Njiraini in owners battle for Sh1.3bn tiles firm

Kenya Revenue Authority (KRA) commissioner-general John Njiraini is locked in a shareholders’ battle for the control of Space & Style Limited, a roofing materials company that supplies the popular decra tiles.

The dispute, which was first filed last year in the Commercial Court, has now spilled over to the Constitutional Division where one of the Space and Style partners is accusing Mr Njiraini of using his position as the top taxman to harass him.

The court battle has lifted the veil on the ownership of Space & Style Limited, which according to the filings is valued at Sh1.3 billion.

The disgruntled partner, Mr Njama Wambugu, claims that Mr Njiraini holds shares in Space & Style through an offshore company, Decamis Limited, which is registered in Hong Kong.

Mr Wambugu has filed a separate suit accusing KRA of slapping him with exorbitant tax demands as intimidation and harassment.

“One Winfrida Wanjiku Ngumi, the 2nd respondent and the 1st petitioner are shareholders in Space & Style Limited, the 2nd respondent’s (Mr Njiraini) interest in the said company being held through an offshore company of the said 2nd respondent, namely Decamis Limited registered in Hong Kong,” says Mr Wambugu.

KRA is seeking a total of Sh160 million from Mr Wambugu and his four companies, which he attributes to the fallout over his business deals with Mr Njiraini.

In the latest suit he is seeking orders declaring that the KRA boss has contravened the law by engaging in and interfering with the affairs of Space & Style Limited and using the same to initiate tax inquiries and demands on the petitioners. He wants KRA restrained.

Mr Njiriani has not responded to the case filed on Mr Wambugu's behalf by Havi and Company Advocates.

Separately, Mr Wambugu has been in court since May last year, when he accused his partners in Space & Style Limited of transferring his shares illegally from the firm they founded in 2002.

At the time, the firm had three owners with Mr Wambugu holding 47,500 shares, Wainfrida Wanjiku Ngumi 47,500 shares and Decamis Limited, alleged to be proxy for Mr Njiriani, 5,000 shares. In 2017, he agreed to sell his shares to Ms Ngumi at a consideration of Sh250 million, subject to valuation of the firm, to enable him exit the company.

He was allegedly paid a deposit of Sh25 million and it was agreed that in the event she fails to clear the balance she would acquire only 4,197 ordinary shares, and subsequently executed transfer of documents of shares as security.

A dispute arose when two reports put the value of the firm at Sh1.2 billion and Sh800,000.

Ms Ngumi transferred Mr Wambugu’s shares to herself and appointed three other partners as directors, which he claimed to be in breach of his exit clause.

But Ms Ngumi in her response noted that Mr Wambugu transferred his shares voluntarily and therefore made her majority shareholder and has asked the court to dismiss the case.

She wants the court not to grant orders seeking to restrain the firm from changing the signatories to the company’s bank account, arguing that there is no dispute to warrant granting of orders that can cripple its operations. She has asked the court to ask Mr Wambugu to provide security equivalent to Sh600 million if it were to give the orders.

Justice Aaron Makau on January 31, 2019 referred the dispute to arbitration, but meanwhile restrained Ms Ngumi from changing the firm’s seven bank account signatories and also from acting as majority shareholder.

But Ms Ngumi, Space & Style Limited and her newly appointed co-directors have moved to the Court of Appeal holding that there is no dispute to be referred to arbitration.