1. This ruling emanates from a notice of motion dated 18th September 2024 in which the appellant are seeking orders that;
a) Spent
b) The honorable court do so issue an order stopping all withdrawals and/or transfers of funds or money from all bank accounts for M/S PEBO (KENYA)LTD until the parties herein agree on the list of signatories an structure of management of all the businesses of the said company
c) The respondent be compelled to provide the applicant with a list of all bank accounts for M/SPEBO9KENYA0LTD.
d) Costs be in cause
2. The application is based on the grounds that;
i. The majority shareholder of M/S PEBO (KENYA) LTD MR ETER BOGONKO ONCHINGA passed on 14th June 2024.
ii. The applicant and the respondents are the remaining shareholders of the impugned company.
iii. The respondents have kept secret the information regarding the details of all banks accounts for M/P PEBO (KENYA) LTD away from the any access by the applicant.
iv. The shareholder GREE ON THE NEW SIGNATORIES to all the companies’ bank accounts an agenda the respondents have flatly refused to discuss.
v. The new strictures of management of the company be discussed and agreed n to ensure the continuity of running of the company’s businesses an agenda the respondents have flatly refused to discuss.
vi. This application has been made in absolute good faith and in the interest of justice.
APPELLANTS SUBMISSION
3. The appellant submitted that the main shareholder Mr. Bogonko Peter Onchonga on 24th June 2024 and his estate is yet to be administered and whereby a citation was filed no.HCFP&A/E010/2024 and eventually a succession cause no.HFP&A/E003/2025 was filled as a result. The current miscellaneous application herein was prompted by failure of the respondents to streamline the daily operations of the company after the demise of the main share holder. The applicant and the respondents will have a company board meeting to make resolutions how to streamline the operations of the company, key in discussion would be how to repay a loan of ksh.118,735,543.70/= that PEBO (K) LTD owes National Bank on the strength of Nyakoe Hotels title deeds. The respondents are unwilling to sit down the with the applicant and hence they have ignored repaying the loan that the loan that the hotel has necessitated this application. the respondent filed a further affidavit alleging that the application had not disclosed the account numbers. By his affidavit sworn on the 13th march, 2025 at paragraph 3 the appellant disclosed all the accounts against which he seeks a temporary freeze until the shareholders and directors appoint new signatories. In their submissions , they relied on the case of RUIDU (K) C0MPANY LTD V ROBERT WANGAI GITHINJI (2017) Eklr Justice for a ochieng recognized that the right of a shareholder to be concerned with the daily operations of the company and the duty of the court protect the assets of the company from possible dissipation by bother opaque directors. He held as follows;
`57.on the other hand there is a possibility that Roberts’s co-director could dissipate the company’s assets, leaving Robert without recourse. Therefore the court needs to safeguard the assets until such time as Robert will have been compensated so that when he leaves the company he would have no reason to concern himself with how the company was being operated.
RESPONDENTS SUBMISSIONS
4. They submitted that the application is utterly incompetent,frivolus,vexatious and an abuse of the process of the court and should be dismissed with costs in that the applicant has not given a bank accounts in respect to M/S PEBO(K)LTD and the curt cannot issue such blanked order as sought in the application. The respondent says that the applicant is a nominal shareholder with no powers in the management of the company and their intention is not to disclose the property and the liabilities of the company if given chance. The applicant has annexed a copy of the death certificate in respect to Bogonko Peter Onchonga and that the applicant as to be investigated on how the said death certificate came to his hands which bears different serial numbers with what the respondent have which are marked as H.K.O 001(a&b). the applicant had committed acts of mischief having obtained a separate certificate of death serial number 1802043 signed by another officer as shown in paragraph 14 of the earlier affidavit.They also depone that the applicant herein do not have locus standi since he is a nominal shareholder.
ISSUES FOR DETERMINATION
Having considered the application herein , the following issues arise for determination;
a) Whether the applicant has the locus standi to bring the instant application.
b) Whether this application meets the threshold for the orders sought herein.
c) Whether this court has jurisdiction to deal with the issue of succession of the deceased director in this suit ,
ANALYSIS AND DETERMINATION
Whether the applicant has the locus standi to bring the instant application.
5. In the respondents affidavit ,she argues that the applicant lacks locus standi to bring this application since he is a nominal shareholder. In the Companies Act of 2015 ,a derivative suit is governed by sections 238 to 242 , by dint of section 238(1 ) a derivative claim is that which is brought by a member of a company in respect of a cause of action vested in the company , seeking relief on behalf of the company. Under section 238, the applicant must establish that he is a member of the company, that the cause of action is vested in the company and the relief sought must be on behalf of the company for its benefit and not for personal gain or benefit. In this instance , the question is not whether the applicant is a shareholder , the 1st respondent clearly states that the applicant is a nominal shareholder , the company law of Kenya allows nominal shareholders to institute a suit on behalf of the company and not on his own behalf. The applicant has sued herein in his own name . The applicant herein therefore has locus standi by virtue of being a nominal shareholder. In considerate is not indicated whether the application is for the benefit of the company. It has not been established that the application was brought in the interest of the company.
Whether application meets the threshold for the orders sought.
6. Case of mandatory injunction, it is required that an applicant must demonstrate special circumstances that exist. This is what was stated in the case of Robai Kadili Agufa & Another v Kenya Power & Lighting Co Ltd [2015] eKLR where the court stated:
“Nation Media Group & 2 others vs. John Harun Mwau [2014] eKLR the Court of Appeal said:
“It is trite law that for an interlocutory mandatory injunction to issue, an applicant must demonstrate existence of special circumstances...A different standard higher than that in prohibitory injunction is required before an interlocutory mandatory injunction is granted. Besides existence of exceptional and special circumstances must be demonstrated as we have stated a temporary injunction can only be granted in exceptional and in the clearest of cases.”
In the case of International Air Transport Association & other vs Akarim Agencies Company Limited & 2 Others [2014] eKLR the court stated the basis upon which Mareva Injunction will be granted and the court made the following comments:
“In the opinion of Lord Denning in the case of MAREVA COMPANIA NAVIERA SA V INTERNATIONAL BULKCARRIERS SA. The basis for freezing order is the inherent jurisdiction of the court although some jurisdictions have enacted freezing order statutes and others have codified it under their civil procedure laws. Freezing order may be issued alone or with other injunctive orders or orders calling for security for satisfaction of an existing or a judgment which may be issued by the court in the case. However, and I stated this earlier, freezing order is not to be used to: 1)to pressure a defendant; or 2)as a type of asset stripping (forfeiture); or 3)as a conferment of some proprietary rights on the plaintiff upon the assets of the Defendant. The purposes of any order that should be issued under Order 39 Rules 5 and 6 of the CPR is to prevent the Defendants or would be judgment-debtor from dissipating his assets as to have the effect of obstructing or delaying the execution of any decree that may be passed against him”. They are simply aimed at preventing the Respondent from dissipating its property in order to defeat the judgment that may be issued against the Respondent. Dissipation, therefore, in the context of law refers to any action that the Respondent takes with regard to his asset or assets which is aimed at defeating satisfaction of an existing or future judgment, including: a. Selling, removing, alienating, transferring, assigning, encumbering, or similarly dealing with the asset; a) instructing, requesting, counseling, demanding, or encouraging any other person to take an action described in subparagraph (a); and (c) facilitating, assisting in, aiding, abetting, or participating in an action described in subparagraph (a) or (b). The circumstances of this case are perfect for consideration of a freezing.”
the applicant in his affidavit states that this application is brought because of a real apprehension that the respondents will waste the resources of the company if the foregoing matters are not addressed and the company will not be able to meet its obligations to the existing workers and creditors. In as much as apprehension can be a factor in considering whether a right is threatened ,it is not enough on its own to justify an injunction. courts require more substantial basis in order to grant an injunction. The applicant has not satisfied the court in order to grant the orders sought.
7. Therefore, an applicant must establish that without the grant of a Mareva injunction , the company’s assets will be mismanaged. I find that the applicant has not sufficiently demonstrated this necessity, and thus, both the prayers for a Mareva injunction and for disclosure are declined.
8. On whether this court has jurisdiction to deal with the issue of succession of the deceased director in this suit , It has emerged that the main issue of the applicant herein is the succession of the deceased managing director A company is a legal entity separate from it’s directors and shareholders . (See the case of Salmon vs Salmon). The issue of succession of the estate of the deceased should be separated from the company affairs and be dealt with in a family court as he will be replaced by his successor upon conclusion of the succession cause . The company can still operate even without it’s managing director as the secretary can convene a meeting of the remaining directors and make resolutions on managing directors and change of signatories and relay the same to the banks for purposes of change of signatories . We have neither been told whether such a meeting has been held nor has a request for the same been filed . The Articles of association has also not been filed herein . This is the documents which provides for running of the company affairs and specifies the process of succession incase of death of a director .
9. The court has no jurisdiction to interfere in the internal operations of a company unless the internal dispute resolution mechanisms have been exhausted . The orders sought herein if granted will cripple the running of the company .
10. I therefore find this application has no merit and is hereby dismissed with costs .
11. It is so ordered.
T.A ODERA
JUDGE
23.6.25
DELIVERED VIRTUALLY VIA TEAMS PLATFORM ON THIS 23RD DAY OF JUNE 2025 IN THE PRESENCE OF :
N/A FOR APPLICANT
N/A FOR RESPONDENT
CA KIPCHIRCHIR
a) Spent
b) The honorable court do so issue an order stopping all withdrawals and/or transfers of funds or money from all bank accounts for M/S PEBO (KENYA)LTD until the parties herein agree on the list of signatories an structure of management of all the businesses of the said company
c) The respondent be compelled to provide the applicant with a list of all bank accounts for M/SPEBO9KENYA0LTD.
d) Costs be in cause
2. The application is based on the grounds that;
i. The majority shareholder of M/S PEBO (KENYA) LTD MR ETER BOGONKO ONCHINGA passed on 14th June 2024.
ii. The applicant and the respondents are the remaining shareholders of the impugned company.
iii. The respondents have kept secret the information regarding the details of all banks accounts for M/P PEBO (KENYA) LTD away from the any access by the applicant.
iv. The shareholder GREE ON THE NEW SIGNATORIES to all the companies’ bank accounts an agenda the respondents have flatly refused to discuss.
v. The new strictures of management of the company be discussed and agreed n to ensure the continuity of running of the company’s businesses an agenda the respondents have flatly refused to discuss.
vi. This application has been made in absolute good faith and in the interest of justice.
APPELLANTS SUBMISSION
3. The appellant submitted that the main shareholder Mr. Bogonko Peter Onchonga on 24th June 2024 and his estate is yet to be administered and whereby a citation was filed no.HCFP&A/E010/2024 and eventually a succession cause no.HFP&A/E003/2025 was filled as a result. The current miscellaneous application herein was prompted by failure of the respondents to streamline the daily operations of the company after the demise of the main share holder. The applicant and the respondents will have a company board meeting to make resolutions how to streamline the operations of the company, key in discussion would be how to repay a loan of ksh.118,735,543.70/= that PEBO (K) LTD owes National Bank on the strength of Nyakoe Hotels title deeds. The respondents are unwilling to sit down the with the applicant and hence they have ignored repaying the loan that the loan that the hotel has necessitated this application. the respondent filed a further affidavit alleging that the application had not disclosed the account numbers. By his affidavit sworn on the 13th march, 2025 at paragraph 3 the appellant disclosed all the accounts against which he seeks a temporary freeze until the shareholders and directors appoint new signatories. In their submissions , they relied on the case of RUIDU (K) C0MPANY LTD V ROBERT WANGAI GITHINJI (2017) Eklr Justice for a ochieng recognized that the right of a shareholder to be concerned with the daily operations of the company and the duty of the court protect the assets of the company from possible dissipation by bother opaque directors. He held as follows;
`57.on the other hand there is a possibility that Roberts’s co-director could dissipate the company’s assets, leaving Robert without recourse. Therefore the court needs to safeguard the assets until such time as Robert will have been compensated so that when he leaves the company he would have no reason to concern himself with how the company was being operated.
RESPONDENTS SUBMISSIONS
4. They submitted that the application is utterly incompetent,frivolus,vexatious and an abuse of the process of the court and should be dismissed with costs in that the applicant has not given a bank accounts in respect to M/S PEBO(K)LTD and the curt cannot issue such blanked order as sought in the application. The respondent says that the applicant is a nominal shareholder with no powers in the management of the company and their intention is not to disclose the property and the liabilities of the company if given chance. The applicant has annexed a copy of the death certificate in respect to Bogonko Peter Onchonga and that the applicant as to be investigated on how the said death certificate came to his hands which bears different serial numbers with what the respondent have which are marked as H.K.O 001(a&b). the applicant had committed acts of mischief having obtained a separate certificate of death serial number 1802043 signed by another officer as shown in paragraph 14 of the earlier affidavit.They also depone that the applicant herein do not have locus standi since he is a nominal shareholder.
ISSUES FOR DETERMINATION
Having considered the application herein , the following issues arise for determination;
a) Whether the applicant has the locus standi to bring the instant application.
b) Whether this application meets the threshold for the orders sought herein.
c) Whether this court has jurisdiction to deal with the issue of succession of the deceased director in this suit ,
ANALYSIS AND DETERMINATION
Whether the applicant has the locus standi to bring the instant application.
5. In the respondents affidavit ,she argues that the applicant lacks locus standi to bring this application since he is a nominal shareholder. In the Companies Act of 2015 ,a derivative suit is governed by sections 238 to 242 , by dint of section 238(1 ) a derivative claim is that which is brought by a member of a company in respect of a cause of action vested in the company , seeking relief on behalf of the company. Under section 238, the applicant must establish that he is a member of the company, that the cause of action is vested in the company and the relief sought must be on behalf of the company for its benefit and not for personal gain or benefit. In this instance , the question is not whether the applicant is a shareholder , the 1st respondent clearly states that the applicant is a nominal shareholder , the company law of Kenya allows nominal shareholders to institute a suit on behalf of the company and not on his own behalf. The applicant has sued herein in his own name . The applicant herein therefore has locus standi by virtue of being a nominal shareholder. In considerate is not indicated whether the application is for the benefit of the company. It has not been established that the application was brought in the interest of the company.
Whether application meets the threshold for the orders sought.
6. Case of mandatory injunction, it is required that an applicant must demonstrate special circumstances that exist. This is what was stated in the case of Robai Kadili Agufa & Another v Kenya Power & Lighting Co Ltd [2015] eKLR where the court stated:
“Nation Media Group & 2 others vs. John Harun Mwau [2014] eKLR the Court of Appeal said:
“It is trite law that for an interlocutory mandatory injunction to issue, an applicant must demonstrate existence of special circumstances...A different standard higher than that in prohibitory injunction is required before an interlocutory mandatory injunction is granted. Besides existence of exceptional and special circumstances must be demonstrated as we have stated a temporary injunction can only be granted in exceptional and in the clearest of cases.”
In the case of International Air Transport Association & other vs Akarim Agencies Company Limited & 2 Others [2014] eKLR the court stated the basis upon which Mareva Injunction will be granted and the court made the following comments:
“In the opinion of Lord Denning in the case of MAREVA COMPANIA NAVIERA SA V INTERNATIONAL BULKCARRIERS SA. The basis for freezing order is the inherent jurisdiction of the court although some jurisdictions have enacted freezing order statutes and others have codified it under their civil procedure laws. Freezing order may be issued alone or with other injunctive orders or orders calling for security for satisfaction of an existing or a judgment which may be issued by the court in the case. However, and I stated this earlier, freezing order is not to be used to: 1)to pressure a defendant; or 2)as a type of asset stripping (forfeiture); or 3)as a conferment of some proprietary rights on the plaintiff upon the assets of the Defendant. The purposes of any order that should be issued under Order 39 Rules 5 and 6 of the CPR is to prevent the Defendants or would be judgment-debtor from dissipating his assets as to have the effect of obstructing or delaying the execution of any decree that may be passed against him”. They are simply aimed at preventing the Respondent from dissipating its property in order to defeat the judgment that may be issued against the Respondent. Dissipation, therefore, in the context of law refers to any action that the Respondent takes with regard to his asset or assets which is aimed at defeating satisfaction of an existing or future judgment, including: a. Selling, removing, alienating, transferring, assigning, encumbering, or similarly dealing with the asset; a) instructing, requesting, counseling, demanding, or encouraging any other person to take an action described in subparagraph (a); and (c) facilitating, assisting in, aiding, abetting, or participating in an action described in subparagraph (a) or (b). The circumstances of this case are perfect for consideration of a freezing.”
the applicant in his affidavit states that this application is brought because of a real apprehension that the respondents will waste the resources of the company if the foregoing matters are not addressed and the company will not be able to meet its obligations to the existing workers and creditors. In as much as apprehension can be a factor in considering whether a right is threatened ,it is not enough on its own to justify an injunction. courts require more substantial basis in order to grant an injunction. The applicant has not satisfied the court in order to grant the orders sought.
7. Therefore, an applicant must establish that without the grant of a Mareva injunction , the company’s assets will be mismanaged. I find that the applicant has not sufficiently demonstrated this necessity, and thus, both the prayers for a Mareva injunction and for disclosure are declined.
8. On whether this court has jurisdiction to deal with the issue of succession of the deceased director in this suit , It has emerged that the main issue of the applicant herein is the succession of the deceased managing director A company is a legal entity separate from it’s directors and shareholders . (See the case of Salmon vs Salmon). The issue of succession of the estate of the deceased should be separated from the company affairs and be dealt with in a family court as he will be replaced by his successor upon conclusion of the succession cause . The company can still operate even without it’s managing director as the secretary can convene a meeting of the remaining directors and make resolutions on managing directors and change of signatories and relay the same to the banks for purposes of change of signatories . We have neither been told whether such a meeting has been held nor has a request for the same been filed . The Articles of association has also not been filed herein . This is the documents which provides for running of the company affairs and specifies the process of succession incase of death of a director .
9. The court has no jurisdiction to interfere in the internal operations of a company unless the internal dispute resolution mechanisms have been exhausted . The orders sought herein if granted will cripple the running of the company .
10. I therefore find this application has no merit and is hereby dismissed with costs .
11. It is so ordered.
T.A ODERA
JUDGE
23.6.25
DELIVERED VIRTUALLY VIA TEAMS PLATFORM ON THIS 23RD DAY OF JUNE 2025 IN THE PRESENCE OF :
N/A FOR APPLICANT
N/A FOR RESPONDENT
CA KIPCHIRCHIR