Tatu City minority shareholders have applied for orders barring the majority owners from disposing property owned by the real estate developers until an appeal filed in court is heard and determined.
The minority shareholders have filed a notice of appeal to the January 18 ruling that ordered the majority shareholders of the multi-billion shilling real estate project to buy them out.
In the application for injunction against disposal of Tatu City’s property, minority owners Stephen Mwagiru and his mother Rosemary Mwagiru argue that the majority shareholders have already indicated an intention “to continue their legitimate commercial activities without further obstruction” following the High Court ruling by Justice Daniel Musinga.
The Mwagirus are applying for an injunction to restrain Tatu City’s majority shareholders from selling, subdividing, mortgaging, charging, letting or subletting land owned by the company without the court’s permission until their appeal is determined.
The application, in which they are also requesting for a delay in implementation of Justice Musinga’s ruling until the appeal is heard and determined, was certified as urgent and is set to be heard on February 6.
“Unless the application annexed hereto is heard urgently, the assets of the company, Tatu City Ltd, are likely to be disposed of and the proceeds thereof be applied without regard to the interest of the applicants, and to their prejudice, thereby rendering the application thereof nugatory.”
Shareholding wrangles have delayed launch of the real estate development for more than two years.
(Read: Judge orders that Tatu City cases be consolidated)
The project, which is estimated to be valued at more than Sh240 billion ($3 billion) on completion, will accommodate more than 22,000 residents in a mixed commercial and residential estate constructed on a 1,000 hectare piece of land.
Tatu City’s majority shareholders said they would respond to the application after being served with the court papers.
Although Justice Musinga ruled that the minority shareholders’ stake should be bought out at current market rates, a complex shareholding structure comprising of numerous foreign registered entities means that the actual shareholding of the Mwagirus is yet to be determined.
Each of Tatu City’s seven individual shareholders own one share in the company, while the bulk of the shares (1,569,993) are held by Cedar IV, a foreign incorporated entity that is in turn also owned by another complex web of firms.
Besides the Mwagirus, other shareholders of Tatu City include Judith Nyaga, Vimal Shah, B.D. Shah, Tarun Shah and Deepak Shah.
Justice Musinga ruled that Kenyan courts did not have jurisdiction to decide on winding up of foreign-registered companies.
“The petitioners should pursue the alternative remedy, both here in Kenya and at the London Court of International Arbitration,” ruled Justice Musinga.
An agreement signed earlier between the shareholders had provided that disputes would be referred to English courts or the London Court of International Arbitration.
The Mwagirus, however, want the Court of Appeal to determine whether Kenyan courts have powers to decide on the disputed shareholding of the numerous foreign-registered entities that collectively own Tatu City.
“There is an alternative remedy available and that is acquisition of shares by the majority shareholder at a fair value;” reads part of the notice of appeal filed on Wednesday.