Elly Mwaijande vs Petros MAjinyori & 4 others. Misc commercial case no 18 of 2023.

This cas is about unfair prejudice of comlanya affairs in wich member of comlany sued a company for protecting  his interest.

It is on record that the 5th respondent is limited liability company doing business among others construction. Being a construction firm, the presence of registered

engineer is mandatory as such on 1st September,2019 the 5th respondent

hired the petitioner as electrical engineer and technical director for the term of 12 Months. Ill-advisedly, some of shareholders failed to pay for their subscribed shares and in the circumstance the petitioner on 20th October, 2019 was allotted with 5 shares, so he become a shareholder and employee of the 5th respondent. However, on 31st December,2020 the petitioner employment was terminated and remained as shareholder.

Further facts were that, after that termination, the 5th respondent continued to use the petitioner names and professional credential without the petitioner’s consent. Despite of numerous reminders the 1st 2nd 4th

Respondents have turned deaf and neglected or refused to initiate the process of removing the petitioner’s name in the 5th respondent’s register and regulators records in this case Contractors Registration Board (CRB).

It is against this background that the petitioner is praying for orders as

contained in the petition hence this ruling.

The court had this to say:

In my literal interpretation and in the light of what was stated in the case of Velisa Elizabeth Deflose (supra) the purpose of section 233 (1), (2), (3) of the Companies Act, No. 12 of 2002, ‘unfair prejudice’

is for the protection of the minority shareholders who may lack sufficient

power or influence over decisions touching the affairs of the Company or critical matters affecting the business of the Company or exclusion of a shareholder from the management or decision making over the affairs in instances where there is a legitimate expectation of being involved in the management of the companies.

With the above understanding, it should be noted that a petition for unfair prejudice may be brought on the grounds that the affairs of the Company are being carried out or have been conducted in a manner that is unfairly prejudicial to the interests of the minority shareholders. It should further be emphasized that a phrase company’s affairs imply multitude of things and need to be understood within the context in which it is considered.

 It may include decision reached by directors, removal or exclusion of a member from participation in the management of the affairs

of a company and any actions taken by directors contrary to articles of association of a company may amount to unfair prejudice. Also, it should be noted that the interests of a member are not limited to his strict legal

rights under the constitution of the company but can take into account wider equitable consideration such as the underlying understanding between the parties.

See the case of Elder v Elder & Watson [1952] SC. 49 in which Lord Cooper had this to say: Unfairly prejudicial conduct could exist where there was a visible departure from the standard of fair dealing and a

violation of the conditions of fair play on which every shareholder who entrusts his money to a company is entitled

to rely. 

Guided by the above authority it is my considered view that refusal to remove the petitioner in 5th respondent register is an act of the company because directors are duty bound to initiate the process.

Therefore, that actions or omission in compliance or refusal to act on the

petitioner request amount to unfair prejudice. In the case at hand, the petitioner has alleged that the 5th respondent has refused to remove his name from the register in my view the request to be remove from the

register connotes transfer of shares as such it is a matter touching on the conduct of the affairs of the company. 

See the case of Arbuthnot! v Bonymann & Others [2015] EWCA Civ 536 (20 May 2015) at 630 the court held that, prejudice may extend to other financial damages.

Guided by the above authority and taking the status of the petitioner on the company, the affairs of 5th respondent are being run to his detriment because to date he cannot register his own company as his professional certificate are with the 5th respondent.

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