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Stima Sacco ordered to buy Sh108m Maseno scheme Co-op Bank shares

COOPBank

Co-operative Bank head office along Haile Selasi Avenue, Nairobi. FILE PHOTO | NMG

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Summary

  • Stima Sacco was accused on reneging on a 2016 deal to buy the Sh108 million stock from Maseno Sacco, which needed to sell the stock to boost its cash flow and loan disbursement to its members.
  • But Maseno could not sell the shares because it had used them as security for a Sh45 million loan from Stima Sacco.
  • Thejudge also directed Stima Sacco to deduct the Sh45 million loan, which Maseno Sacco was struggling to repay.

Stima Sacco has lost a court battle against Maseno University Savings and Credit Society over a failed deal to purchase shares in Co-operative Bank of Kenya #ticker:COOP worth Sh108 million.

Justice Grace Nzioka directed Stima Sacco to conclude purchase of the nine million Co-operative Bank of Kenya shares from Maseno Sacco within 30 days.

Stima Sacco was accused on reneging on a 2016 deal to buy the Sh108 million stock from Maseno Sacco, which needed to sell the stock to boost its cash flow and loan disbursement to its members.

But Maseno could not sell the shares because it had used them as security for a Sh45 million loan from Stima Sacco.

Thejudge also directed Stima Sacco to deduct the Sh45 million loan, which Maseno Sacco was struggling to repay.

Also to be deducted from the amount is Sh5.8 million Stima Sacco had paid for the transfer of the shares from Co-op Holding & Company Limited, a coalition of Saccos that owns 64.56 percent of Cooperative Bank.

“Similarly, it suffices to note that, the Respondent (Stima) had even paid the relevant taxes to facilitate the transfer. They had signed the payment voucher; they had willed their rights to dividends to the Appellant (Maseno),” the judge said.

“All these acts amount to part performance of the contract by the Respondent. It is only appropriate that they should complete the transaction,” the judge said.

The court heard that the two Saccos entered into a deal in January 2016 in which Maseno would sell some 9 million shares to Stima at Sh12 per share. The class ‘A’ shares are traded among cooperative societies.

The transaction was approved by the authorised officers of the respective parties and subsequently, Stima was notified by Co-op that the documentation process was complete for it to pay transfer fees and applicable taxes. However, Maseno said Stima failed to pay for the purchase of the shares exposing it to financial problems, which led to mass exodus of its membership.

The matter was referred before the Cooperatives tribunal, which on conclusion ordered Stima Sacco to pay Maseno Sh2.5 million for general damages for breach of contract.