Court declines to dissolve West Nile company

The Commercial Court in Kampala has declined to dissolve West Nile-based multi-billion shilling Ozuu Brothers Company Limited after two minority shareholders alleged unfair treatment.

On August 19, Justice Elizabeth Alividza, in her judgment delivered in the presence of the squabbling shareholders, said powers to liquidate a company are vested in the Registrar of Companies.

The feud pits the family, whose company was incorporated on May 9, 1999, under the Companies Act with a share capital of sh100m, divided into 10,000 ordinary shares.

The late Isaac Nyakuni founded the entity. It is headquartered at Plot 13-15, Hospital Road, Arua.

The company, sole distributor of Mukwano Group products, has a vast property portfolio and business interests in Uganda, eastern Democratic Republic of Congo, and South Sudan.

"This petition was brought under the wrong procedure. This court has no power to wind up a company. This power was given to the Registrar of Companies. The High Court has power to handle appeals," said Alividza.

 "The company is a solvent entity, has a rich history, and is a success story."

The petition arose last year on May 11 when William Etria and Richard Aderubo, who have 500 shares each, purported that the majority shareholders were oppressive.

The majority shareholders are Samuel Ejidra (5,000 shares), Benjamin Alioni Nyakuni (3,000 shares), and Moses Draza (1,000 shares).

The petitioners alleged that some of the company assets acquired using company funds have been registered in the names of the majority co-shareholders.

They purport that they were pushed out in 2011.The duo further claim the co-shareholders have amassed wealth and acquired properties including fuel stations and residential buildings in upscale city suburbs.

The petitioners claim they have been denied salary as shareholders, no meetings convened, and that the company has failed to declare dividends and distribute the same.

But in response through the lawyers Kania & Alli Advocates and Solicitors, the majority shareholders refute the allegations.

They contend that the duo on their own volition, opted to distance themselves from the company operations, and ventured into other businesses.

In her judgment, the judge agreed with the submissions of lawyers Renato Kania and Alli Balpe, that the petitioners were never excluded but opted to stay away, which prejudiced their own interests.

The properties in the company portfolio, as listed in the court documents, are the Head Office/depot, Grid Building Plot Number 10-12 New Lane, OB Plaza Plot 9-11 Adumi Road, KCB Block(Ozuu Plaza) Plot Number 39-41 Adumi Road, and Annexed Plot KCB Building.

Others are Factory Store, Nebbi Building, Koboko building, Paidha Plot, Ariwara Plot with building, Dradri Mbia Farm at Lazebu Vurra County, Vast Ewuata land opposite White Castle, Ocial land in Ocoko, and Bako Julius Farm, 17 kilometres from Rhino camp.

Alividza directed the Registrar of Companies to probe and conduct a forensic audit of company finances.

She talked of the need to resolve the issue of property ownership, as the evidence adduced was more of memory rather than documentary.

The parties were instructed to meet the Registrar of Companies by September 9, and return to court with a work plan on September 27.

"This judgment serves as an interim order, pending further investigations. This is not meant to break up the company but to streamline operations," Alividza said.

Reacting to the judgement outside court shortly after the session, Aderubo told New Vision: "The good thing is that they have accepted we are shareholders."

Ejidra declined to comment, saying he would only do so after comprehending the judgment. "Let me rest for now. I will respond later."

Balpe applauded the note that court had declined the move to wind up the company, and also the recognition that his clients were the majority shareholders.

Kania said: "We shall discuss the judgment and agree on the way forward. It is a judgment but court has made interim directives. It is premature for now to make a conclusion on the next course of action. I will discuss with my clients."