Law books

Can the court order a company to hold a general meeting?

The court can order a company to hold a general meeting under section 280 of the Companies Act where a lack of quorum had hindered the holding of the meeting.

This was found in the Miscellaneous Application E445 of 2021 (Seruji Limited v Savannah Cement Limited) in the High Court at Nairobi presided by A Mabeya, J.

Application: Whether the court can order a company to hold a general meeting.

Initially, the applicant made an application for an Extra-Ordinary General Meeting. The application was heard ex-parte and the orders sought were granted. Later, the interested party successfully sought the setting aside of those orders. The court set aside the orders it had granted and made orders for the application to be heard afresh with the participation of the interested party.

The applicant explained that the respondent had four shareholders at incorporation and that the quorum for a General Meeting was three shareholders. However, the respondent was left with only two shareholders and thus had a quorum hitch. The board resolution was necessary to restructure the respondent’s facilities with Kenya Commercial Bank (KCB) but a quorum hitch had become an impediment.
The application was opposed. It was contended that the applicant’s shareholding in the respondent was disputed. This was because it had irregularly acquired the shares of two shareholders. That meant shareholding in the company was below the required threshold and the Articles of Association had not been amended. The interested party stated that it should be the one to call for a General Meeting as its shareholding was not disputed. The interested party added that the restructuring of the respondent’s facilities at KCB required the shareholding dispute to be sorted out first.

Application allowed
Orders: –

  1. Leave was granted to the respondent to hold an Extra-Ordinary General meeting within Seven (7) days of the grant of the order. This notwithstanding the provisions of article 17 of the Memorandum and Articles of Association of the respondent.
  2. Upon service of notice of the meeting of not less than 3 days upon the interested party, the applicant was to constitute a quorum.
  3. The costs of the summons were awarded to the applicant against the interested party.

Read other legal opinions

Leave a Reply