URSB suspends Igara Tea Factory board filings pending high court decision
The shareholders, backed by 382 members holding 117,869 shares, also alleged that the company had accumulated huge debts, failed to pay workers and tea farmers, and withheld statutory deductions.
URSB suspends Igara Tea Factory board filings pending high court decision
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Assistant Registrar of Companies, Daniel Nasasira, has barred persons claiming to be directors of Igara Growers Tea Factory Limited from filing any company resolutions or statutory returns with the Uganda Registration Services Bureau (URSB) until the High Court determines the legality of the company’s board.
The ruling arose from an application filed by five shareholders; Asuman Batangaya, Willis Bashaasha, Ronald Rwankanji, Hannington Katarikawe and Godfrey Agaba Turikwendera, who accused the company’s leadership of overstaying in office, conducting unlawful elections, and mismanaging company affairs.
The shareholders, backed by 382 members holding 117,869 shares, also alleged that the company had accumulated huge debts, failed to pay workers and tea farmers, and withheld statutory deductions.
According to the applicants, an Extraordinary General Meeting held on January 31, 2025, resolved that the then board would continue managing the company only until August 2025, by which time overdue annual general meetings were expected to have been held.
The petitioners argued that the board’s mandate expired in August 2025, but its members continued exercising authority, including convening annual general meetings and confirming directors in June 2026.
The company, through KTA Advocates, denied the allegations and maintained that under the company's Articles of Association, the directors remained in office until they were lawfully replaced.
The company further contended that the meetings held on June 24, 2026, lawfully confirmed the directors-elect and therefore resolved the governance dispute.
Nasasira dismissed all preliminary objections raised by the company, including claims that URSB was biased, that there were pending court proceedings barring the matter, that the dispute had become moot following the June 2026 meetings, and that the registrar lacked jurisdiction to investigate allegations involving fraud.
He held that none of those objections prevented the registrar of companies from entertaining the complaint.
However, Nasasira declined to determine whether the current board is legally in office, ruling that the issue requires interpretation of the company’s constitutional documents and, therefore, falls within the jurisdiction of the High Court.
He directed the parties to seek a determination under Section 138 of the Companies Act, which allows court intervention where it becomes impracticable to convene a company meeting.
“The appropriate and legally prescribed remedy available to the company and its members was an application to a competent court under Section 138 of the Companies Act,” Nasasira ruled.
Pending the High Court’s decision, Nasasira ordered that no person claiming to be a director of Igara Growers Tea Factory Limited should lodge any further company resolutions, returns or statutory forms with URSB.
The shareholders had also asked the registrar to appoint inspectors to investigate the company’s affairs under Sections 169 and 170 of the Companies Act.
They alleged that the company owes about sh21.1b, including approximately sh6b owed to tea out-growers, sh1.4b in unpaid salaries, sh1.7b in unremitted National Social Security Fund contributions, as well as debts to suppliers, financial institutions and the Uganda Revenue Authority.
The applicants further alleged that despite continuing to sell tea through the Mombasa auction and receiving proceeds, the company failed to meet its obligations, raising concerns over possible mismanagement of company funds.
Nasasira found that the allegations disclosed sufficient grounds to justify an investigation into the company’s affairs.
However, he ruled that such an investigation should await the High Court’s determination on who lawfully constitutes the company’s board, saying inspectors’ findings would require a legally recognised board capable of implementing any recommendations.
He, therefore, deferred the appointment of inspectors until the governance dispute is resolved.
The registrar made no order as to costs, noting that the dispute concerns the governance of a public company with more than 7,000 shareholder-farmers and raises issues of significant public importance.