Background and introduction
1. For determination is the application dated 9th September 2025, in which the applicant seeks leave to continue the instant suit as a derivative action on behalf of ACCRETIVE AFRICA MANAGEMENT CONSULTING LIMITED (hereinafter the Company). The application is supported by an affidavit sworn by the applicant on even date.
Analysis and determination
2. The record shows that service was duly effected upon Mr. Deepak Varansi, the majority shareholder and co-director of the Company. Notwithstanding such service, no response has been filed. The Court has nonetheless carefully considered the application together with the supporting evidence.
3. The issue for determination is whether leave should be granted to the applicant to continue the suit as a derivative action. The applicable statutory framework is found under sections 238 and 239 of the Companies Act (hereinafter “the Act”). Section 238(1) defines a derivative claim as one instituted by a member of a company in respect of a cause of action vested in the company, seeking relief on behalf of the company.
4. Derivative proceedings serve to safeguard the legal interests of the company by providing redress for wrongs committed against it, often by insiders such as directors or majority shareholders, or by third parties whose conduct has occasioned harm to the corporation. Such actions constitute an exception to the rule in Foss v Harbottle (1843) 2 Hare 462, which established that a company must ordinarily sue in its own name or through its duly appointed representative.
5. For an applicant to succeed under section 238(1), it must be demonstrated that:
i. The applicant is a member of the company;
ii. The cause of action is vested in the company; and
iii. The relief sought is for the benefit of the company as a whole, and not for the applicant’s personal gain.
6. These requirements are conjunctive rather than independent, as affirmed in Ghelani Metals Limited & 3 Others v Elesh Ghelani Natwaral & Another [2017] eKLR.
7. Turning to the evidence, the CR12 dated 22nd February 2022 confirms that the applicant is both a director and shareholder of the Company hence has standing to bring this application. The applicant has produced a contract dated 10th May 2018 between the Company and Ashuk Engineers Limited, in which the Company was contracted to takeover operations and sale of the business assets belonging to Ashuk Engineers. The applicant avers that the termination of the said contract on 30th November 2021 was irregular and in breach of Clause 14 thereof. He further demonstrates that he raised his concerns by email dated 24th January 2022 and through the Company’s counsel, but no action was taken by the co-director.
8. I have equally perused the plaint and I am satisfied that the reliefs sought are intended to protect the Company from potential loss arising from the alleged breach of contract. The suit is not designed to advance the applicant’s personal interests but rather to vindicate the rights of the Company.
Disposition
9. In the premises, the application dated 9th September 2025 is meritorious. Leave is hereby granted to the applicant to prosecute the suit as a derivative action on behalf of, and for the benefit of, Accretive Africa Management Consulting Limited. Costs of the application shall be in the cause.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 26th DAY OF FEBRUARY 2026.
F. MUGAMBI
JUDGE
1. For determination is the application dated 9th September 2025, in which the applicant seeks leave to continue the instant suit as a derivative action on behalf of ACCRETIVE AFRICA MANAGEMENT CONSULTING LIMITED (hereinafter the Company). The application is supported by an affidavit sworn by the applicant on even date.
Analysis and determination
2. The record shows that service was duly effected upon Mr. Deepak Varansi, the majority shareholder and co-director of the Company. Notwithstanding such service, no response has been filed. The Court has nonetheless carefully considered the application together with the supporting evidence.
3. The issue for determination is whether leave should be granted to the applicant to continue the suit as a derivative action. The applicable statutory framework is found under sections 238 and 239 of the Companies Act (hereinafter “the Act”). Section 238(1) defines a derivative claim as one instituted by a member of a company in respect of a cause of action vested in the company, seeking relief on behalf of the company.
4. Derivative proceedings serve to safeguard the legal interests of the company by providing redress for wrongs committed against it, often by insiders such as directors or majority shareholders, or by third parties whose conduct has occasioned harm to the corporation. Such actions constitute an exception to the rule in Foss v Harbottle (1843) 2 Hare 462, which established that a company must ordinarily sue in its own name or through its duly appointed representative.
5. For an applicant to succeed under section 238(1), it must be demonstrated that:
i. The applicant is a member of the company;
ii. The cause of action is vested in the company; and
iii. The relief sought is for the benefit of the company as a whole, and not for the applicant’s personal gain.
6. These requirements are conjunctive rather than independent, as affirmed in Ghelani Metals Limited & 3 Others v Elesh Ghelani Natwaral & Another [2017] eKLR.
7. Turning to the evidence, the CR12 dated 22nd February 2022 confirms that the applicant is both a director and shareholder of the Company hence has standing to bring this application. The applicant has produced a contract dated 10th May 2018 between the Company and Ashuk Engineers Limited, in which the Company was contracted to takeover operations and sale of the business assets belonging to Ashuk Engineers. The applicant avers that the termination of the said contract on 30th November 2021 was irregular and in breach of Clause 14 thereof. He further demonstrates that he raised his concerns by email dated 24th January 2022 and through the Company’s counsel, but no action was taken by the co-director.
8. I have equally perused the plaint and I am satisfied that the reliefs sought are intended to protect the Company from potential loss arising from the alleged breach of contract. The suit is not designed to advance the applicant’s personal interests but rather to vindicate the rights of the Company.
Disposition
9. In the premises, the application dated 9th September 2025 is meritorious. Leave is hereby granted to the applicant to prosecute the suit as a derivative action on behalf of, and for the benefit of, Accretive Africa Management Consulting Limited. Costs of the application shall be in the cause.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 26th DAY OF FEBRUARY 2026.
F. MUGAMBI
JUDGE