RULING.
Introduction.
1. This action was commenced on the 20 th July 2026 when an application was filed under a Certificate of Urgency and seeks for various orders against the Respondents. The orders include:
a. That pending interparties hearing and determination of this application, the Defendants/Respondents be barred from awarding the tender for ‘Financing, Construction, Operations and Maintenance of 400KWP Solar PV Plant for the Affected Party.
b. That upon granting of leave to the applicant to commence a derivative action on behalf of and for the benefit of the Affected Party and before filing of the derivative suit, the Defendants/Respondents be barred from awarding the tender for “Financing, Construction, Operation and Maintenance of 400KWP Solar PV for the Affected Party”.
c. That this Honourable Court be leased rto grant the Plaintiff/Applicant leave to commence a derivative action on behalf of and for the benefit of Kapsara Tea Factory Company against the Defendants.
d. That directions be given as to service of the plaint filed forthwith.
e. That at the hearing of the application interparties, the Honourable Court be pleased to issue an order barring the Defendant/Respondents from suspending the Applicant Director pending the hearing and determination of the derivative suit filed herewith.
f. That the costs of the application be provided for .
2. The application is premised on the grounds set out on the face of the application and the affidavit of the Applicant sworn on the 16 th July 2026. The Applicant has also annexed several documents in support of the application.
3. The Respondents were duly served with the application and they filed their responses to the application. The Replying Affidavit is sworn by the Company Secretary of the 6 th Respondent on behalf of the Respondents. The parties did file their submissions as directed by the court.
4. At the mention of this matter for directions on the disposal of the application, the Defendants withdrew their Notice of Preliminary Objection dated 3 rd August 2026, and therefore the court will not consider the same in this ruling.
Applicant’s Case and Submissions .
5. The gist of the Applicant’s averments and submissions are that he is a director and shareholder of the Affected Party. He annexed a copy of the CR 12 to support the same. The company is owned by small shareholders and suppliers of green leaf tea and supports the growers through aggregation of green leaf tea to achieve economies of scale through processing, marketing and sale of the tea made therefrom. The board of the Affected Party comprises the Applicant and the 1 st to 5 th Respondents herein.
6. It was his averment that the Respondents have breached their fiduciary duty owed to the shareholders by advertising for the tender for the Financing, Construction, Operation and Maintenance of 400KWP Solar Plant for the Affected Party without a Procurement Plan being in place contrary to section 17.0 of the Management Agency Agreement.
7. It was his further averment that the Respondents had appointed Kenya Tea Development Agency (KTDA) to provide secretarial services to the Affected Party contrary to section 34 (6) of the Tea Act, 2020 as read with Clause 2.3 of the Management Agency Agreement between the Affected Party and KTDA. Further the Respondents had advertised for the above tender without the opinion and approval of the board contrary to the agreement between the Affected Party and KTDA.
8. The Applicant continued to aver that the Respondents had also paid for the Continuous Withering Machine (CWM) contrary to the recommendations of the Audit Report that had directed that further payments be stopped until outstanding issues had been resolved. This had occasioned loss to the shareholders’ funds despite discussions at the Annual General Meeting (AGM) and the Respondents were to pursue compensation by the KTDA for losses already incurred with the installation of the Automated Withering Machine (AWM), which they had not done leading to losses to the Affected Party.
9. The Respondents were also alleged to have allowed the use of the Withering Machines despite the knowledge that they were faulty and had thus led to losses to be incurred by the Affected Party and the shareholders. The Defendants had also failed to reimburse Kshs. 12.5 million and Kshs. 3.6 million for decommissioning and escalation costs of the Withering Machines. In addition, the Respondents had failed to develop policies including procurement, finance, maintenance, production and Human resources policies.
10. Lastly, the Applicant averred that he had been excluded from the decision making processes of the company and because the Respondents were in control, there was no one to sue for the company for the wrongs committed against the shareholders of the company. The Respondents actions have left the Affected Party exposed to massive losses which will prejudice the interests of the shareholders.
11. In support thereof, the Applicant annexed a copy of the CR 12 for the Affected Party, the Factory Accounts for the Affected Party, the tender advertised as stated above, the Management Agency Agreement executed between the Affected Party and KTDA Management Services, a copy of the Audit Report on the Affected Party dated 21 st November 2017 and the minutes of the Affected Party AGM held on the 2 nd December 2022.
12. In his submissions, the Applicant primarily relied on the provisions of section 238 of the Companies Act, section 25 (5) of the Tea Act, section 34 (6) of the Tea Act and Clauses 17.0 and 2.3 (i) of the Management Agency Agreement executed between the Affected Party and KTDA. Section 238 of the Companies Act provides as follows:
“ Interpretation: Part XI
(1) In this Part, "derivative claim" means proceedings by a member of a company—
(a) in respect of a cause of action vested in the company; and
(b) seeking relief on behalf of the company.
(2) A derivative claim may be brought only—
(a) under this Part; or
(b) in accordance with an order of the Court in proceedings for protection of members against unfair prejudice brought under this Act.
(3) A derivative claim under this Part may be brought only in respect of a cause of action arising from an actual or proposed act or omission involving negligence, default, breach of duty or breach of trust by a director of the company.
(4) A derivative claim may be brought against the director or another person, or both.
(5) It is immaterial whether the cause of action arose before or after the person seeking to bring or continue the derivative claim became a member of the company.
(6) For the purposes of this Part—
(a) "director" includes a former director;
(b) a reference to a member of a company includes a person who is not a member but to whom shares in the company have been transferred or transmitted by operation of law .
13. The above section provides the locus upon which a party may either bring or seek leave to commence a derivative action and on what grounds. A party needs to demonstrate that they are a serving or former director or shareholder of the company. The Applicant herein is a shareholder and director of the company though currently under suspension by the Affected Party.
14. On the other hand, section 25 of the Tea Act has the following provisions:
“ Licensing of manufacturers
(1) A person shall not manufacture tea for sale except under and in accordance with a licence issued under this Act.
(2) A person shall apply for a manufacturing licence to the Board in a prescribed form and shall pay the prescribed fee.
(3) The Board may, after consultation with the Cabinet Secretary—
(a) issue a manufacturing licence, in accordance with this Act;
(b) refuse to issue the licence on any ground which may appear to the Board to be sufficient and inform the applicant in writing of the reasons thereof;
(c) cancel, vary or suspend any licence if in the findings of the Board, the licensee is found to have contravened the regulations made under this Act for the operation of manufacturing entities.
(4) A manufacturing licence issued under this section shall in addition to authorizing the holder to carry on the business set out in subsection (1), also authorize the holder to carry out the business of packing and blending tea.
(5) Before the issuance or renewal of a manufacturing licence for a tea factory limited company the Board shall satisfy itself that the applicant has a procurement policy providing for competitive procurement of goods and services .
15. It is thus clear from the provisions of section 25 (5) of the Tea Act that the company is required to have procurement policy in place for the procurement of goods and services.
16. The Applicant has placed reliance of the decision in Ghelani Metals Limited & 3 Others vs Elesh Ghelani Natwarlal & Another (2017) eKLR . The decision sets out what is a derivative suit and when and by whom it can be commenced. The court in that case did state thus:
“ Derivative actions are the pillars of corporate litigation. As I understand it, derivative action is a mechanism which allows shareholder(s) to litigate on behalf of the corporation, often against an insider (whether a director, a shareholder or other officer) or a third party whose actions have allegedly injured the corporation. The action is designed as a tool of accountability to ensure redress is obtained against all wrongdoers, in the form of a representative suit filed by a shareholder on behalf of the corporation ”.
Respondents Case and Submissions.
17. In the Replying Affidavit sworn by the 6 th Respondent in opposition to the application, the deponent avers that the Application is misconceived both in law and fact and does not satisfy the statutory threshold for the grant of leave to continue a derivative claim as these are exceptional proceedings and the Applicant is required to demonstrate a genuine and bona fide claim against the interests of the company.
18. He further averred that the procurement the subject of this application, the appointment of KTDA Management Services Limited to provide Company Secretarial and Internal Audit Services were decisions of the relevant organs of the Affected Party decisions in the normal discharge of their statutory and fiduciary responsibilities and were intended to improve operational efficiency, reduce energy costs, enhance sustainability and promote the long-term success of the Company for the benefit of all its shareholders, which mandate had been discharged honestly, diligently, independently and in good faith.
19. The deponent further, and interestingly so stated that the directors are entrusted by law with the responsibility of making commercial and management decisions on behalf of the Company and are not expected to guarantee the commercial success of every business venture undertaken by the Company. The management was only expected to exercise commercial judgment, evaluation of risks and assessment of opportunities and should not, without more, be construed as breaches of fiduciary duty merely because another shareholder would have preferred a different course of action. No breach of the statutory and/or fiduciary obligations had been demonstrated by the Applicant.
20. It was the Respondents further statement that the Applicants had been suspended from his directorship of the company through the company’s internal processes for a period of 12 months and the present application was premised of the suspension and not the genuine concern for the interests of the Affected Party.
21. The Respondents equally relied on the Ghelani Metals Limited & 3 Others v Elesh Ghelani Natwarlal & Another [20171 eKLR case where the Court settled the procedure under the Companies Act as the proper procedure to commence derivative suits and thus leave was required so that the court could weed our frivolous suits. This was a slight departure from the directives earlier decreed in the English case of Foss v Harbottle .
22. The Respondents also relied on the twin cases of Giella v Cassman Brown & Co. Ltd [1973] EA 358 and Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR , and submitted that the Applicant had not met the threshold by demonstrating a prima facie case with a likelihood of success.
23. In order to determine the application herein, I will distill the issues for the courts consideration as follows:
a. Has the applicant met the threshold for the grant of the orders sought?
b. What directions should the court grant ?
Analysis and Determination .
24. Several facts arise in the averments and submissions of the parties herein. First, it is unchallenged that the Applicant and the 1 st to 5 th Respondents are all directors and shareholders of the Affected Party. The Applicant has however been suspended as a director of the Affected Party since July 2026, shortly before filing the present application.
25. Has the Applicant set out a prima facie case to warrant the orders sought? The provisions of section 238 and 239 of the Companies Act requires the applicant to meet. The conditions to be met by the Applicant were well enunciated in the Court of Appeal case of Amin Akberali Manji, Hemanth Kumar & MusiklandMillenium Limited v Altaf Abdulrasul Dadani & Musikland Limited (Under Receivership) [2015] KECA, 356 (KLR) . The court laid out the following guidelines on when to deny and when to grant leave to commence a derivative suit. The court stated thus:
“ 241. (1) If a member of a company applies for permission under section 239 or 240, the Court shall refuse permission if satisfied—
(a) that a person acting in accordance with section 144 would not seek to continue the claim;(b) if the cause of action arises from an act or omission that is yet to occur-that the act or omission has beenauthorized by the company;(c) if the cause of action arises from an act or omission that has already occurred — that the act oromission—(i) was authorised by the company before it occurred; or(ii) has been ratified by the company since it occurred.
(2) In considering whether to give permission, the Court shall take into account the following considerations:
(a) whether the member is acting in good faith in seeking to continue the claim;(b) the importance that a person acting in accordance with section 143 would attach to continuing it;(c) if the cause of action results from an act or omission that is yet to occur, whether the act or omissioncould be, and in the circumstances would be likely to be—(i) authorised by the company before it occurs; or(ii) ratified by the company after it occurs;(d) if the cause of action arises from an act or omission that has already occurred-whether the act or omissioncould be, and in the circumstances would be likely to be, ratified by the company(e) whether the company has decided not to pursue the claim;(f) whether the act or omission in respect of which the claim is brought gives rise to a cause of action that themember could pursue in the member's own right rather than on behalf of the company.
(3) In deciding whether to give permission, the Court shall have particular regard to any evidence before it asto the views of members of the company who have no personal interest (direct or indirect) in the matter.[Emphasis mine ]”.
26. Having had occasion to consider the above provisions and the law as set out under sections 239 and 239, I do find on the onset that the Applicant has demonstrated that the Respondents have failed to comply with various provisions of the Companies Act and the Management Agreement executed between the Affected Party and KTDA. Primarily, I note that in their response, the Respondents did not provide a copy of the procurement policy. This is key as the core issue raised by the Applicant is the tender sent out by the Affected Party for the Financing, Construction, Operation and Maintenance of the 400 KWP Solar PV Plant.
27. It is not sufficient for the Respondents to aver that the responsibility of the directors to guarantee success. While there are many factors that would come in to affect the profitability and success of a project, the directors are under a fiduciary duty to make every effort to ensure that whatever investment decisions they make should be able to bring the shareholders profits and a proper return on their investments.
28. That therefore makes the import of Clause 17.0 of the Management Agency Agreement critical. The directors need to undertake a feasibility study, to at least ensure the viability of the projects they plan to undertake prior to commissioning.
29. I further deem that the court cannot wish away the aspect of the audit issues raised and which remain unresolved. These includes the matters raised in the forensic audit and the payments for the Withering machines. I thus deem that the Applicant has persuaded the court in relation to the requirements set out under section 238 and 239 of the Companies Act to warrant the grant of the orders sought.
30. As I allow the application, I will advise the parties to embrace mediation in the resolution of the dispute herein for the benefit of the shareholders and also to ensure quick determination of the matter.
Disposition.
31. I do allow the application in the following terms:
a. The application is allowed in terms of prayers 3, 4 and 6.
b. The Applicant to file and serve the plaint within 7 days of today’s order.
c. The Respondents to file and serve their defences, witness statements and documents within 15 days of service of the plaint.
d. Mention on 28 th September 2026 for directions on the hearing and disposal of the suit.
e. In view of the circumstances of the application, the costs shall be in the cause .
Dated, signed and delivered virtually via Microsoft Teams this 3 rd September 2026.
HCCC NO. E006 OF 2026 KENNETH L. INDUSA VS THOMAS K. TATEL & 5 OTHERS RULING Pg. 11
Introduction.
1. This action was commenced on the 20 th July 2026 when an application was filed under a Certificate of Urgency and seeks for various orders against the Respondents. The orders include:
a. That pending interparties hearing and determination of this application, the Defendants/Respondents be barred from awarding the tender for ‘Financing, Construction, Operations and Maintenance of 400KWP Solar PV Plant for the Affected Party.
b. That upon granting of leave to the applicant to commence a derivative action on behalf of and for the benefit of the Affected Party and before filing of the derivative suit, the Defendants/Respondents be barred from awarding the tender for “Financing, Construction, Operation and Maintenance of 400KWP Solar PV for the Affected Party”.
c. That this Honourable Court be leased rto grant the Plaintiff/Applicant leave to commence a derivative action on behalf of and for the benefit of Kapsara Tea Factory Company against the Defendants.
d. That directions be given as to service of the plaint filed forthwith.
e. That at the hearing of the application interparties, the Honourable Court be pleased to issue an order barring the Defendant/Respondents from suspending the Applicant Director pending the hearing and determination of the derivative suit filed herewith.
f. That the costs of the application be provided for .
2. The application is premised on the grounds set out on the face of the application and the affidavit of the Applicant sworn on the 16 th July 2026. The Applicant has also annexed several documents in support of the application.
3. The Respondents were duly served with the application and they filed their responses to the application. The Replying Affidavit is sworn by the Company Secretary of the 6 th Respondent on behalf of the Respondents. The parties did file their submissions as directed by the court.
4. At the mention of this matter for directions on the disposal of the application, the Defendants withdrew their Notice of Preliminary Objection dated 3 rd August 2026, and therefore the court will not consider the same in this ruling.
Applicant’s Case and Submissions .
5. The gist of the Applicant’s averments and submissions are that he is a director and shareholder of the Affected Party. He annexed a copy of the CR 12 to support the same. The company is owned by small shareholders and suppliers of green leaf tea and supports the growers through aggregation of green leaf tea to achieve economies of scale through processing, marketing and sale of the tea made therefrom. The board of the Affected Party comprises the Applicant and the 1 st to 5 th Respondents herein.
6. It was his averment that the Respondents have breached their fiduciary duty owed to the shareholders by advertising for the tender for the Financing, Construction, Operation and Maintenance of 400KWP Solar Plant for the Affected Party without a Procurement Plan being in place contrary to section 17.0 of the Management Agency Agreement.
7. It was his further averment that the Respondents had appointed Kenya Tea Development Agency (KTDA) to provide secretarial services to the Affected Party contrary to section 34 (6) of the Tea Act, 2020 as read with Clause 2.3 of the Management Agency Agreement between the Affected Party and KTDA. Further the Respondents had advertised for the above tender without the opinion and approval of the board contrary to the agreement between the Affected Party and KTDA.
8. The Applicant continued to aver that the Respondents had also paid for the Continuous Withering Machine (CWM) contrary to the recommendations of the Audit Report that had directed that further payments be stopped until outstanding issues had been resolved. This had occasioned loss to the shareholders’ funds despite discussions at the Annual General Meeting (AGM) and the Respondents were to pursue compensation by the KTDA for losses already incurred with the installation of the Automated Withering Machine (AWM), which they had not done leading to losses to the Affected Party.
9. The Respondents were also alleged to have allowed the use of the Withering Machines despite the knowledge that they were faulty and had thus led to losses to be incurred by the Affected Party and the shareholders. The Defendants had also failed to reimburse Kshs. 12.5 million and Kshs. 3.6 million for decommissioning and escalation costs of the Withering Machines. In addition, the Respondents had failed to develop policies including procurement, finance, maintenance, production and Human resources policies.
10. Lastly, the Applicant averred that he had been excluded from the decision making processes of the company and because the Respondents were in control, there was no one to sue for the company for the wrongs committed against the shareholders of the company. The Respondents actions have left the Affected Party exposed to massive losses which will prejudice the interests of the shareholders.
11. In support thereof, the Applicant annexed a copy of the CR 12 for the Affected Party, the Factory Accounts for the Affected Party, the tender advertised as stated above, the Management Agency Agreement executed between the Affected Party and KTDA Management Services, a copy of the Audit Report on the Affected Party dated 21 st November 2017 and the minutes of the Affected Party AGM held on the 2 nd December 2022.
12. In his submissions, the Applicant primarily relied on the provisions of section 238 of the Companies Act, section 25 (5) of the Tea Act, section 34 (6) of the Tea Act and Clauses 17.0 and 2.3 (i) of the Management Agency Agreement executed between the Affected Party and KTDA. Section 238 of the Companies Act provides as follows:
“ Interpretation: Part XI
(1) In this Part, "derivative claim" means proceedings by a member of a company—
(a) in respect of a cause of action vested in the company; and
(b) seeking relief on behalf of the company.
(2) A derivative claim may be brought only—
(a) under this Part; or
(b) in accordance with an order of the Court in proceedings for protection of members against unfair prejudice brought under this Act.
(3) A derivative claim under this Part may be brought only in respect of a cause of action arising from an actual or proposed act or omission involving negligence, default, breach of duty or breach of trust by a director of the company.
(4) A derivative claim may be brought against the director or another person, or both.
(5) It is immaterial whether the cause of action arose before or after the person seeking to bring or continue the derivative claim became a member of the company.
(6) For the purposes of this Part—
(a) "director" includes a former director;
(b) a reference to a member of a company includes a person who is not a member but to whom shares in the company have been transferred or transmitted by operation of law .
13. The above section provides the locus upon which a party may either bring or seek leave to commence a derivative action and on what grounds. A party needs to demonstrate that they are a serving or former director or shareholder of the company. The Applicant herein is a shareholder and director of the company though currently under suspension by the Affected Party.
14. On the other hand, section 25 of the Tea Act has the following provisions:
“ Licensing of manufacturers
(1) A person shall not manufacture tea for sale except under and in accordance with a licence issued under this Act.
(2) A person shall apply for a manufacturing licence to the Board in a prescribed form and shall pay the prescribed fee.
(3) The Board may, after consultation with the Cabinet Secretary—
(a) issue a manufacturing licence, in accordance with this Act;
(b) refuse to issue the licence on any ground which may appear to the Board to be sufficient and inform the applicant in writing of the reasons thereof;
(c) cancel, vary or suspend any licence if in the findings of the Board, the licensee is found to have contravened the regulations made under this Act for the operation of manufacturing entities.
(4) A manufacturing licence issued under this section shall in addition to authorizing the holder to carry on the business set out in subsection (1), also authorize the holder to carry out the business of packing and blending tea.
(5) Before the issuance or renewal of a manufacturing licence for a tea factory limited company the Board shall satisfy itself that the applicant has a procurement policy providing for competitive procurement of goods and services .
15. It is thus clear from the provisions of section 25 (5) of the Tea Act that the company is required to have procurement policy in place for the procurement of goods and services.
16. The Applicant has placed reliance of the decision in Ghelani Metals Limited & 3 Others vs Elesh Ghelani Natwarlal & Another (2017) eKLR . The decision sets out what is a derivative suit and when and by whom it can be commenced. The court in that case did state thus:
“ Derivative actions are the pillars of corporate litigation. As I understand it, derivative action is a mechanism which allows shareholder(s) to litigate on behalf of the corporation, often against an insider (whether a director, a shareholder or other officer) or a third party whose actions have allegedly injured the corporation. The action is designed as a tool of accountability to ensure redress is obtained against all wrongdoers, in the form of a representative suit filed by a shareholder on behalf of the corporation ”.
Respondents Case and Submissions.
17. In the Replying Affidavit sworn by the 6 th Respondent in opposition to the application, the deponent avers that the Application is misconceived both in law and fact and does not satisfy the statutory threshold for the grant of leave to continue a derivative claim as these are exceptional proceedings and the Applicant is required to demonstrate a genuine and bona fide claim against the interests of the company.
18. He further averred that the procurement the subject of this application, the appointment of KTDA Management Services Limited to provide Company Secretarial and Internal Audit Services were decisions of the relevant organs of the Affected Party decisions in the normal discharge of their statutory and fiduciary responsibilities and were intended to improve operational efficiency, reduce energy costs, enhance sustainability and promote the long-term success of the Company for the benefit of all its shareholders, which mandate had been discharged honestly, diligently, independently and in good faith.
19. The deponent further, and interestingly so stated that the directors are entrusted by law with the responsibility of making commercial and management decisions on behalf of the Company and are not expected to guarantee the commercial success of every business venture undertaken by the Company. The management was only expected to exercise commercial judgment, evaluation of risks and assessment of opportunities and should not, without more, be construed as breaches of fiduciary duty merely because another shareholder would have preferred a different course of action. No breach of the statutory and/or fiduciary obligations had been demonstrated by the Applicant.
20. It was the Respondents further statement that the Applicants had been suspended from his directorship of the company through the company’s internal processes for a period of 12 months and the present application was premised of the suspension and not the genuine concern for the interests of the Affected Party.
21. The Respondents equally relied on the Ghelani Metals Limited & 3 Others v Elesh Ghelani Natwarlal & Another [20171 eKLR case where the Court settled the procedure under the Companies Act as the proper procedure to commence derivative suits and thus leave was required so that the court could weed our frivolous suits. This was a slight departure from the directives earlier decreed in the English case of Foss v Harbottle .
22. The Respondents also relied on the twin cases of Giella v Cassman Brown & Co. Ltd [1973] EA 358 and Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR , and submitted that the Applicant had not met the threshold by demonstrating a prima facie case with a likelihood of success.
23. In order to determine the application herein, I will distill the issues for the courts consideration as follows:
a. Has the applicant met the threshold for the grant of the orders sought?
b. What directions should the court grant ?
Analysis and Determination .
24. Several facts arise in the averments and submissions of the parties herein. First, it is unchallenged that the Applicant and the 1 st to 5 th Respondents are all directors and shareholders of the Affected Party. The Applicant has however been suspended as a director of the Affected Party since July 2026, shortly before filing the present application.
25. Has the Applicant set out a prima facie case to warrant the orders sought? The provisions of section 238 and 239 of the Companies Act requires the applicant to meet. The conditions to be met by the Applicant were well enunciated in the Court of Appeal case of Amin Akberali Manji, Hemanth Kumar & MusiklandMillenium Limited v Altaf Abdulrasul Dadani & Musikland Limited (Under Receivership) [2015] KECA, 356 (KLR) . The court laid out the following guidelines on when to deny and when to grant leave to commence a derivative suit. The court stated thus:
“ 241. (1) If a member of a company applies for permission under section 239 or 240, the Court shall refuse permission if satisfied—
(a) that a person acting in accordance with section 144 would not seek to continue the claim;(b) if the cause of action arises from an act or omission that is yet to occur-that the act or omission has beenauthorized by the company;(c) if the cause of action arises from an act or omission that has already occurred — that the act oromission—(i) was authorised by the company before it occurred; or(ii) has been ratified by the company since it occurred.
(2) In considering whether to give permission, the Court shall take into account the following considerations:
(a) whether the member is acting in good faith in seeking to continue the claim;(b) the importance that a person acting in accordance with section 143 would attach to continuing it;(c) if the cause of action results from an act or omission that is yet to occur, whether the act or omissioncould be, and in the circumstances would be likely to be—(i) authorised by the company before it occurs; or(ii) ratified by the company after it occurs;(d) if the cause of action arises from an act or omission that has already occurred-whether the act or omissioncould be, and in the circumstances would be likely to be, ratified by the company(e) whether the company has decided not to pursue the claim;(f) whether the act or omission in respect of which the claim is brought gives rise to a cause of action that themember could pursue in the member's own right rather than on behalf of the company.
(3) In deciding whether to give permission, the Court shall have particular regard to any evidence before it asto the views of members of the company who have no personal interest (direct or indirect) in the matter.[Emphasis mine ]”.
26. Having had occasion to consider the above provisions and the law as set out under sections 239 and 239, I do find on the onset that the Applicant has demonstrated that the Respondents have failed to comply with various provisions of the Companies Act and the Management Agreement executed between the Affected Party and KTDA. Primarily, I note that in their response, the Respondents did not provide a copy of the procurement policy. This is key as the core issue raised by the Applicant is the tender sent out by the Affected Party for the Financing, Construction, Operation and Maintenance of the 400 KWP Solar PV Plant.
27. It is not sufficient for the Respondents to aver that the responsibility of the directors to guarantee success. While there are many factors that would come in to affect the profitability and success of a project, the directors are under a fiduciary duty to make every effort to ensure that whatever investment decisions they make should be able to bring the shareholders profits and a proper return on their investments.
28. That therefore makes the import of Clause 17.0 of the Management Agency Agreement critical. The directors need to undertake a feasibility study, to at least ensure the viability of the projects they plan to undertake prior to commissioning.
29. I further deem that the court cannot wish away the aspect of the audit issues raised and which remain unresolved. These includes the matters raised in the forensic audit and the payments for the Withering machines. I thus deem that the Applicant has persuaded the court in relation to the requirements set out under section 238 and 239 of the Companies Act to warrant the grant of the orders sought.
30. As I allow the application, I will advise the parties to embrace mediation in the resolution of the dispute herein for the benefit of the shareholders and also to ensure quick determination of the matter.
Disposition.
31. I do allow the application in the following terms:
a. The application is allowed in terms of prayers 3, 4 and 6.
b. The Applicant to file and serve the plaint within 7 days of today’s order.
c. The Respondents to file and serve their defences, witness statements and documents within 15 days of service of the plaint.
d. Mention on 28 th September 2026 for directions on the hearing and disposal of the suit.
e. In view of the circumstances of the application, the costs shall be in the cause .
Dated, signed and delivered virtually via Microsoft Teams this 3 rd September 2026.
HCCC NO. E006 OF 2026 KENNETH L. INDUSA VS THOMAS K. TATEL & 5 OTHERS RULING Pg. 11