false but that in the alternative, the registrar of companies is not vested with jurisdiction to conduct a full trial on fraud to its logical conclusion. - 18. The respondent in his defence further contended that the complainant is not an incorporated entity under the Companies Act of 2012 and therefore, does not have locus to bring this complaint before this forum. That the Import of Section 40(2) of the **Companies Act** is that any issue that arises from challenging a name shall be between two companies entered on the register of companies and the applicant did not throughout the proceedings avail any evidence on record to prove their entities' legal existence and therefore, the applicant is an unknown entity under the Companies Act and does not have the locus and capacity to lodge a complaint before this Court and this will be a nullity that will occasion a miscarriage of justice. - 19. Further that there's no provision in the companies Act and regulations that gives the registrar of companies' powers to suspend a company account or file and its only Courts of Judicature that can


invoke Section 98 of the Civil Procedure Act and Section 33 of the **Judicature** Act and grant a relief of suspending the company account or file. The lack of such an order makes it illegal for the registrar of companies to suspend the account and the same should be reversed.

20. That it is the respondents' prayer that the registrar of companies finds this complaint devoid of merit, lacks locus before URSB and the same be dismissed with costs and the illegal and arbitrary suspension of the respondent be vacated and the respondent be allowed to conduct its business as it has proved its legal existence and right to operate with in the confines of the Companies Act 2012 or that the registrar of Companies affords any other relief in the circumstances.

## Complainant's Rejoinder

- 21. In rejoinder, the complainant contended that the respondent was registered at URSB in compliance with the NGO Act, 2016 and as such is not purely a company but a Non-Governmental Organization whose membership must be the same both at URSB and at the NGO Bureau. - 22. That concerning the background of registration of Sanyu Africa Research Institute as an NGO, the complainant further contended that James Ditai was entrusted by his colleagues with the responsibility of registering it as an NGO with the NGO board at the time, which he did by reservation of the name on $09<sup>th</sup>$ September 2013 but breached the trust and in complete bad faith registered it as a company limited by guarantee without including the original founder members and all the registrations including that of the trade mark were done in bad faith with the intention to defraud the complainant. - 23. Furthermore that even though a certificate of incorporation shall be conclusive evidence under **Section 22** of the Companies Act, Sanyu Africa Research Institute (SAfRI) Ltd was registered at URSB in compliance with the NGO Act 2016 and that excluding its original

founder members and introducing nonmembers was a dishonest act by Dr. James Ditai and done in bad faith.

- 24. Further the complainant contended that Section $40(2)$ of the Companies Act 2012 is not applicable to these facts because the issue before the registrar of companies is that the respondent is registered in the name of the complainant but in total bad faith since James Ditai excluded the legitimate members and introduced other 3 members who were non members of the complainant. That their introduction in the respondent was done illegally and in absolute bad faith. - 25. That James Ditai reserved the complainant's name on the 9<sup>th</sup> day of September 2013 with the NGO Board at the time and on the same day reserved the same with URSB after which he submitted a report and obtained a refund of all expenses incurred in the registration of the complainant. However, under Section 2(3) of the Non-Governmental organizations Registration Act Capp 113 it was a requirement to first register the organization with the NGO Board before registering with URSB for which the reservation at URSB remained on the system hence re-reservation of the same name by the same person Dr. James Ditai. - 26. That it is complainant's submission that Dr. James Ditai by excluding the rightful founding members of Sanyu Africa Research Institute (SAfRI) and bringing total strangers was illegal, dishonesty and done in bad faith and that it is the complainant's prayer that the respondent be removed from the register of companies to enable the complainant register its name in compliance with the NGO Act, 2016 and further state that all the process of registration was done by Dr. James Ditai but on behalf of the organization and its members. - 27. Further that regarding the lifting of the red flag on the company file, it's the complainant's submission that Dr. James Ditai cannot benefit from his own treacherous maneuvers. That the company name is a property of the complainant and James Ditai continuing to use the same by withdrawing funds or carrying out any other business

 without the involvement of the complainant is an injustice to the complainant.

- 28. That further in light of the above, it is only prudent that the activities of the company remain suspended until the register is rectified by removing Tabitya David, Mwiraguzu Moses and Balamu Magoola the alleged illegal entrants and be replaced by Dr. Sam Ononge, Prof. Andrew Weeks, Dr. Otim Tom Charles, Dr. John Baptist Waniaye, Prof. Florence Mirembe and Mr. Michael Maweda. - D. Agreed Issues - 1. Whether the respondents' name is confusingly similar to that of the complainant and constitutes passing off of the complainant's name. - 2. What are the available remedies? - E. Representation - **29.** *The complainant was represented by Kasaija Robert and Sharon Murungi* from $R$ . Kasaija & Co. Advocates and representatives for the complaint were Dr. Sam Ononge, Mr. Freddrick Obbo and Dr. Ben Wanume. - **30.** The respondent was represented by Bob Matsiko appearing together with Lugelo Michael holding brief for Counsel Eddie Nangulu from Nagulu Mugoda & Co. Advocates. The representative from the respondent was $Dr$ . *James Ditai a director in the respondent.* - **F.** Determination

## Issue 1

Whether the respondents' name is confusingly similar to that of the complainant and constitutes passing off of the complainant's name.

31. I have considered both counsel's submissions although, they did not limit themselves to the issue at hand as stated above and I will proceed to determine the issue at hand and throw light on any other areas of concern as raised by both counsel.

## *Analysis*

32. The present dispute is premised on the registration of a companythe respondent – Sanyu Africa Research Institute (SAfRI) Limited as a company limited by Guarantee at URSB while the complainant


NGO has been in existence under a name Sanyu Africa Research Institute (SAfRI).

- 33. The Registrar of Companies is guided by the Companies Act in registration of Companies and names are approved on basis of desirability of the name. - 34. Section 36 of the Companies Act provides: - $(1)$ The registrar may, on written application, reserve a name pending registration of the company or a change of name by an existing company, any such reservation shall remain in force for thirty days or such longer period, not exceeding sixty days as the registrar may, for special reasons, *allow and during that period no other company is entitled to be registered* with that name. - (2) No name shall be reserved and no company shall be registered by a name, *which in the opinion of the registrar is undesirable.* - *35. Section 37* provides further; - (1) Where in the registrar's opinion the name by which a company is registered *gives misleading indication of the nature of its activities as to be likely to cause harm to the public, the registrar may direct it to change its name.* - $36$ . In the present case, on $15/12/2021$ , the representative of the respondent Dr. James Ditai paid shillings 20,000 in Diamond Trust Bank under Payment Registration Number 2220004321500 as a fee for reservation of name Sanyu Africa Research Institute (SAfRI) Limited and on the same day, he filled in the form for reservation of name as an NGO/ Company Limited by Guarantee with URSB and in the same, a search was conducted on the register of companies and business names and it was established that Sanyu Africa Research Institute (SAfRI) Limited was not similar to any other name on the register and the same was reserved under reservation number R2000005049279. He further submitted the Memorandum and Articles of Association with the relevant Forms to URSB and the same were approved and on $22/12/2021$ the same was incorporated as Sanyu Africa Research Institute (SAfRI) Limited by Guarantee.


37. Section 22 (1) of the Companies Act is to the effect that;

*a certificate of incorporation given by the registrar of companies in respect* of any association shall be conclusive evidence that all the requirements of the Act in respect of registration and of matters precedent and incidental to registration have been complied with and that the association is a company authorised to be registered and duly registered under this Act.

- 38. Therefore, Sanyu Africa Research Institute (SAfRI) Limited by guarantee was legally incorporated as per the provisions of the Companies Act as above highlighted. - 39. The registration of companies is not determined on phonetic similarity but rather whether the name may be misleading to the public. However, in the present case, one of the parties' is not a legal entity as per the Companies Act and doesnot appear on the company register. - $40$ . Section 40(2) provides that;

*Where, through inadvertence or otherwise, a company on its first* registration or on its registration by a new name is registered by a name which, in the opinion of the registrar, is too similar to the name by which existence is $a$ *company in* previously registered, the first*mentioned company may change its name with the consent of the registrar* and, if the registrar so directs within six months after it is registered by that name, shall change it within six weeks from the date of the direction or such longer period as the registrar may allow.

$41$ . The interpretation of this provision is that for a dispute to be brought before the registrar of companies, the parties to the dispute must both appear on the register of companies and one with a claim for similarity of name must have been registered earlier than the other. This is because:

"The law guards against double registration and existence of two companies with similar identical names and the purpose is to protect the owners of the first registered company and the members of the public against confusion and contradiction. The existence of two companies


bearing identical names is likely to cause confusion among the members of the public" See Pentecostal Assemblies of God Limited v Pentecostal Assemblies of God Lira Limited HCCS No. 97 of 2015[2019] **UGHCCD 217**

- 42. Therefore, a dispute concerning similarity of names is only entertained by the registrar of companies where parties to the dispute are duly incorporated and all appear on the companies register. - 43. Even when it is visibly obvious that Sanyu Africa Research Institute (*SAfRI*) NGO is similar to *Sanyu Africa Research Institute* (*SAfRI*) *Limited,* the former only has legal status at the National Bureau of NGOs under the NGO Act of 2016 but does not appear on the company register to fall within the ambit of the Companies Act for it to seek a remedy under Sections 36 to 40 of the Companies Act challenging the registration status of the former on grounds of similarity of name which leaves the respondent's name similar to none on the companies register. - 44. Therefore, the complainant is not vested with locus to file such a complaint before the Registrar of Companies as per Section 40(2) of the Companies Act but can seek appropriate legal redress and remedies in Courts of law. - 45. Counsel for the complainant in his submissions does not dispute the fact that his name is not on the company register but contends that it is an NGO registered at the National Bureau of NGOs where one of its founding members Dr. James Ditai fraudulently and in bad faith came to URSB and used the name belonging to the NGO to register a company Limited by Guarantee. To further enunciate on the principle of fraud and bad faith as submitted upon by both Counsel, the Supreme Court in the case of **Kampala Bottlers** Limited Vs Damanico SCCA No. 22 of 1992 held that;

"Fraud cannot be proven by way of a mere statutory declaration or an affidavit and that allegations of fraud are so technical that they must be *proven strictly the burden being heavier than on a balance of probabilities* therefore require a full-blown trial to have them proved. Fraud is a very


serious allegation to make and its always wise to abide by the Civil *Procedure Rules Order 6 rule 2 and plead fraud particularly stating every aspect."*

- 46. Therefore, the registrar of companies does not have jurisdiction to conduct a full-blown trial and determine aspects of fraud as this would amount to usurping powers of court and any such findings pertaining fraud made by the registrar of companies would be a nullity. - 47. Henceforth if the registration of the respondent was procured by fraud and bad faith as alleged by the complainant, then the proper forum to make the accurate findings on fraud and bad faith is court which is vested with the proper and concurrent jurisdiction to handle such matters pertaining the status of an NGO and that of a company and it's upon such an order from court upon trial that URSB can be directed to either rectify the register or even cancel the respondent's registration. - 48. Therefore, any aspects of fraud in procuring any registration can only be determined by court which can upon its findings order URSB to act accordingly. - 49. From the complainants' submissions, it seems like the complainant is challenging the respondent's registration on grounds of fraud and bad faith of which the registrar of companies has no power to investigate and make a determination on the same, but can only be ordered by court upon conducting a trail on the same to have the register rectified or offer any remedy in the circumstances. - 50. Further during the hearing, the issue regarding the suspension of company filings came up where both counsel made submissions on the same as highlighted above. Although the Registrar of Companies has no powers to invoke Section 98 of the Civil Procedure Act and Section 33 of the Judicature Act to grant an interim relief in any proceedings before him or her, he or she can take precaution of what is being filed on the company file in issue so that proceedings before him or her are not jeopardized by any


filings which could affect the proceedings before him or her or occasion a miscarriage of justice.

- 51. During the hearing of this matter, I found it just and equitable to halt further filings on the company file of the respondent so that the proceedings are not in away affected to the detriment of both parties and having resolved the issue regarding similarity of both names as stated above, the suspension of company filings on the respondent company file is hereby lifted. - 52. Therefore, this complaint fails and is hereby dismissed with no order made as to costs.

I so order.


**Registrar**

05/07/2023