Shareholder row, Sh350m claim rock Cannon Insurance

Mr Talwar’s wife Nirmalla, and son Vishishit, now say that the defendants in the case illegally transferred the Cannon Life Assurance shares in 2022, without consent from the late tycoon’s family, which owns 25 percent of the insurer.

The tycoon’s kin have sued Cannon General Insurance, Cannon Life Assurance, Goodison Twenty Five Ltd, Gareto Investment Trust Ltd, lawyer Desterio Oyatsi, Golum Investment and Metropolitan, which has a 75 percent stake in the insurance firm.

Ms Nirmalla and Mr Vishisht have sued on behalf of Mr Talwar’s estate.

Mr Oyatsi has been sued in his capacity as the signatory to the transfer of shares, while the Registrar of Companies has been brought on board to block any further transfers, particularly relating to the Cannon General Insurance shares worth Sh313 million, going by the 2021 agreement.

Ms Nirmalla and Mr Vishishit claim in court papers that Metropolitan colluded with Gareto Investment Trust, Golum Investment and Mr Oyatsi to irregularly transfer the late tycoon’s shares in 2022.

They are seeking Sh350 million for the shares in the two Cannon companies, and damages for the alleged illegal transfer of Cannon Life Assurance shares.

Mr Talwar died in 2020. In 2014, he sold the 75 percent stake to Metropolitan International in a deal estimated at Sh2.3 billion. The hostile takeover, the two Talwar kin add, has seen the three companies kick out Mr Vishit from the Cannon Life Assurance board of directors.

Based on agreements signed for the share acquisitions by Goodison Twenty Five, Gareto Investment Trust and Golum Investment, Mr Talwar’s family was to get Sh313 million for his 25 percent stake in Cannon General Insurance, and Sh37 million for another 25 percent stake in Cannon Life Assurance.

Mr Talwar’s family had agreed to sell their patriarch’s 25 percent stake in Cannon General Insurance (K) Ltd and Cannon Life Assurance (K) Ltd, but now say that the deal aborted after the agreed stop date of May 31, 2022.

“The transfer of the 1st Plaintiff’s (Ms Nirmalla) shares was done contrary to the provisions of the 2nd Defendant’s (Cannon Life Assurance) constitution documents which, in article 31 of the Articles of Association, requires that the transfer must be signed by both the transferor and transferee,” the tycoon’s widow says in court papers.

“The 1st Plaintiff has not signed any share transfer documents indicating her intention to transfer the shares belonging to the Estate of Mr Talwar,” she added.

The two Cannon firms had premiums of Sh1.9 billion in 2023.

Mr Talwar’s kin claim that the initial share sale deal signed in 2021 was to see them and Metropolitan sell their shares in the Cannon firms to Goodison Twenty Five, Gareto Investment Trust and Golum Investment.

Metropolitan, the firms and Mr Oyatsi are yet to respond to the suit.

The transfer of Metropolitan shares and those of Mr Talwar’s estate were joined at the hip based on agreements signed by all the parties in the transaction, the tycoon’s relatives argue in court documents.

The Insurance Regulatory Authority (IRA) told the parties in the transaction to ensure that they comply with provisions of section 23 (4A) of the Insurance Act, which bars one individual or institution from owning more than 25 percent of an underwriting firm.

The IRA also directed that the parties adhere to resolutions made by shareholders in regard to restitution of policyholders, and that proceeds of the transaction be held in an escrow account in the names of advocates for the buyers and sellers, pending completion of the conditions.

The Talwars now argue that the IRA’s conditions were not met, and that the timeframe for completing the deal lapsed, but that Metropolitan and the other two firms went ahead to transfer shares without consent from the tycoon’s estate.

Although the shares were to be acquired by Goodison Twenty Five, Gareto Investment Trust and Golum Investment, the transaction was to be financed by Metropolitan.

That meant Metropolitan ceding its 66 percent shareholding to the other three firms for free.

Metropolitan paid for a 75 percent stake in Cannon in 2014. It retained 66.29 percent, and forewent a 4.71 percent stake to Goodison Twenty Five, and another four percent to Gareto Investment Trust.

Mr Talwar retained his 25 percent stake.

Ms Nirmalla and Mr Vishisht have sought court orders revoking the 2022 share transfer, and compelling Metropolitan, Goodison Twenty Five, Gareto Investment Trust and Golum Investment to pay the Sh350 million purchase price.

The Talwars also want compensation in the form of damages after a court declaration that the share transfer was illegal, null and void.

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