State in new fight for control of Kenya Seed with ex-CEO

The fight for control of Kenya Seed Company has moved back to court as the government seeks to stop the former managing director Nathaniel Tum from convening a shareholders meeting.

Agricultural Development of Kenya (ADC) which holds shares in the KSC on behalf of the government, claims that the December 10 meeting is illegal since it has been called by non-shareholders.

Mr Tum and Soet (K) Limited on November 12 issued a press notice for an extraordinary general meeting to uphold or cancel a decision made in 2000 to offer executives of KSC a 12.8 per cent stake.

The stake was sold to top managers, diluting the government’s shareholding from a majority of 52.8 per cent to 40 per cent, meaning that the State lost power to control the board.

This sparked a legal dispute between the government and a team led by Mr Tum over ownership and replacement of KSC executives and the appeals court reversed the share sale.

“Temporary injunction do issue against…restraining them from calling for and/or holding the extra-ordinary general meeting of the shareholders of Kenya Seed Company set for December 10, 2013 …pending hearing of the application herein inter-parties,” read an order sought by ADC.

The ADC in court documents said the notice calling for the extraordinary general meeting is defective, arguing that it’s only the government that can summon such a meeting given its position as a majority shareholder.

The State-owned agro based firm reckons the company’s register has not been rectified after the court annulled the 2001 privatisation.

The company’s board under Mr Tum issued nine million new shares to the public in 2001, in a deal that did not meet requirements for disposal of public assets.
In 2003, when the Narc government came into power, the entire board and management were dismissed.

However, senior managers led by Mr Tum challenged the dismissal and asked for reinstatement, arguing that the company was no longer government-controlled.

Mr Tum said the issue of privatisation was never determined by the court since the matter that was ruled on was only the removal from office. Mr Tum served as director from 1985 to 2003.

Mr Tum and his team lost a High Court suit which was again upheld by the Court of Appeal in 2010 which ruled the company is a strategic government facility. He said the shareholding still remains unresolved and that he acquired his first shares in the company in 1983.

The company’s assets was estimated at Sh6.1 billion in the year 2009/10.