The fight over SportPesa assets and business has taken a new twist after entrepreneurs Paul Wanderi Ndung’u and Asenath Wachera Maina were expelled as shareholders of the betting company’s holding firm at zero compensation for their stakes.
Ronald Karauri, a shareholder and director at Pevans, informed Mr Ndung’u and Mrs Maina that they have been removed as shareholders for triggering court cases against the firm—whose license was revoked in 2019 on tax evasion claims.
Mr Karauri’s note followed a notice to summon a contested shareholders meeting in Tanzania. The legality and existence of the October 8 meeting in Tanzania has been questioned.
According to a notice of the meeting and minutes seen by Business Daily, the general meeting was summoned under a special resolution to expel errant members.
Mr Ndung’u and Mrs Maina argued that the special resolution requires the approval of shareholders with a combined stake in excess of 75 percent.
The two have a combined 38 percent stake in Pevans and their lawyers argued that summons of the meeting had the backing of shareholders with about 40 percent of rights.
They said there is no evidence that a shareholder known as NaoGen (21 percent) sent a proxy to the meeting.Sportpesa
They argued that calls to have the meeting in Nairobi or through Zoom were ignored. Zoom or virtual meetings were adopted as platforms for shareholder meetings following the advent of the Covid-19 menace.
Pevans’s licence was cancelled in July 2019 for alleged non-payment of taxes.
A new company called Milestone Games Limited, which was created by some of the shareholders of Pevans but excluded Mr Ndung’u and Mrs Maina, entered the betting business in October 2020 with the SportPesa brand.
This sparked a vicious legal battle for the gaming brand pitting the duo and their former partners including Mr Karauri.
Mr Ndung’u and Mrs Maina have stakes of 17 and 21 percent respectively in Pevans but now face the prospect of being forced out without any compensation.
Mr Ndungu and Mrs Maina have triggered several court cases on behalf of Pevans East Africa Ltd to protest the transfer of the SportPesa brand and assets to Milestone Games, which is majority owned by Mr Karauri and Robert Macharia.
Mr Karauri has a seven percent stake in Pevans where Mr Mcharia is listed as company secretary.
“Paul Wanderi Ndung’u and Asenath Wachera Maina, shareholders/members of Pevans East Africa Limited are hereby expelled in accordance with Article 30 of the Company’s Articles of Association from the company with immediate effect from the 8th of October 2022,” Mr Karauri wrote to the duo in a letter dated January 10, 2023.
“The directors to immediately commission a comprehensive audit and seek the opinion of an auditor on the fair share value of the shares of the company with a view of establishing what amount, if any, is payable to the expelled members in accordance with Article 31 as read together with Article 9 of the Company’s Articles of Association.”
Mr Karauri disclosed that Pevans has negative equity of Sh14.3 billion. This means that Mr Ndungu and Mrs Maina will not be paid anything.
Shareholders in favour of SportPesa trading under Milestone are in court to restrain Mr Ndung’u and Mrs Maina from dealing with Pevans or representing the firm.
Justice Alfred Mabeya granted temporary orders barring Mr Ndung’u and Mrs Maina from Pevans until January 24 pending the two responding to the suit.
The orders expired on 24th January 2023, however, some of the Pevan shareholders went back to court on January 26 seeking an extension of the temporary orders
The expulsion of Mr Ndung’u and Mrs Maina from Pevans and the seeking of orders to stop their association with the company is designed to take away the legal platform they have used in their fight to reclaim the SportPesa brand and assets.
The duo has sued their erstwhile partners on behalf of Pevans, accusing them of a conflict of interest and breach of fiduciary duty by transferring the sports betting brand to the new company Milestone.
Mrs Maina, for instance, sued the Registrar of Trademarks last year, over the alleged fraudulent transfer of the SportPesa trademark from Pevans to Milestone.
Mr Ndung’u also joined the legal battle last year, saying he is representing the interests of Pevans which opted to remain passive in the matter yet its core assets are at stake.
Before the fallout, Pevans made billions of shillings in profits and expanded the fortunes of the founders. Records of the company show that its shareholders earned dividends totalling Sh7.6 billion in the four and a half years to June 2019.
Its net income topped Sh12 billion over the period, revealing the lucrative earnings in sports betting.
According to the latest court fight, Pevans started making losses after the cancellation of its licence. The financial performance of Milestone, which continues to operate, is not publicly available.