Court blocks ban on CMC directors
Posted Sunday, September 30 2012 at 18:41
- Mr Muthoka, who is also the executive chairman of logistics firm Andy Forwarders (the largest shareholder at CMC), successfully persuaded the court to block CMA board’s resolution that declared him unfit to sit in the boards of public companies.
- Mr Kiereini has argued that CMA had pre-judged and pre-empted the findings of any further investigations into the alleged offence.
- The boardroom battle at CMC has awakened the CMA into initiating a raft of changes in corporate governance regulations, including a proposal to have any director aged above 75 leave office by end of December.
Two ousted board members of troubled motor firm CMC have obtained temporary court orders blocking the capital markets regulator’s directive that they be barred from serving as directors in the company.
The High Court, in a ruling made last Thursday, also allowed Peter Muthoka, a former chairman of the auto firm and his side-kick Joseph Kevai, to challenge the Capital Markets Authority’s (CMA) decision to bar them from holding directorships in Nairobi Securities Exchange (NSE)-listed companies.
Constitutional and Judicial Review judge Mohammed Warsame also stayed CMA’s findings on the alleged involvement of former CMC directors in a string of management and financial irregularities at the motor dealer.
Mr Kivai, who represented Andy Forwarders in the CMC board, appears to be the greatest beneficiary of the interim orders that have stayed the regulator’s decision to bar him from serving as a CMC director, effectively reinstating him to the board pending the hearing determination of a suit he has filed against CMA.
Justice Warsame allowed Mr Kevai to initiate judicial review proceedings aimed at quashing the CMA board’s August 3, 2012 resolutions that disqualified him from sitting in the troubled motor firm’s board.
“Upon reading the application, statutory statement and a verifying affidavit of Mr Kivai, I hereby order that the court’s leave do operate as a stay of the regulator’s resolution to disqualify the applicant from holding directorship in CMC,” Mr Warsame ruled.
Mr Muthoka, who is also the executive chairman of logistics firm Andy Forwarders (the largest shareholder at CMC), successfully persuaded the court to block CMA board’s resolution that declared him unfit to sit in the boards of public companies.
Mr Muthoka also got the nod to contest the CMA board resolutions reprimanding him for allowing the accounts for the year ended September 30, 2009 and 2010 to be signed despite his knowledge that they were not prepared in compliance with International Financial Reporting Standards (IFRS) and guidelines on corporate governance.
Mr Muthoka and Mr Kivai have been directed to serve the regulator with suit papers and return to court on October 10 for further directions.
CMA has banned seven former CMC directors, including former Attorney-General Charles Njonjo, from serving in the boards of listed firms on accusations of betraying shareholder interests.
Kung’u Gatabaki, the CMA chairman, said the seven could not be trusted with corporate leadership in any other company listed at the NSE.
The list of banned directors included former head of civil service and long-serving chair of CMC board Jeremiah Kiereini, former CMC chief executive Martin Foster, Richard Kemoli, Andrew Hamilton and Sobakchand Shah, a former finance director at the motor dealer.
Mr Muthoka and Mr Kivai say in court papers that CMA’s actions breached the rules of natural justice and were in excess of its jurisdiction.
The ousted CMC directors are questioning the CMA’s decision to disqualify them from serving in boards of listed firms when the dispute is actively under litigation in court where the regulator is party.
The Andy Forwarders directors also reckon that in barring them from serving as directors in public companies, the CMA had acted as an accuser and a judge.