Rukikaire successfully challenges control of late Garuga’s companies

The Uganda Registration Services Bureau (URSB) has overturned the appointment of lawyer Agaba Maguru as a director of three companies associated with the late businessman James Garuga Musinguzi, ruling that the process through which he assumed office was unlawful.

The decision follows an application by former minister of Privatisation Mathew Rukikaire, who challenged the resolutions that installed Maguru as managing director after Garuga-Musinguzi’s death last year.

Rukikaire told URSB that he is a shareholder in Garuga Properties Limited, holding 0.45 per cent of the company’s issued share capital. Garuga Properties is the majority shareholder in Kinkizi Development Company Limited and Incafex Limited, where Garuga-Musinguzi also served as a director.

Following Garuga-Musinguzi’s death, extraordinary general meetings were convened, and Maguru was appointed managing director of the companies.

However, Rukikaire argued that the resolutions passed during the meetings, and the subsequent filings made with URSB, were neither lawfully authorised nor validly adopted and therefore could not confer any legal rights on Maguru.

Maguru denied the allegations, arguing that Rukikaire’s shareholding was too insignificant to influence the affairs of the companies. Henry Hapa Nganwa, another director of Garuga Properties Limited, also maintained that Maguru had been validly appointed to the board.

The respondents further argued that Rukikaire was not a shareholder in Kinkizi Development Company Limited or Incafex Limited and therefore lacked the legal standing to challenge decisions made by those companies.

But in his ruling, Daniel Nasasira, the assistant registrar of companies, rejected those arguments, finding that Rukikaire had demonstrated sufficient legal interest to challenge the appointments.

“As a shareholder of Garuga Properties Limited, the applicant possesses a direct and legally recognisable interest in the second and third respondent companies. His interest falls squarely within the category of an ‘interested party’,” Nasasira ruled.

He added: “I am therefore unable to accept the respondents’ contention that the doctrine of separate corporate personality completely extinguishes the applicant’s standing in the circumstances of this case. While that doctrine preserves the distinct legal identity of each company, it cannot be applied so rigidly as to deny a party who demonstrates a direct and legitimate interest in the impugned corporate acts access to the statutory remedy expressly created under Regulation 20.”

Nasasira held that Rukikaire had the requisite locus standi to challenge decisions relating to Garuga Properties Limited as one of its shareholders.

“I further find that, by virtue of his shareholding in Garuga Properties Limited, which is the majority and controlling shareholder of Kinkizi Development Company Limited and Incafex Limited, the applicant has demonstrated a sufficient and legally recognisable interest to qualify as an interested party,” the ruling states.

The assistant registrar further found that the extraordinary general meeting of Garuga Properties Limited had been convened without giving notice to Rukikaire, despite his entitlement as a shareholder to participate in the meeting.

Consequently, Nasasira declared that Maguru’s appointment as a director of Garuga Properties Limited was unlawful and ordered that his appointment be expunged from the company’s registration records maintained by URSB.

The decision effectively nullifies Maguru’s appointment and restores the company’s register to the position before the disputed resolutions were filed.

The post Rukikaire successfully challenges control of late Garuga’s companies appeared first on The Observer Media Ltd.