The directors including Paloma Mosquera, Eduardo Hernandez and Joan Hernandez accused Mr Muchungu of trying to introduce his family members as shareholders of the company, a move that was rescinded by the Registrar of Companies.
Justice David Majanja said the company is entitled to appoint its managing director and the MD does not have a right to remain in office particularly against the wishes of the majority shareholders and directors.
The High Court has directed the managing director of micro-finance company embroiled in a dispute with his co-directors to surrender passwords, computers and all company properties in his possession, pending the determination of the case.
James Ndegwa Muchungu is required to surrender the items of Meridian Acceptance Ltd, after his co-directors, who are mostly Spanish citizens, accused him of failing to act in the best interest of the company. The other directors claimed that Mr Muchungu of negligence and breach of trust.
The directors including Paloma Mosquera, Eduardo Hernandez and Joan Hernandez also accused Mr Muchungu of trying to introduce his family members as shareholders of the company, a move that was rescinded by the Registrar of Companies.
Justice David Majanja said the company is entitled to appoint its managing director and the MD does not have a right to remain in office particularly against the wishes of the majority shareholders and directors.
“Since the position of Managing Director is an employment position, unfair dismissal or removal can be remedied by an award of damages. On the other hand, the continued stalemate between the Company and the Defendant would cause the Company irreparable harm. The Defendant must now yield to the directions and dictates of the Company to relinquish that position,” the Judge said.
The Judge said as director, Mr Muchungu is entitled to visit the company’s offices, attend board meetings but may not interfere with its management.
Mr Muchungu was charged in August, together with others with stealing Sh176 million from the company.
In an affidavit Mr Hernandez, who is the chairperson of the board of directors of the company said Mr Muchungu was appointed the MD in 2012 and held the position until December last year, when his services were terminated.
He accused Mr Muchungu of trying to introduce his family members as shareholders of the company on December 11, 2020, which attempt, though initially successful, was reversed until the share transfers were approved by the directors.
The also accused Mr Muchungu of conflict of interest, non-compliance with statutory requirements and mismanaging the company finances.
