Old Mutual Holdings has been ordered to deposit Sh500 million in an interest-earning escrow account, pending the determination of a case filed by billionaire businessman Joel Kibe.
Justice Josephine Mong’are said the company should deposit the amount as a condition for allowing Old Mutual to sell UAP Tower in Upper Hill.
The company claimed that it intended to sell the landmark building for Sh5.5 billion as part of its plan to inject the much-needed capital into Old Mutual and also offset other company loans and obligations.
Mr Kibe had claimed that he was concerned that the proposed sale would prejudice him as a minority shareholder and that the court should not allow this to happen as he stood to lose Sh246.6 million that he had invested in the company.
“In recognising that the applicant (Mr Kibe), though through a nominee account, is a shareholder and having moved to court seeking protection as a minority shareholder, I find that the applicant has established that he has rights that are likely to be infringed if this court does not provide the protection sought herein,” said the judge.
The court said the funds would protect the interests of Mr Kibe such that should the case be decided in his favour, there would be funds available to settle his claim.
Justice Mong’are said Mr Kibe had made allegations that required answers or explanations from the company.
Mr Kibe went to court last year accusing the directors of flouting the provisions of the company’s articles of association in the management of the firm.
He claimed that there was a pattern of premeditated and sustained oppressive and unfairly prejudicial conduct by the company against him, having defrauded him of his entire investment of Sh246.6 million plus interest over the last 10 years.
He also complained that the company had made unjustifiable disposal of its assets and that UAP Holdings rebranded to Old Mutual Holdings Plc and completely lost its corporate identity.
The tycoon claimed that the transaction was done in secrecy as he and other minority members were not consulted on the move.
Mr Kibe is seeking a raft of declarations, including that the directors have been conducting its affairs of the company in a manner oppressive to him, and an order directing the taking of accounts of the company.
He also sought an order for an investigation of the company to be done by a court-appointed inspector under Section 786 of the Companies Act.
Mr Kibe had also sought an order directing the company to buy him out at the price he paid for the shares, with interest at 18 percent per annum from the date of purchase.
The company opposed the case through an affidavit of its group chief executive, Arthur Oginga, who said the billionaire was making accusations without any evidence. He said the allegations were intended to cast the company's board in a negative light.
Mr Oginga said the company deferred its listing because it did not meet the listing eligibility criteria set out in the Capital Markets (Securities) (Public Offers, Listing, and Disclosures) Regulations.
On the company’s ability to buy his shares, Mr Oginga said there was no law or obligation requiring any company to purchase its own shares from its shareholders and since Mr Kibe purchased his shares in the secondary market, he can also sell them in the same market.
Mr Oginga added that the sale of the Tanzanian subsidiary was conducted transparently, with full disclosure to shareholders, who overwhelmingly approved it at the annual general meeting (AGM) held on June 25, 2024.
The company maintained that there was no merger between UAP Holdings Limited and Old Mutual Holdings as alleged, as the company is one and the same.
The judge said the company had not disputed that Mr Kibe was an underlying shareholder of the company having purchased his shares through the nominee investment company, Genghis Capital.
“I am persuaded that this court has the discretion to recognise beneficial shareholder interests in a company so as to do interest between the parties even though the said beneficial shareholders are not registered in the company as its member,” said the judge.
