Introduction and Background
1. By an application dated 28 th July 2024 and made principally under section 862(6) of the Companies Act (Chapter 486 of the Laws of Kenya) , the Applicant seeks the court’s intervention in the membership of the 2 nd Interested Party (“the Company”). The Applicant specifically seeks an injunction to restrain the Respondent from making any changes to the Company's membership or directorship and also restrain the 1 st Interested Party (“the Registrar”) from recording any such changes in the official register. He further seeks to uphold and reinstate an entry in the register showing that the Respondent resigned as a director and member of the Company and that he be granted leave to nominate new subscribers to the Company's Memorandum and Articles of Association.
2. The application is supported by grounds on its face and those set out in the Applicant’s affidavits of 28 th July 2024 and 25 th September 2024. It is opposed by the Respondent through her replying affidavit sworn on 12 th September 2024 and Preliminary Objection dated 9 th August 2024(“the Objection”). The Registrar has responded to the application through the replying affidavit of ZACHARIA MWANGI sworn on 4 th November 2025 and the Company has also responded through the replying affidavit of the Respondent sworn on 25 th September 2025. The Applicant has responded to the Objection through the Grounds of Opposition dated 7 th February 2025(erroneously dated 2024) whereas the Company has also responded to the same through the Grounds of Opposition dated 27 th October 2025. The application and the Objection were canvassed by way of written submissions which are on record and which I will be making relevant references to in my analysis and determination below.
ANALYSIS AND DETERMINATION
3. I propose to first deal with the Respondent’s Objection before dealing with the Applicant’s application, if at all. The Objection is based on the argument that the application is legally flawed and should be dismissed for reasons that the Applicant, as an individual, does not have the locus standi to file the application on behalf of the Company. Citing the legal principle from Foss v. Harbottle (1843) 2 Hare 462 , the Respondent submits that the proper party to bring a legal action for a wrong done to a company is the company itself. The Respondent further emphasizes the principle of separate legal personality, established in cases like Salmon vs Salmon [1987] AC 78. , which holds that a company is a distinct legal entity from its members and directors.
4. The Respondent also states that the Applicant is improperly attempting to re-litigate the same issue of Company ownership that was previously decided by the High Court and Court of Appeal. The Respondent contends that the previous judgments were final and denied the Applicant's claims to ownership and control over the Company’s properties. The Respondent asserts that the Applicant's present application is a "cosmetic facelight" to the previous ownership dispute and that the Applicant, having been a “losing litigant”, is now illegally trying to usurp the powers of the Company's members.
5. The Respondent states that the Applicant's prayer for leave to nominate subscribers is ultra vires of the Companies Act . The Respondent asserts that the Court's previous orders only required the Applicant to jointly oversee the handover of the Company and its management, not to have authority over the Company's governing organs. The Respondent concludes that the Court's judgment makes it clear that the Applicant has no role in the Company’s governance.
6. In response, the Applicant submits that the Objection is not a "pure point of law" and requires the exercise of judicial discretion, which violates the principles established in the case of Mukisa Biscuit Manufacturing Co. Ltd v. West End Distributors Ltd. (1969) EA 696. The Applicant submits that the current case is not barred by the doctrine of res judicata as the parties, subject matter, and cause of action are not the same as in the previous Nakuru Environment and Land Court and Court of Appeal cases. That the previous cases concerned the ownership of the Company’s properties, while the current one is about the Company's membership and directorship
7. The Applicant also contends that the prayer to nominate subscribers is not ultra vires of the Companies Act as his application is properly brought under section 862(6) of the Companies Act, which allows the court to make " consequential orders as appear just ". The Applicant asserts that he has a legitimate interest in the matter, as explicitly allowed by section 862(6) of the Companies Act , which states that an application may be brought by "any person appearing to the Court to have a legitimate interest". Those previous judgments, which affirmed that the Applicant founded the Company and ordered him to oversee the handover, lend legitimacy to his claim.
8. I have gone through the Objection and the parties’ responses to the same. I am inclined to agree with the Applicant that the Objection is not really on points of law as the same invites the court to interrogate evidence and exercise judicial discretion. For instance, on whether the suit is res judicata the decisions of the ELC and Court of Appeal, the court would need to have sight of the said decisions which would need to be introduced as annexures in an affidavit as evidence. This would obviously be running afoul the principle in Mukisa(supra) that an Objection must not be blurred by factual details calling for evidence. In any event, even if I am to take judicial notice of the said decisions, that is William Charles Fryda v Assumption Sisters of Nairobi Registered Trustees & another [2017] KEELC 1608 (KLR) and the Court of Appeal’s William Charles Fryda v Assumption Sisters of Nairobi Registered Trustees & 2 others; Civil Appeal No. 184 of 2017 and going through the same, I am in agreement with the Applicant that the decision of the Environment of the Land Court at Nakuru that was upheld by the Court of Appeal specifically dealt with the ownership of the Company’s properties and the case involved different parties while the current matter is not only before a different court but it concerns ownership of shares in the Company and its directorship. The issue that was adjudicated by the Environment and Land Court was whether the Applicant was beneficial owner of the Company’s properties and was therefore entitled to ownership or control of the said properties. The Environment and Land Court ruled against the Applicant in its principal finding that the subject properties were not held by the Company in trust for the Applicant and directed that the said properties be transferred to the Company to be held under a charitable trust, managed and controlled by the Company.
9. The Court of Appeal upheld decision of the Environment and Land Court but clarified that it is the Company that should hold the subject properties, not Assumption Sisters of Nairobi Trustees (ASN). As a result, the appellate court directed ASN to transfer the subject properties to the Company and for the Company to manage the hospitals that operated thereon. The Court of Appeal also ruled that the Applicant had no direct ownership interest rights in the properties which were not held by the Company in trust for the Applicant. It is therefore clear that the previous cases dealt with property rights and the beneficial interests and trusts concerning properties belonging to the Company and not shares in the Company which owned the subject properties. The present application on the other hand deals primarily with a dispute concerning ownership of shares in the Company and directorships and other matters concerning corporate governance of the Company which are governed under the Companies Act and in respect of which jurisdiction is expressly vested in the High Court under section 3(1) thereof . It is instructive to note that in this suit, the Applicant specifically seeks an injunction to prevent changes in membership and directorship of the Company and for permission to nominate subscribers to the Memorandum and Articles of Association thereof and enforcement of a resignation entry in the Company register. It is also clear that the Environment and Land Court is not mandated to deal with a dispute concerning membership of the Company nor did the Court of Appeal decide on the dispute concerning the membership of the Company, and in particular whether the Applicant could nominate subscribers, and whether the Registrar should register the alleged resignation of the Respondent as a director in the Company and whether her resignation was in fact valid. It is further evident from the previous judgments rendered by both the Environment and Land Court and the Court of Appeal, that the Environment and Land Court directed that the subject properties should be transferred to the Company which was to operate the hospitals thereon whereas the current application was triggered by an application to the Registrar under section 862(1) of the Companies Act in respect of which the Applicant had locus under section 862(6) as a person appearing to have a legitimate interest in making the application under section 862(1) to apply to this Court for such consequential orders as appear just with respect to the legal effect (if any) to be accorded to the entry because it has appeared in the register.
10. It is therefore my finding and determination that based on the previous decisions of the Environment and Land Court and the Court of Appeal, the Applicant qualifies as a person with a legitimate interest and therefore has the requisite locus standi to bring an application under section 862(6) of the Companies Act which provides that “ If an entry is removed from the Register under this section the registration of which had legal consequences as referred to in section 861 (3 ), any person appearing to the Court to have a legitimate interest in the matter may apply to the Court for such consequential orders as appear just with respect to the legal effect (if any) to be accorded to the entry because it has appeared in the Register.”
11. It is also my finding and determination that the decision of the Court of Appeal which held that the Applicant does not own the Company’s properties and he is not a beneficiary of a trust, cannot be read to have stripped him of his legitimate interests in conduct of the Company’s affairs particularly because section 3(1) of the Companies Act acknowledges and defines that a director in relation to a body corporate includes any person in accordance with whose directions or instructions (not being advice given in a professional capacity) the directors of the body are accustomed to act. When regard is had to the decision of the Court of Appeal which directed ASN to transfer the subject properties to the Company, and ordered that the Company should manage the hospitals and further that ASN and the Applicant should jointly oversee the handover this determination expressly acknowledges that the Applicant has a stake in the matters concerning the affairs and operations of the Company including its governance.
12. In the circumstances, I find that the preliminary objection has no merit and the same is accordingly dismissed.
13. I now turn to the application where the Applicant in which and, from his submissions, he states that he seeks two main orders: (a) reinstatement of an entry in the register showing that the Respondent resigned as a director and member of the Company; and (b) that he be granted leave to nominate new subscribers to the Company's Memorandum and Articles of Association.
14. The Applicant contends that in 1999, he organized the incorporation of the Company and that the initial subscribers and directors were Sr. MTG, Sr. GM, and the Respondent. That the Company was not operationalized, and the Hospital’s properties were registered in the name of ASN Registered Trustees. The Applicant contends that he managed the Hospital as the Medical Director, and it grew into a large healthcare facility and in 2010, he discovered that ASN was attempting to alienate one of the hospital's properties, which triggered the dispute, that was decided by the Environment and Land Court, namely William Charles Fryda v Assumption Sisters of Nairobi Registered Trustees & another (supra) . That judgment of the Environment and Land Court and that of the Court of Appeal in William Charles Fryda v Assumption Sisters of Nairobi Registered Trustees & 2 others(supra) directed inter alia that the subject properties be transferred to the Company.
15. The Applicant states that following the Court of Appeal's decision, he reviewed the Company records and found entries that related to changes of directors and members between 2011 and 2022. The Applicant contends that these entries were made in violation of the Companies Act and the Company's Articles of Association and that one of the offending entries was the cessation of the Respondent as a Director and Member of the company. The Applicant argues that the decision to replace the Respondent was based on a meeting of an entity called "St. Mary's Mission Hospital Limited," not the Company itself, the meeting was attended by 14 individuals, while the Company had only two surviving members at the time, that is the Respondent and Sr. G (now deceased), that the Respondent's resignation letter was addressed to the Superior General of the ASN, not the Company as required by its Articles of Association, that an affidavit sworn by the Respondent related to "St. Mary's Mission Hospital Limited," not the Company and that the change of members was not supported by any resolution.
16. The Applicant avers that based on these facts, the Registrar rectified the register by removing the impugned entries, including the one for the Respondent's cessation as a Director and Member. He therefore now seeks to have the entry for the Respondent's cessation upheld and reinstated in the register of the Company and to be granted leave to nominate new subscribers to the Memorandum of Association. The Applicant argues that the Respondent intended to resign, that she has breached her fiduciary duties repeatedly by allowing impostors to control the Company, acting against its constitution, and being complicit in attempts to alienate Company property and that she has failed to implement the Court of Appeal's orders. Further, that as the Company's promoter, he is best placed to name new subscribers to prevent the Company from being left without directors and subscribers and there is an imminent risk that the Respondent will cause further illegal changes to the Company's composition, as a result of which the assets of the Company will not be vested on the Company as ordered by the court.
17. In response, the Respondent characterizes the application as a blatant and fraudulent attempt to acquire control of the Company through the back door, abuse of the court process, and a hostile takeover bid disguised as a legal request. The Applicant is accused of approaching the court with unclean hands as he is allegedly in blatant breach of the very Court of Appeal orders he purports to enforce by withholding crucial Company documents such as title deeds and financial records and has even faced criminal charges related to the Hospital's accounts. The Respondent denies all allegations of breaching her fiduciary duties and contends that directors and a management board were properly appointed in accordance with the Company's Articles of Association to ensure its smooth operation. She clarifies that her 2021 resignation was only from the Board of Directors, not from her role as a subscriber and she states she has not transferred her shares and remains the sole surviving subscriber, fully capable of fulfilling her role. The Respondent argues that the Registrar’s decision to rectify the register based on the Applicant's complaint was procedurally flawed, as it was made without affording her or the Company a fair hearing, contravening the Companies Act and the Constitution .
18. The Respondent claims the Applicant's true motive is personal gain, citing that he operates a competing hospital next to the Company’s Hospital and that his previous litigation sought to have the Hospital's properties transferred to himself. She asserts she is the sole surviving original subscriber and a director of the Company, that the Company was incorporated under the auspices of the ASN and the original subscribers were ASN members acting as trustees. That a valid board meeting was held on 3 rd January 2011 where new directors were properly appointed to replace deceased members. In sum, the Respondent vehemently opposes all the orders sought by the Applicant and instead, urges the court to dismiss the application and affirm her position as the sole subscriber and director, allowing her to regularize the Company's affairs and ensure compliance with the Court of Appeal's directives for the handover.
19. The starting point in the resolution of this dispute is the re-statement of the decision of the Court of Appeal, in William Charles Fryda v Assumption Sisters of Nairobi Registered Trustees & 2 others (supra) directing the Applicant together with others to “jointly oversee the handover” of the hospitals from the ASN to the Company and to ensure that the Company is fully vested with the full and absolute ownership of the properties and management of the hospitals. The decision of the Court of Appeal was premised on the fact that the Applicant is a co-founder of the Hospital such that he was central to and had to actively participate in the implementation of the orders of the Court of Appeal which would see the subject properties vested in the Company and the hospital thereon managed by it. The Court of Appeal was cognizant that an individual such as the Applicant may exercise significant control over a company even when such individual is not or is no longer a member of a director of the company. The findings of the Court of Appeal implies that the Applicant being a natural person is deemed to be a beneficial owner of the Company in that he directly or indirectly exercises “significant influence or control” over the Company whether formal or informal through connections to persons with ownership interests or through positions held by the natural persons in the Company as a person who exercises control or exercises significant authority over a legal person, over the operations of the legal person and or by participating in the financing of the enterprise and other financial relationships without the control and oversight of the board of directors of the Company: see the Companies (Beneficial Ownership Information) Regulations 2020 and the Guide on Disclosure of Beneficial Ownership Information as published by the Business Registration Service (BRS).
20. In the affidavit filed by the 1 st interested party, the Registrar of Companies in respect of the Company’s composition, the Registrar deponed that the Company was duly incorporated on 16 th July 1999 as a company limited by guarantee, without shares and that its initial directors and secretary at incorporation were as stated above by the Applicant.
21. The Registrar has produced records held at the Companies Registry concerning several filings made by the Company over the years, including changes to the directors and appointment of CO as secretary in 2011, Annual Returns for the year 2011–2018 with inconsistent company names and appointment of new directors, FM and MN, in 2021 after the Respondent’s purported resignation. The record reflects that the Applicant applied to the Registrar under section 862(1) of the Companies Act for removal of allegedly invalid entries following which the Registrar initially rectified the 2021 changes and later, after review, also removed the 2011 changes, restoring the Company to its original incorporation status.
22. The Registrar states that following full rectification, only the Respondent remains as the sole director and member in that the other two original directors are deceased and that the register currently reflects the status of the Company as at incorporation. The Registrar avers that she acted under section 862(1) , which permits the Registrar on receiving an application made in accordance with that section to remove from the register an entry relating to a company that the Registrar is satisfied is of a kind that (a) derives from anything that is invalid or ineffective or that was done without the authority of the company; or (b) is factually inaccurate or is derived from something that is factually inaccurate or is forged.
23. The Registrar’s rectification decision of 31 st October 2023 rejected the Respondent’s resignation stating that the filing of the same was invalid because it was addressed to a third party. This was upheld in the further rectification decision of 18 th April 2024. The Applicant has stated that it seeks to reinstate this position in the register.
24. It is instructive that the Respondent has deponed that she resigned from the Company by a letter dated 29 th March 2021 and an affidavit sworn by the Respondent on 6 th April 2021 but that the resignation was only from her position as a director of the Company and that she never resigned as a Subscriber of the Company, nor has she transferred her shares. It is also significant that on the date of the resignation of the Respondent, a Form CR6 lodged by Christine Kagunye Wanjiru was simultaneously lodged at the Companies Registry purporting to appoint Florence Muia and Mary Ngumu Wakirunyu as directors of the Company. These set of circumstances calls upon the Court to determine whether the Respondent resigned from the Company as a director and upon her resignation she could purport to appoint other persons as directors of the Company. A close reading of the Articles of Association of the Company reveals that it is only a director that has capacity to appoint another director such that if the Respondent had already resigned from the Company as at 29 th March 2021, she could not purport to appoint Florence Muia and Mary Ngumu Wakirunyu as directors of the Company because she lacked the legal capacity to do so following her resignation. It also bears repeating that the Respondent communicated her resignation as a director of the Company in a statutory declaration that was presented to the Registrar of Companies. That declaration was to be taken by the Registrar of Companies as an accurate statement of the state of affairs concerning the Respondent’s resignation as a director of the Company and the Respondent cannot now renege from the position communicated in that statutory declaration considering that it is a criminal office to present a false document to a public officer such that effect ought to be given to the Respondent’s resignation as a director of the Company as more particularly communicated by way of the statutory declaration dated 6 th April 2021.
25. While the Respondent asserts that she had never resigned as a subscriber to the Memorandum and Articles of Association of the Company, her resignation of 6 th April 2021 as a director of the Company should not be taken as a full exit from the Company as she has never transferred her shareholding in the Company, this position is misconceived because the Company is a limited liability company by guarantee. It is instructive to note that under section 7(1) of the Companies Act, a company is a company limited by guarantee if it does not have a share capital, the liability of its members is limited by the company’s Articles of Association to the amount that the members undertake to contribute to the assets of the company in the event of its liquidation. This therefore means that upon her resignation from the Company on 6 th April 2021, the Respondent ceased to be director and could no longer participate in the affairs of the Company and never retained any stake in the Company since the Company is limited by guarantee and not shares.
26. In the rectification letter of 31 st October 2023, the Registrar advised that for the Respondent’s resignation to take full and legal effect, she had to submit the resignation letter to the Board of the Company as it was the appropriate entity to accept such resignations. This direction by the Registrar cannot be allowed to stand because of the Turquand’s rule that was established in the case of Royal British Bank v Turquand (1856) 6 E&B 32 which states that the public is entitled to assume that the company’s internal management and procedures have been followed correctly even if there have been internal irregularities: The Turquand’s rule stated thus;- “ When there are persons conducting the affairs of the company in a manner which appears to be perfectly consonant with the articles of association, those so dealing with them externally are not to be affected by irregularities which may take place in the internal management of the company.”
27. It is therefore my finding that the Registrar ought to have accepted the Respondent’s resignation which was communicated by way of and evidenced by the statutory declaration dated 6 th April 2021. The requisite form CR6 dated 6 th April 2021 was also presented to the Registrar of Companies such that she lacked jurisdiction to decline to uphold the Respondent’s resignation of 6 th April 2021 as supported by the minutes dated 2 nd March 2021 and a letter dated 29 th March 2021 and a statutory declaration dated 6 th April 2021.
28. Finally, the Registrar’s final decision of 18 th April 2024 continuing to uphold the Respondent’s decision as a director of the Company despite her resignation cannot also stand as it purports to uphold a void act. In arriving at this finding, I am guided by the decision in the British case of MacFoy v United Africa Company Ltd (West Africa) (1961) UKPC 49 that establishes the fundamental principal of law to the effect that if an act is void, it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of the court to set it aside. Any proceeding that is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It is therefore my finding that the Applicant’s prayer to reinstate the Respondent’s resignation and removal from the register of the Company is merited and is hereby allowed.
29. On the prayer for the Applicant to nominate subscribers to the Memorandum and Articles of the Company, I note that the Registrar, in its rectification decision of 31 st October 2023 advised the Respondent as the surviving member of the Company to ensure compliance with Clause 2 and 3 of the Articles which specified that the membership of the Company should be made up of at least 3 subscribers but that the directors may increase the number of members. However, it is my finding that the Respondent resigned as a director of the Company on 6 th April 2021 and no longer has a stake in the Company which is limited by guarantee not shares. There is also the Court of Appeal decision that directed the Applicant and others to jointly hand over the hospitals from ASN to the Company and ensure that the ownership and management of the properties and hospitals are vested in the Company.
30. Upon going through the depositions, Articles of the Company and the Companies Act , what emerges is that the Applicant is not and has never been listed as a member or subscriber of the Company despite the role that he performed in the incorporation of the Company as its sole promoter as expressly acknowledged by the Court of Appeal. Flowing from my determination that the Respondent has no stake in the Company following her resignation therefrom; and considering that public policy requires that decisions of courts should be complied with as a matter of the national principles of governance under Article 10 of the Constitution, I find and hold that it is therefore in public interest that the register of the Company should be rectified to reflect the Applicant as the director of the Company for purposes of implementing the decision of the Court of Appeal and this Court is duty bound to make that direction in light of section 862(6) of the Companies Act which mandates the Court to make such consequential orders as appear just with respect to the legal effect (if any) to be accorded to the entry because it has appeared in the Register.
Conclusion and Disposition
31. The upshot of my findings above is that the Applicant’s application dated 28 th July 2024 is merited and the same is hereby allowed. Each party to this application shall bear their own costs.
DATED SIGNED AND DELIVERED virtually this 11 TH DAY OF DECEMBER 2025
............................................................................
J W W MONGARE
JUDGE
IN THE PRESENCE OF
1. Mr. Langat for the Applicant
2. Mr. Odhoch for the Respondent
3. N/A for the 1 st interested Party
4. Ms. Wambugu for the 2 nd interested party
5. Ivan- Court Assistant
2 | Page
1. By an application dated 28 th July 2024 and made principally under section 862(6) of the Companies Act (Chapter 486 of the Laws of Kenya) , the Applicant seeks the court’s intervention in the membership of the 2 nd Interested Party (“the Company”). The Applicant specifically seeks an injunction to restrain the Respondent from making any changes to the Company's membership or directorship and also restrain the 1 st Interested Party (“the Registrar”) from recording any such changes in the official register. He further seeks to uphold and reinstate an entry in the register showing that the Respondent resigned as a director and member of the Company and that he be granted leave to nominate new subscribers to the Company's Memorandum and Articles of Association.
2. The application is supported by grounds on its face and those set out in the Applicant’s affidavits of 28 th July 2024 and 25 th September 2024. It is opposed by the Respondent through her replying affidavit sworn on 12 th September 2024 and Preliminary Objection dated 9 th August 2024(“the Objection”). The Registrar has responded to the application through the replying affidavit of ZACHARIA MWANGI sworn on 4 th November 2025 and the Company has also responded through the replying affidavit of the Respondent sworn on 25 th September 2025. The Applicant has responded to the Objection through the Grounds of Opposition dated 7 th February 2025(erroneously dated 2024) whereas the Company has also responded to the same through the Grounds of Opposition dated 27 th October 2025. The application and the Objection were canvassed by way of written submissions which are on record and which I will be making relevant references to in my analysis and determination below.
ANALYSIS AND DETERMINATION
3. I propose to first deal with the Respondent’s Objection before dealing with the Applicant’s application, if at all. The Objection is based on the argument that the application is legally flawed and should be dismissed for reasons that the Applicant, as an individual, does not have the locus standi to file the application on behalf of the Company. Citing the legal principle from Foss v. Harbottle (1843) 2 Hare 462 , the Respondent submits that the proper party to bring a legal action for a wrong done to a company is the company itself. The Respondent further emphasizes the principle of separate legal personality, established in cases like Salmon vs Salmon [1987] AC 78. , which holds that a company is a distinct legal entity from its members and directors.
4. The Respondent also states that the Applicant is improperly attempting to re-litigate the same issue of Company ownership that was previously decided by the High Court and Court of Appeal. The Respondent contends that the previous judgments were final and denied the Applicant's claims to ownership and control over the Company’s properties. The Respondent asserts that the Applicant's present application is a "cosmetic facelight" to the previous ownership dispute and that the Applicant, having been a “losing litigant”, is now illegally trying to usurp the powers of the Company's members.
5. The Respondent states that the Applicant's prayer for leave to nominate subscribers is ultra vires of the Companies Act . The Respondent asserts that the Court's previous orders only required the Applicant to jointly oversee the handover of the Company and its management, not to have authority over the Company's governing organs. The Respondent concludes that the Court's judgment makes it clear that the Applicant has no role in the Company’s governance.
6. In response, the Applicant submits that the Objection is not a "pure point of law" and requires the exercise of judicial discretion, which violates the principles established in the case of Mukisa Biscuit Manufacturing Co. Ltd v. West End Distributors Ltd. (1969) EA 696. The Applicant submits that the current case is not barred by the doctrine of res judicata as the parties, subject matter, and cause of action are not the same as in the previous Nakuru Environment and Land Court and Court of Appeal cases. That the previous cases concerned the ownership of the Company’s properties, while the current one is about the Company's membership and directorship
7. The Applicant also contends that the prayer to nominate subscribers is not ultra vires of the Companies Act as his application is properly brought under section 862(6) of the Companies Act, which allows the court to make " consequential orders as appear just ". The Applicant asserts that he has a legitimate interest in the matter, as explicitly allowed by section 862(6) of the Companies Act , which states that an application may be brought by "any person appearing to the Court to have a legitimate interest". Those previous judgments, which affirmed that the Applicant founded the Company and ordered him to oversee the handover, lend legitimacy to his claim.
8. I have gone through the Objection and the parties’ responses to the same. I am inclined to agree with the Applicant that the Objection is not really on points of law as the same invites the court to interrogate evidence and exercise judicial discretion. For instance, on whether the suit is res judicata the decisions of the ELC and Court of Appeal, the court would need to have sight of the said decisions which would need to be introduced as annexures in an affidavit as evidence. This would obviously be running afoul the principle in Mukisa(supra) that an Objection must not be blurred by factual details calling for evidence. In any event, even if I am to take judicial notice of the said decisions, that is William Charles Fryda v Assumption Sisters of Nairobi Registered Trustees & another [2017] KEELC 1608 (KLR) and the Court of Appeal’s William Charles Fryda v Assumption Sisters of Nairobi Registered Trustees & 2 others; Civil Appeal No. 184 of 2017 and going through the same, I am in agreement with the Applicant that the decision of the Environment of the Land Court at Nakuru that was upheld by the Court of Appeal specifically dealt with the ownership of the Company’s properties and the case involved different parties while the current matter is not only before a different court but it concerns ownership of shares in the Company and its directorship. The issue that was adjudicated by the Environment and Land Court was whether the Applicant was beneficial owner of the Company’s properties and was therefore entitled to ownership or control of the said properties. The Environment and Land Court ruled against the Applicant in its principal finding that the subject properties were not held by the Company in trust for the Applicant and directed that the said properties be transferred to the Company to be held under a charitable trust, managed and controlled by the Company.
9. The Court of Appeal upheld decision of the Environment and Land Court but clarified that it is the Company that should hold the subject properties, not Assumption Sisters of Nairobi Trustees (ASN). As a result, the appellate court directed ASN to transfer the subject properties to the Company and for the Company to manage the hospitals that operated thereon. The Court of Appeal also ruled that the Applicant had no direct ownership interest rights in the properties which were not held by the Company in trust for the Applicant. It is therefore clear that the previous cases dealt with property rights and the beneficial interests and trusts concerning properties belonging to the Company and not shares in the Company which owned the subject properties. The present application on the other hand deals primarily with a dispute concerning ownership of shares in the Company and directorships and other matters concerning corporate governance of the Company which are governed under the Companies Act and in respect of which jurisdiction is expressly vested in the High Court under section 3(1) thereof . It is instructive to note that in this suit, the Applicant specifically seeks an injunction to prevent changes in membership and directorship of the Company and for permission to nominate subscribers to the Memorandum and Articles of Association thereof and enforcement of a resignation entry in the Company register. It is also clear that the Environment and Land Court is not mandated to deal with a dispute concerning membership of the Company nor did the Court of Appeal decide on the dispute concerning the membership of the Company, and in particular whether the Applicant could nominate subscribers, and whether the Registrar should register the alleged resignation of the Respondent as a director in the Company and whether her resignation was in fact valid. It is further evident from the previous judgments rendered by both the Environment and Land Court and the Court of Appeal, that the Environment and Land Court directed that the subject properties should be transferred to the Company which was to operate the hospitals thereon whereas the current application was triggered by an application to the Registrar under section 862(1) of the Companies Act in respect of which the Applicant had locus under section 862(6) as a person appearing to have a legitimate interest in making the application under section 862(1) to apply to this Court for such consequential orders as appear just with respect to the legal effect (if any) to be accorded to the entry because it has appeared in the register.
10. It is therefore my finding and determination that based on the previous decisions of the Environment and Land Court and the Court of Appeal, the Applicant qualifies as a person with a legitimate interest and therefore has the requisite locus standi to bring an application under section 862(6) of the Companies Act which provides that “ If an entry is removed from the Register under this section the registration of which had legal consequences as referred to in section 861 (3 ), any person appearing to the Court to have a legitimate interest in the matter may apply to the Court for such consequential orders as appear just with respect to the legal effect (if any) to be accorded to the entry because it has appeared in the Register.”
11. It is also my finding and determination that the decision of the Court of Appeal which held that the Applicant does not own the Company’s properties and he is not a beneficiary of a trust, cannot be read to have stripped him of his legitimate interests in conduct of the Company’s affairs particularly because section 3(1) of the Companies Act acknowledges and defines that a director in relation to a body corporate includes any person in accordance with whose directions or instructions (not being advice given in a professional capacity) the directors of the body are accustomed to act. When regard is had to the decision of the Court of Appeal which directed ASN to transfer the subject properties to the Company, and ordered that the Company should manage the hospitals and further that ASN and the Applicant should jointly oversee the handover this determination expressly acknowledges that the Applicant has a stake in the matters concerning the affairs and operations of the Company including its governance.
12. In the circumstances, I find that the preliminary objection has no merit and the same is accordingly dismissed.
13. I now turn to the application where the Applicant in which and, from his submissions, he states that he seeks two main orders: (a) reinstatement of an entry in the register showing that the Respondent resigned as a director and member of the Company; and (b) that he be granted leave to nominate new subscribers to the Company's Memorandum and Articles of Association.
14. The Applicant contends that in 1999, he organized the incorporation of the Company and that the initial subscribers and directors were Sr. MTG, Sr. GM, and the Respondent. That the Company was not operationalized, and the Hospital’s properties were registered in the name of ASN Registered Trustees. The Applicant contends that he managed the Hospital as the Medical Director, and it grew into a large healthcare facility and in 2010, he discovered that ASN was attempting to alienate one of the hospital's properties, which triggered the dispute, that was decided by the Environment and Land Court, namely William Charles Fryda v Assumption Sisters of Nairobi Registered Trustees & another (supra) . That judgment of the Environment and Land Court and that of the Court of Appeal in William Charles Fryda v Assumption Sisters of Nairobi Registered Trustees & 2 others(supra) directed inter alia that the subject properties be transferred to the Company.
15. The Applicant states that following the Court of Appeal's decision, he reviewed the Company records and found entries that related to changes of directors and members between 2011 and 2022. The Applicant contends that these entries were made in violation of the Companies Act and the Company's Articles of Association and that one of the offending entries was the cessation of the Respondent as a Director and Member of the company. The Applicant argues that the decision to replace the Respondent was based on a meeting of an entity called "St. Mary's Mission Hospital Limited," not the Company itself, the meeting was attended by 14 individuals, while the Company had only two surviving members at the time, that is the Respondent and Sr. G (now deceased), that the Respondent's resignation letter was addressed to the Superior General of the ASN, not the Company as required by its Articles of Association, that an affidavit sworn by the Respondent related to "St. Mary's Mission Hospital Limited," not the Company and that the change of members was not supported by any resolution.
16. The Applicant avers that based on these facts, the Registrar rectified the register by removing the impugned entries, including the one for the Respondent's cessation as a Director and Member. He therefore now seeks to have the entry for the Respondent's cessation upheld and reinstated in the register of the Company and to be granted leave to nominate new subscribers to the Memorandum of Association. The Applicant argues that the Respondent intended to resign, that she has breached her fiduciary duties repeatedly by allowing impostors to control the Company, acting against its constitution, and being complicit in attempts to alienate Company property and that she has failed to implement the Court of Appeal's orders. Further, that as the Company's promoter, he is best placed to name new subscribers to prevent the Company from being left without directors and subscribers and there is an imminent risk that the Respondent will cause further illegal changes to the Company's composition, as a result of which the assets of the Company will not be vested on the Company as ordered by the court.
17. In response, the Respondent characterizes the application as a blatant and fraudulent attempt to acquire control of the Company through the back door, abuse of the court process, and a hostile takeover bid disguised as a legal request. The Applicant is accused of approaching the court with unclean hands as he is allegedly in blatant breach of the very Court of Appeal orders he purports to enforce by withholding crucial Company documents such as title deeds and financial records and has even faced criminal charges related to the Hospital's accounts. The Respondent denies all allegations of breaching her fiduciary duties and contends that directors and a management board were properly appointed in accordance with the Company's Articles of Association to ensure its smooth operation. She clarifies that her 2021 resignation was only from the Board of Directors, not from her role as a subscriber and she states she has not transferred her shares and remains the sole surviving subscriber, fully capable of fulfilling her role. The Respondent argues that the Registrar’s decision to rectify the register based on the Applicant's complaint was procedurally flawed, as it was made without affording her or the Company a fair hearing, contravening the Companies Act and the Constitution .
18. The Respondent claims the Applicant's true motive is personal gain, citing that he operates a competing hospital next to the Company’s Hospital and that his previous litigation sought to have the Hospital's properties transferred to himself. She asserts she is the sole surviving original subscriber and a director of the Company, that the Company was incorporated under the auspices of the ASN and the original subscribers were ASN members acting as trustees. That a valid board meeting was held on 3 rd January 2011 where new directors were properly appointed to replace deceased members. In sum, the Respondent vehemently opposes all the orders sought by the Applicant and instead, urges the court to dismiss the application and affirm her position as the sole subscriber and director, allowing her to regularize the Company's affairs and ensure compliance with the Court of Appeal's directives for the handover.
19. The starting point in the resolution of this dispute is the re-statement of the decision of the Court of Appeal, in William Charles Fryda v Assumption Sisters of Nairobi Registered Trustees & 2 others (supra) directing the Applicant together with others to “jointly oversee the handover” of the hospitals from the ASN to the Company and to ensure that the Company is fully vested with the full and absolute ownership of the properties and management of the hospitals. The decision of the Court of Appeal was premised on the fact that the Applicant is a co-founder of the Hospital such that he was central to and had to actively participate in the implementation of the orders of the Court of Appeal which would see the subject properties vested in the Company and the hospital thereon managed by it. The Court of Appeal was cognizant that an individual such as the Applicant may exercise significant control over a company even when such individual is not or is no longer a member of a director of the company. The findings of the Court of Appeal implies that the Applicant being a natural person is deemed to be a beneficial owner of the Company in that he directly or indirectly exercises “significant influence or control” over the Company whether formal or informal through connections to persons with ownership interests or through positions held by the natural persons in the Company as a person who exercises control or exercises significant authority over a legal person, over the operations of the legal person and or by participating in the financing of the enterprise and other financial relationships without the control and oversight of the board of directors of the Company: see the Companies (Beneficial Ownership Information) Regulations 2020 and the Guide on Disclosure of Beneficial Ownership Information as published by the Business Registration Service (BRS).
20. In the affidavit filed by the 1 st interested party, the Registrar of Companies in respect of the Company’s composition, the Registrar deponed that the Company was duly incorporated on 16 th July 1999 as a company limited by guarantee, without shares and that its initial directors and secretary at incorporation were as stated above by the Applicant.
21. The Registrar has produced records held at the Companies Registry concerning several filings made by the Company over the years, including changes to the directors and appointment of CO as secretary in 2011, Annual Returns for the year 2011–2018 with inconsistent company names and appointment of new directors, FM and MN, in 2021 after the Respondent’s purported resignation. The record reflects that the Applicant applied to the Registrar under section 862(1) of the Companies Act for removal of allegedly invalid entries following which the Registrar initially rectified the 2021 changes and later, after review, also removed the 2011 changes, restoring the Company to its original incorporation status.
22. The Registrar states that following full rectification, only the Respondent remains as the sole director and member in that the other two original directors are deceased and that the register currently reflects the status of the Company as at incorporation. The Registrar avers that she acted under section 862(1) , which permits the Registrar on receiving an application made in accordance with that section to remove from the register an entry relating to a company that the Registrar is satisfied is of a kind that (a) derives from anything that is invalid or ineffective or that was done without the authority of the company; or (b) is factually inaccurate or is derived from something that is factually inaccurate or is forged.
23. The Registrar’s rectification decision of 31 st October 2023 rejected the Respondent’s resignation stating that the filing of the same was invalid because it was addressed to a third party. This was upheld in the further rectification decision of 18 th April 2024. The Applicant has stated that it seeks to reinstate this position in the register.
24. It is instructive that the Respondent has deponed that she resigned from the Company by a letter dated 29 th March 2021 and an affidavit sworn by the Respondent on 6 th April 2021 but that the resignation was only from her position as a director of the Company and that she never resigned as a Subscriber of the Company, nor has she transferred her shares. It is also significant that on the date of the resignation of the Respondent, a Form CR6 lodged by Christine Kagunye Wanjiru was simultaneously lodged at the Companies Registry purporting to appoint Florence Muia and Mary Ngumu Wakirunyu as directors of the Company. These set of circumstances calls upon the Court to determine whether the Respondent resigned from the Company as a director and upon her resignation she could purport to appoint other persons as directors of the Company. A close reading of the Articles of Association of the Company reveals that it is only a director that has capacity to appoint another director such that if the Respondent had already resigned from the Company as at 29 th March 2021, she could not purport to appoint Florence Muia and Mary Ngumu Wakirunyu as directors of the Company because she lacked the legal capacity to do so following her resignation. It also bears repeating that the Respondent communicated her resignation as a director of the Company in a statutory declaration that was presented to the Registrar of Companies. That declaration was to be taken by the Registrar of Companies as an accurate statement of the state of affairs concerning the Respondent’s resignation as a director of the Company and the Respondent cannot now renege from the position communicated in that statutory declaration considering that it is a criminal office to present a false document to a public officer such that effect ought to be given to the Respondent’s resignation as a director of the Company as more particularly communicated by way of the statutory declaration dated 6 th April 2021.
25. While the Respondent asserts that she had never resigned as a subscriber to the Memorandum and Articles of Association of the Company, her resignation of 6 th April 2021 as a director of the Company should not be taken as a full exit from the Company as she has never transferred her shareholding in the Company, this position is misconceived because the Company is a limited liability company by guarantee. It is instructive to note that under section 7(1) of the Companies Act, a company is a company limited by guarantee if it does not have a share capital, the liability of its members is limited by the company’s Articles of Association to the amount that the members undertake to contribute to the assets of the company in the event of its liquidation. This therefore means that upon her resignation from the Company on 6 th April 2021, the Respondent ceased to be director and could no longer participate in the affairs of the Company and never retained any stake in the Company since the Company is limited by guarantee and not shares.
26. In the rectification letter of 31 st October 2023, the Registrar advised that for the Respondent’s resignation to take full and legal effect, she had to submit the resignation letter to the Board of the Company as it was the appropriate entity to accept such resignations. This direction by the Registrar cannot be allowed to stand because of the Turquand’s rule that was established in the case of Royal British Bank v Turquand (1856) 6 E&B 32 which states that the public is entitled to assume that the company’s internal management and procedures have been followed correctly even if there have been internal irregularities: The Turquand’s rule stated thus;- “ When there are persons conducting the affairs of the company in a manner which appears to be perfectly consonant with the articles of association, those so dealing with them externally are not to be affected by irregularities which may take place in the internal management of the company.”
27. It is therefore my finding that the Registrar ought to have accepted the Respondent’s resignation which was communicated by way of and evidenced by the statutory declaration dated 6 th April 2021. The requisite form CR6 dated 6 th April 2021 was also presented to the Registrar of Companies such that she lacked jurisdiction to decline to uphold the Respondent’s resignation of 6 th April 2021 as supported by the minutes dated 2 nd March 2021 and a letter dated 29 th March 2021 and a statutory declaration dated 6 th April 2021.
28. Finally, the Registrar’s final decision of 18 th April 2024 continuing to uphold the Respondent’s decision as a director of the Company despite her resignation cannot also stand as it purports to uphold a void act. In arriving at this finding, I am guided by the decision in the British case of MacFoy v United Africa Company Ltd (West Africa) (1961) UKPC 49 that establishes the fundamental principal of law to the effect that if an act is void, it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of the court to set it aside. Any proceeding that is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It is therefore my finding that the Applicant’s prayer to reinstate the Respondent’s resignation and removal from the register of the Company is merited and is hereby allowed.
29. On the prayer for the Applicant to nominate subscribers to the Memorandum and Articles of the Company, I note that the Registrar, in its rectification decision of 31 st October 2023 advised the Respondent as the surviving member of the Company to ensure compliance with Clause 2 and 3 of the Articles which specified that the membership of the Company should be made up of at least 3 subscribers but that the directors may increase the number of members. However, it is my finding that the Respondent resigned as a director of the Company on 6 th April 2021 and no longer has a stake in the Company which is limited by guarantee not shares. There is also the Court of Appeal decision that directed the Applicant and others to jointly hand over the hospitals from ASN to the Company and ensure that the ownership and management of the properties and hospitals are vested in the Company.
30. Upon going through the depositions, Articles of the Company and the Companies Act , what emerges is that the Applicant is not and has never been listed as a member or subscriber of the Company despite the role that he performed in the incorporation of the Company as its sole promoter as expressly acknowledged by the Court of Appeal. Flowing from my determination that the Respondent has no stake in the Company following her resignation therefrom; and considering that public policy requires that decisions of courts should be complied with as a matter of the national principles of governance under Article 10 of the Constitution, I find and hold that it is therefore in public interest that the register of the Company should be rectified to reflect the Applicant as the director of the Company for purposes of implementing the decision of the Court of Appeal and this Court is duty bound to make that direction in light of section 862(6) of the Companies Act which mandates the Court to make such consequential orders as appear just with respect to the legal effect (if any) to be accorded to the entry because it has appeared in the Register.
Conclusion and Disposition
31. The upshot of my findings above is that the Applicant’s application dated 28 th July 2024 is merited and the same is hereby allowed. Each party to this application shall bear their own costs.
DATED SIGNED AND DELIVERED virtually this 11 TH DAY OF DECEMBER 2025
............................................................................
J W W MONGARE
JUDGE
IN THE PRESENCE OF
1. Mr. Langat for the Applicant
2. Mr. Odhoch for the Respondent
3. N/A for the 1 st interested Party
4. Ms. Wambugu for the 2 nd interested party
5. Ivan- Court Assistant
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