Rukikaire v INCAFEX Limited (Civil Appeal 3 of 2015) [2017] UGSC 88 (23 October 2017)

IN THE SUPREME fcoURT OF UGANDA AT KAMPALA CIVIL AjPPEAL NO.03 OF 2015 \ BETWEEN MA TTHEW RUKIKAIRE APPELLANT r AM) RESPONDENT 1NCAFEX LIMITED J UDG MENT O F PROF . TIBATE M WA- EKIRIKUBINZA. At the hearing of this appeal, Mr. Joseph Byamugisha together with Mr. Didas Nkuruziza represented tb?e appellant while Mr. Peter Walubiri represented the respondent (Company). (CORAM: K1SAAKYE, ARACH-L m OKO, NSIIIMYE, OPIO-AWER1, TIBATEMWA- ek V rikubinza JJSC.) THE r J e PUBLIC OF UGANDA ♦ (An appeal from the judgment of the C mrt of Appeal at Kampala before Hon. Justices: Kasule, Mwangusya and Mwo idha, JJA, in Civil Appeal No. 67 of 2010 dated the 22" d day of December 20 1 4) Representation This is a second appeal from the Court of Appeal. The brief background of the appeal is that the present appellant, Mr. Matthew Rukikaire filed a petition in the High Court against the company, Incafex Ltd under Section 211 (1) (2) of the repealed Companies Act THE REPUBLIC OF UGANDA CIVIL APPEAL NO. 03 OF 2015 BETWEEN M ATTH EW RUKI KAI RE APPELLANT AND RESPONDENT 1NCAFEX LIMITED Representation JUDGMENT OF PROF. TIBATEMWA-EKIRIKUBINZA. This is i >>>-■ (An appeal from the judgment of the C uirt of Appeal al Kampala before Hon. Justices: Kasule, Mwangusya and Mwo idha, J J A, in Civil Appeal No. 67 of 2010 dated the 22 nd day of December 2014) At the hearing of this appeal, Mr. Joseph Byamugisha together with Mr. Didas Nkuruziza represented the appellant while Mr. Peter Walubiri represented the respondent (Company). IN THE SUPREME COUR T OF UGANDA AT KAMPALA I (CORAM: K1SAAKYE, A RAC II -' a MO KO, NSIHMYE, OPIO-AWERI, T1BATEMWA- EK7RIKUBINZA JJSC.) a second appeal from the Court of Appeal. The brief background of the appeal is that the present appeiiant, Mr. Matthew Rukikaire filed a petition in the High Court against the company, Incafex Ltd under Section 2.1 1 (1) (2) of the repealed Companies Act I J 2 The company being dissatisfied with the High Court decision filed an appeal in the Court of Appeal on the following grounds: 2. The learned trial judge erred in law and fact in allowing the petition when there was no evidence to prove that: 1. The learned trial Judge erred in law and fact in holding that the petitioner was a shareholder in Incafex Ltd. The High Court held that the petitioner was a shareholder and a member of the company. Cap 110. The petition was on the ground that the affairs of the company were being run in a manner that was oppressive to him. He particularly complained that he had been closed out of company meetings and that there was no transparency in the financial affairs of the company. The company through its Managing Director - Mr. James Musinguzi Garuga - opposed the petition on the ground that the appellant was never a shareholder or member in the Company because he had never paid for the 450 shares he was allotted and that he held the said shares in trust for M/S Hauliers - a foreign company. The respondent further contended that there was no evidence to show that the petitioner is a shareholder of the Company. That, Section 27 of the Companies Act defined a person as a member of the company if their name was entered on the register of members. X 4 3 3. The learned trial judge erred in law and fact to make orders for the benefit of foreign shareholders who were not party to the petition and in absence of any prayer to that effect. The Court of Appeal came to the conclusion that there was inadequate evidence as to whether or not the allotted shares had been paid for by the petitioner (current appellant) or the foreign shareholders. Therefore, the petitioner could not be said to be a shareholder. Dissatisfied with the decision and finding of the Court of Appeal, the appellant appealed to this Court on the following grounds: 1. The learned Justices of Appeal misdirected themselves and erred both in law and in fact when they held that the appellant failed to prove that he had subscribed to the 450 ordinary shares that had been allotted to him in the respondent Company. (c)The winding up will prejudice the oppressed members or the petitioner. (a) There has been oppression of some members of the company including the petitioner. (b) The facts justify a winding up on grounds that it is just and equitable to do so. s . allotted shares were subscribed to by the Appellant. 4 Cr The appellant argued grounds 1 and 2 together and the rest of the grounds were argued separately. Both counsel adopted their written submissions which this court has considered in resolving the grounds of appeal raised. 4. The learned Justices of Appeal erred in law when they held that the Appellant could not claim to have been oppressed by the respondent Company. 5. The learned Justices of Appeal erred in law and fact when they held that there was no evidence adduced to justify winding up of the Respondent Company. 2. The learned Justices of Appeal misdirected themselves and erred both in law and in fact when they held that the Appellant did not hold shares in the respondent Company. 3. The learned Justices of Appeal erred in law and in fact when they held that: (a) The foreigners were fully compensated; (b) The question of the consideration was never resolved; (c) The letter by Mr. Agaba Maguru could not have been a substitute for the evidence to determine that the I Grounds 1 and 2 Appellant ’ s submissions company. 5 Counsel for the appellant also faulted the Court of Appeal finding that the appellant was not a shareholder without the register of members having been adduced in evidence to prove that the appellant was not on the register of members. The Appellant ’ s counsel contended that payment for the shares is not what constitutes membership or settlement of the consideration for shares. He cited Section 27 of the Companies Act. Basing on this provision, the appellant argued that the consequences of registration of an allottee of shares accorded him the right to be a member of the However, I shall address grounds 1 and 2 together, grounds 4 and 5 together and ground 3 separately. The appellant submitted that there was evidence to prove that he is a member and shareholder of the company. The appellant relied on the evidence of a return of allotment form marked ‘ annexure D ’ . The return of allotment form indicated that the appellant was allotted 450 shares. Another piece of evidence relied upon was ‘ annexture E ’ - a Memorandum of Understanding between Incafex Ltd Shareholders, Mr. James Musinguzi and Mr. Matthew Rukikaire. The memorandum indicated that all expected payments from government in respect of compensation for the ranches was to be deposited on a bank account to which the appellant was a signatory. Respondent ’ s submissions 6 That an allottee of shares is not a shareholder unless there is proof of agreement to take up the shares through payment and the name entered on the register of members. In support of the argument, the respondent relied on an excerpt in Gower ’ s Principles of Modern Company Law, fourth edition, page 428 where it is stated that: The respondent prayed that ground 1 and 2 of the appeal be dismissed. ... every person, other than a subscriber, who agrees to become a member and whose name is entered in its register of members, shall be a member. Here two things are necessary (a) agreement and (b) entry on the register; both must be present before the person concerned becomes a member and shareholder. On the other hand, the respondent submitted that the appellant failed to adduce any evidence by way of a receipt, a share certificate or memorandum for the payment of the 450 shares. That the appellant in essence failed to discharge the evidential burden that lay on him. It was further submitted that the evidence of the return of allotment and memorandum of understanding relied upon by the appellant do not constitute evidence of him taking up the allotted shares or settlement of the consideration for the said shares. Ground 3 Appellant ’ s submission Respondent ’ s submission Ground 4 Appellant ’ s submission 7 In regard to this ground, it was submitted that there was evidence on record to prove that the appellant was an oppressed member of the For the respondent, it was submitted that the court of Appeal was right to dismiss the issue of the compensation. Since the compensation was in respect to the investment into the company by the foreigners - who were not parties to the petition in the first place. Further that Amrik Singh -representative of the foreign shareholders - did not raise any dispute concerning the compensation in the lower courts. The appellant mainly faulted the learned Justices of Appeal finding that the foreign shareholders had been compensated and yet at the same time found that he had never paid for the shares. That this was a contradiction since the foreign shareholders could not be compensated for that which was not paid for. The appellant further faulted the Court of Appeal for coming to such a finding basing on the mere assertion in the letter written by the company secretary without further evidence by way of receipts to prove payment of the compensation. A Respondent ’ s submission Ground 5 Appellant ’ s submission 8 On the other hand, the respondent contended that the court of Appeal ’ s holding that there was no evidence of oppression was based on the fact that the appellant did not have shares in the company. company. That, the directors refused to convene company meetings which was mandatory under the Companies Act. In support of this contention, counsel for appellant relied on Re: Nakivubo Chemists (U) Ltd (1977) HCB 312 where it was held that not being allowed to attend company meetings was evidence of oppression. Further, that the compensation of investment in respect of the shares was paid to foreign shareholders who were not members of the company. The appellant contended that the facts of the present case justified an order to wind up the company. While relying on the authority of Re: Nakivubo Chemists (U) Ltd (Supra) and Section 211(2) (b) of the Companies Act Cap 110, the appellant submitted that the test to apply is whether the business of the company cannot go on due to the deadlock among the shareholders. The deadlock among the That the authorities of Re Nakivubo Chemists (U) Ltd (supra) and Lock vs. John Blackward Ltd [1924] A.C 782 relied upon by the appellant were distinguishable from the present facts. While in the foregoing cases the court found that the petitioners were shareholders, the appellant in the instant case was not shareholder. Respondent ’ s submission Rejoinder a member of the 9 shareholders was failure to be transparent with the compensation money due from government for the ranches of the company. In conclusion, the appellant prayed that the appeal is allowed with costs both in his Court and in the courts below. He also prayed that the judgment of the Court of Appeal be set aside and that of the High Court be reinstated. It was further submitted that the relief of winding up was not prayed for by the petitioner in the first place. The respondent prayed that the appeal be dismissed with costs to the respondent in this Court and in the courts below. In rejoinder, the appellant emphasized that he was company by virtue of section 27 (2) of the Companies Act Cap 110. That the provision defined a member as every other person who agrees to become a member of the company. The respondent argued that since the appellant was not a shareholder, he could not say that he was an oppressed member. That there would be no ground to wind up the company at the instance of a non-member. Since winding up was not justified, then there would be no alternative relief to winding up under Section 211 of the Companies Act. Consideration of court Grounds 1 and 2 10 However, other persons can become members of the company when shares in the company are allotted. When a person either individual or corporate is allotted shares subsequent to the formation of the company, that person becomes a ‘ shareholder ’ , ‘ member ’ or ‘ owner ’ and stands in the same position as the subscriber. Such persons The central question for determination in grounds 1 and 2 rotates around the definition of who a shareholder or member of a Company is. The appellant reiterated his earlier submissions that he owned 45% of the shares in the Company. That the respondent could only dispute this fact by producing the members register of which it failed to do. The appellant further submitted that the respondent ’ s assertion that he had never paid for the allotted shares was irrelevant for the purpose of determining membership of a company. The process of incorporating a company limited by shares involves registration of the company ’ s memorandum and articles of association which are signed by subscribers. A ‘ subscriber ’ is the term applied to the first members of a private limited company who add their names to the memorandum of association during the company formation process. By so doing, they agree to form a company and become members/share- holders in the company. Definition of member. (a) by subscribing to the memorandum of association; and The law on Allotment of company shares and membership 11 V- v What can be deduced from the section is that a person may become a member of a company in two ways; Section 27 of the then Companies Act Cap 110 defined a member as follows: agree to become part of a company by taking a particular number of shares through a process known as allotment. Indeed David J. Bakibinga in his book, Company Law in Uganda, 2001 at page 66 states that, agreement to become a member can be through allotment of shares. This position was also reflected in Section 27(2) of the Companies Act Cap 1 10. 2. Every other person who agrees to become a member of a company, and whose name is entered in its register of members, shall be a member of the company. (b) by agreement to be a member subsequent to the formation of a company. 1. The subscribers to the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members. 12 The word allotment was not defined in the Companies Act Cap 110. However, Section 54 of the said Companies Act required a company to file a return of the allotment of its shares with the company Registrar within 60 days of the making of the allotment. Chitty J in Re Florence Land and Public works Company (1885) L.R.29 Ch. D 421 stated: Lord Templeman in National Westminster or Bank Pic vs. IRC (1995) A.C 111 at 126 held that “ allotment does not make a person a member of the company. Entry in the register of members is also What is termed allotment is generally neither more nor less than the acceptance by the company of the offer to take shares.... The offer is to take a certain number of shares, or such a less number of shares as may be allotted. The above definition was adopted by the Supreme Court of India in Sri Gopal Jalan and Company vs. Calcutta stock 1964 Air 250/1964 SCR (3) 698. Gower and Davies, in Principles of Modern Company Law, 8 th edition at page 845 define the term ‘ allotment ’ as the process by which the Company finds someone who is willing to become a shareholder of the company. Gower and Davies further explain that the process of becoming a shareholder is a two-step one, involving first a contract of allotment and then registration of the member. I or on 13 V From the foregoing, it could be safely be concluded that a person becomes a shareholder or member of a company if allotment is followed by registration. However one question which must be answered is: who is duty bound to complete the process, who needed to give the allottee legal title to the shares. Allotment confers a right to be registered as a member. ” in as much as the term ‘ issue ’ is used, it must be taken as meaning something distinct from allotment, as importing that some subsequent act has been done whereby the title of the allottee becomes complete, either by the holders of the shares receiving some certificate or being placed on the register of shareholders , or by some other step by which the title derived from the allotment may be made entire or complete. (Emphasis of court) Lord Templeman further stated that an applicant for shares) is neither a member nor a shareholder u>hile his rights rest in contract until the issue of the shares has been completed by registration. The term “ allotment of shares ” is sometimes confused with that of “ issue of shares ” ; the two terms are not the same. They are quite distinct and afford distinct rights to a person in law. Distinguished from allotment, the term “ issue of shares ” is a subsequent act whereby the title of the allottee becomes complete. In Ambrose Lake Tin and Copper Co (1878) 8 Ch. D 635 at 638 it was held: shares in to 14 My conclusion is that it is “ the company ” which has the obligation to enter each member on the members register. In this context the company ’ s duty lies with the company secretary, whose duty it is to (1) Every company shall keep a register of its members and enter in that register the following particulars — (b)the date at which each person was entered in the register as a member; (a)the names and postal addresses of the members, and in the case of a company having a share capital , a statement of the shares held by each member, distinguishing each share by its number so long as the share has a number, and of the amount paid or agreed to be considered as paid on the shares of each member; (c)the date at which any person ceased to be a member, except that where the company has converted any of its shares into stock, the register shall show the amount of stock held by each member instead of the amount of shares and the particulars relating to shares specified paragraph (a) of this subsection. (Emphasis added) has the duty to register the allotments? The answer lies in Section 112 of the Companies Act which provided that: 15 Furthermore, I note that the issue of whether membership is exclusively proved by the presence of an individual ’ s name on the register was addressed in the case of Mawogola Farmers & Growers Ltd vs. Kayanja [1971] E.A 272. In that case, the promoters of the appellant company called upon the respondent and others to purchase shares in the company. The respondents agreed and paid Having already stated that it is the duty of the company to enter the name of each shareholder into the company register and to indicate the amount paid on the shares, I cannot visit the failure of the company onto the shareholder. The appellant argued that the respondent did not adduce the evidence of the members register as required by Section 112 and that therefore, his assertion that he was a member was not rebutted. On the other hand, the respondent argued that the mere registration of an allotment is not evidence that the allottee has accepted the shares and paid for them. There has to be an agreement to become a shareholder and registration on the members register. I take note of the fact that there was no members register adduced to prove whether or not the appellant was a registered member of the Company. Could it then be said that appellant was not a member of the Company? ensure that the company complies with relevant legislation and regulations. Lutta J A concurring with Mustafa JA also held: ... in such conclusive Section 28 of the 16 Although the facts of the Mawogola case can be distinguished from the matter before us, in that in the Mawogola case there was no dispute as to whether the respondents had paid for the shares allotted to them, the East African Court of Appeal set a for the shares. However, no shares were allotted to them. The respondents sued the appellant company for orders that their shares be allotted to them and that the company ’ s register of members be rectified but the appellant company did not keep a register. Mustafa JA held: register, such a person should be allowed to prove he is a member despite ... the absence of a register. if a person has paid for his shares and has been issued with a share certificate but his name is not in the share cases, the register cannot be said to be of membership of the company. That of the Companies Act does not make the register of members final and conclusive membership. A person may agree to be a shareholder and is made a shareholder by paying for his shares and actually being issued with share certificates, or being given receipts in respect of the payment although his name may not, de facto, be in the register. 4 ’ conclusive. (My emphasis) It is on record that two return forms were adduced in evidence. The 17 first form was the annual return for the period of 30 th June 1987, signed by the company secretary of the respondent. This form was filed and registered at the Companies registry on 3 rd September 1987. principle that: presence of an individual ’ s name on the register is not the only way in which shareholding can be proved. In Lutaaya vs. Gandesha [1986] HCB 46 the Court held inter alia that: Although the Company ’ s Act makes provision for membership of a Company under Section 28, for maintenance of members register in Section 112, for the inspection of the register by even a non-member in Section 115 and for the fact that the register is a prima facie evidence for membership in Section 120, there was not one exclusive or exhaustive mode of proving membership of a Company. Even the occurrence of ones name on the register of members was only prima facie evidence and other evidence could be adduced to rebut that. Therefore, other modes could be used to prove membership of the company. Some of the ways of proving membership was possession of a share certificate and to some extent the appearance of one ’ s name on the annual return. But none of these was exclusive or IB I must however make mention of the affidavit of the respondent ’ s managing director- Mr. James Musinguzi - which confirms the fact of allotment of 450 shares to the appellant. He stated in paragraphs 6 and 7 of the affidavit as follows: 6. That since Incafex Ltd intended to acquire land in Uganda for ranching and Mr. Ainrik Singh and Mohan Singh mere non-Africans within the meaning of the Land Acquisition Act, it was agreed that they would not, be allotted shares in the company and that their interests as: Twinomukunzi Charles- 100 shares, Musinguzi James- 100 shares, Nganwa Henry- 100 shares, Rukikaire Matthew- 450 shares and Garuga Properties Ltd - 250 shares. This form was filed and registered with the companies ’ registry on 7 th February 1995 by the respondent ’ s company secretary. The second form was a return of allotment filed for the period between 30 th July 1987 and 30 th July 1995. The form indicated that 1000 shares were allotted. The allotees of the said shares were described The form indicated that the share capital of the company is 1000 shares. The company made a call for payment on 300 shares out of the 1000 shares. The holders of the 300 shares were: Twinomukunzi Charles- 100 ordinary shares, James Musinguzi- 100 ordinary shares and Henry Nganwa- 100 ordinary shares. Further, the form indicated the following persons as the directors of the company: Charles Twinomunzi, James Musinguzi, Ernest Kakwano, Matthew Rukikaire, Henry Nganwa, Amrik Singh, Mohan Singh and Tumusiime Mutebile. 7. That ever since Mr. Matthew Rukikaire was allotted the said 450 19 In view of such circumstances, I am not in position to make a finding that the appellant had paid up for his shares. However, the obligation of a member of a company limited by shares, to pay for the shares arises either when the company calls upon the From the above analysis, and in line with the decision of Lutaaya vs. Gandesha (supra), I find that the appellant was a member of the company to whom 450 shares were allotted, since the appearance of one ’ s name on the Company ’ s Annual Return may be evidence of membership. It is clear that the Respondent does not dispute the fact that the appellant was an allottee of shares. What is in contention is whether the shares had been paid for. would be taken care of by Mr. Matthew Rukikaire who was accordingly allotted 450 ordinary shares in the company. The only contention that remains to be resolved is whether the appellant actually paid for the 450 shares he was allotted. The trial judge found that there was no evidence adduced as to payment for the 450 shares by the appellant even though he promised to adduce the evidence of payment. I note also that the return of allotment form filed in 1995 docs not also indicate that the appellant paid for the said shares whether in cash or kind. shares he has never paid for them in cash as per the allotment or otherwise. company. Ground 3 20 Arising from the above, I come to the conclusion that grounds 1 and 2 succeed. Based on the fact that the appellant adduced evidence that his name was on the annual return of allotment form and also adduced Therefore, the lack of evidence that the appellant had paid for the 450 shares does not affect his membership in the company. evidence that he had invested in the company, I come to the conclusion that he was a shareholder in the company. It was also the evidence of the appellant that he invested in the company a vehicle (land rover) and land. This was not disputed by the Managing Director of the Company who instead said the land was subject to a bank loan and that the company had contributed to clearing off the mortgage together with the appellant. I consider this as further evidence that the appellant was indeed a member of the shareholder to make payment for the unpaid shares during its operation or when the company is being wound up. And on a company being wound up, the liability of the shareholder is limited to the extent of the unpaid shares that he or she holds. The appellant submitted that the learned Justices of the Court of Appeal contradicted themselves when on the one hand they held that the foreign shareholders were compensated, and yet on the other hand, they held that the appellant ’ s shares had not been fully paid Grounds 4 and 5 21 The main argument in these grounds relates to whether there is sufficient evidence on record to sustain a claim of oppression and subsequent winding up of the company. Furthermore, the appellant argued that apart from the letter of the company secretary (Mr.Agaba Maguru) asserting compensation to the foreign shareholders, no other evidence was adduced to prove compensation. In addressing the issue of compensation, the Court of Appeal found as follows: During the trial, both the respondent (current appellant) and Amrik. Singh (foreign shareholder) were crossed-examined on the consideration for the allotted shares and although they promised to produce documents and an adjournment was granted for the purpose, none of them did. Just like the Court of Appeal noted, this Court finds that the issue of whether the alleged compensation related to investment made in the Company by the foreign shareholders or for the shares allotted to them needs to be clarified through production of evidence of payment. In such circumstances, it is my view that the complaints raised in ground 3 would be resolved through an audit of the respondent ’ s books of account as directed by the trial judge. for. It would leave a question as to why anybody would be compensated for something they had not paid for. 22 In its reply dated 4 th December 2004, the company simply denied the appellant ’ s concerns. No response was made as to the proposal to have a meeting. A claim of oppression is brought by a shareholder. The Companies Act did not define what amounts to oppressive conduct and this court shall not lay down a definitive description of the term oppression. To determine whether a shareholder is oppressed requires a case by case analysis of the matter before court. The appellant claims that following his resignation from government employment, he made efforts to get involved in the company in a more active way but such involvement was denied. In his petition the appellant contends that on two occasions he was not notified of Extraordinary Meetings called by the respondent. The first occasion was a meeting held on 1 st December 2003. At this meeting, a resolution was passed to On record is a letter written by the appellant on 3 rd December 2003 in which he indicated that for years the company through its managing director- Mr. James Musinguzi had never convened shareholders ’ meetings. In a bid to protect his interest and find an amicable settlement concerning the compensation the company had received from the government, the appellant proposed a meeting between himself and the managing director, before 5 th December 2003. 23 Following the above discoveries, on 15 th January, 2004, and pursuant to Section 132 of the Companies Act, the appellant requisitioned for the holding of an Extraordinary General Meeting. This requisition was received and duly signed by the company secretary. The company only made response to the appellant through a letter dated 16 th January 2004 informing him that he had no capacity to call a company meeting. As such his requisition was of no consequence and was to be disregarded. remove the appellant ’ s name as one of the signatories to the Company ’ s bank account where the compensation money from government was to be deposited. The appellant avers that he first discovered this development in January 2004. The second occasion was an extraordinary meeting held on 3 rd December 2003 at which a resolution was passed to sell one of the company ’ s properties situated in Kololo, Kampala. The above response is what culminated into the appellant filing a suit in the High Court against the respondent on ground that the company ’ s affairs were being conducted in a manner oppressive and prejudicial to his interests and contrary to law and procedure. This Court notes that calling of company meetings is a statutory mandate. The Companies Act categorized company meetings into three. The Annual General meeting, Extraordinary General Meeting and statutory meeting. directors of 1. The a the appellant had paid for the 450 shares allotted to him, I am 24 132. Convening of an extraordinary general meeting on requisition. I note that the above provision of law gave a right to a member of the company to requisition for an extra-ordinary general meeting only if such member had paid up one-tenth of the shares held. As already noted in this judgment, since the return of allotment form Hied in 1995 does not indicate that It is to be noted that the right to requisition for an extraordinary meeting accrued to a person who fulfilled the requirements of Section 132 (1) of the (then) Companies Act below: company, notwithstanding anything in its articles, shall, on the requisition of members of the company holding at the date of the deposit of the requisition not less than one-tenth of such of the paid-up capital of the company as at the date of the deposit carries the right of voting at general meetings of the company, or, in the case of a company not having a share capital, members of the company representing not less than one-tenth of the total voting rights of all the members having at that date a right to vote at general meetings of the company, forthwith proceed duly to convene an extraordinary general meeting of the company. force. 26 The appellant alleged that he was never notified of any meeting the Company held. A company meeting is an avenue through which members of the company exercise their rights and protect their interest in the company. It will therefore ordinarily be an act of oppression on the member if he is deprived of this privilege and right. The Court of Appeal while addressing the ground relating to oppression of the appellant held as follows: There was no credible evidence of any other member of the said company being offended. There was also no evidence adduced to justify winding up of the appellant company. Section 134 of the Companies Act. The Section provided that: I am persuaded by the authority of Re Nakivubo Chemists (U) Ltd [1977] HCB 311(HC). Although it is a decision of the High Court, it ably laid down the law regarding the principle underlying minority oppression. The facts of the case were that, on 30/5/73 the Company- Nakivubo Chemists (U) Notice of the meeting of a company shall be served on every member of the company in the manner in which notices are required to be served by Table A, and for the purpose of this paragraph, the expression “ Table A ” means that Table as for the time being in 4 4 The issues raised for determination inter alia were: (1) (2) The court held inter alia that: 2/ Limited was incorporated under the Companies Act Cap 85. The petitioner- Dominiko Rumanyika and two other respondents- James Rwanyarare and Joseph Kakuhikire subscribed for shares in the company. The petitioner had borrowed the money he used to buy his shares from James Rwanyarare which money he had not repaid. James Rwanyarare purported to take away the shares from the petitioner for failure to refund his money. Rwanyarare himself had never paid for his shares. This degenerated into quarrels between the two and the petitioner claimed that the affairs of the company had been carried out in an oppressive manner. Whether the company ’ s affairs had been carried out in an oppressive manner and whether the petitioner had been oppressed by the majority. Whether it would be appropriate to make a winding up order. For the petitioner to succeed under Section 211 of the Companies Act, he must show not only that there has been oppression of the minority shareholders of a company but also that it has been the affairs of the company which have been conducted in an oppressive manner. The oppression a Annual General The is an / 28 Also, Gower and Davies in Principles of Modern Company law, 4 th edition at page 528 state: company. The petitioner was wrongfully excluded from all participation in the management of the company as a result of bitter unresolved quarrelling between himself and the respondents ... must be to a person in his capacity as a shareholder and not in any other capacity. Meeting is an important protection to members, for it is the one occasion when they can be sure of having an opportunity of meeting the directors and of questioning them on the accounts ... The Annual general meeting is valuable to them because the directors must hold it whether they want to or not. Rwanyarare ’ s illegal act of purportedly taking away some of the petitioner ’ s shares in the company clearly amounted to oppression to the petitioner as shareholder. The petitioner had also been oppressed by the majority in that he had not been allowed to attend any company meeting as a shareholder since 1974 and this was contrary to the Memorandum and Articles of Association of the I therefore find that ground 4 succeeds. Ground 5 2. If on any such petition the court is of opinion — 29 Following the above, I now turn to the issue - whether the evidence adduced was sufficient to justify the winding up of the company. The respondent alleged that the appellant was not a member - which allegation I have found legally incorrect - and therefore not entitled to requisition for a meeting. The evidence reproduced above shows that the appellant was never notified of company meetings. He was therefore denied a platform to participate in the affairs and management of the company as a member. The relevant section that provided for winding up a company on ground of oppression was Section 211 of the Companies Act. It provided as follows: 1. Any member of a company who complains that the affairs of the company are being conducted in a manner oppressive to some part of the members (including himself or herself) or, in a case falling within section 170(2), the Attorney General may make an application to the court by petition for an order under this section. Up, The High Court handled the issue of winding up as follows: 30 To my mind, the deadlock among the shareholders of this case is all about disclosure and transparency with regard to the compensation due from the Government for the ranches of the Respondent Company which is its core business. Such a deadlock if it persists unresolved would justify the making of a winding up order on the grounds that it was just and equitable 1. that the company ’ s affairs are being conducted as aforesaid; and 2. that to wind up the company would unfairly prejudice that part of the members, but otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound the court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company ’ s affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company ’ s capital, or otherwise. 31 x The High Court judge then made orders relating to auditing the books of accounts of the company. No winding up order was made. The Court of Appeal held: There was also no evidence adduced to justify winding up of the appellant company. However, I find that there was evidence adduced to justify winding up of the company. I have reproduced this evidence in ground 4. That notwithstanding, I am inclined to agree with the trial judge that although there was evidence to justify winding up, the contentious issue of compensation needed to be resolved. This would be possible through an audit of the company books of accounts. that the Company be wound up. However, would the winding up of the company unfairly prejudice that part of the members within the meaning of Section 211 (2) (b) of the Act? I think it would. Such a hurdle regarding disclosure and transparency is not unsurmountable. In such a situation the court under Section 211 of the Act may make such order as it thinks fit to bring to an end the matters complained of. I therefore find it just and equitable that the winding up order is not granted at this stage since the issues as to compensation, the value of investment (if any) into the company by the appellant and the worth of each shareholder can only be resolved after an audit of the company ’ s accounts. Ground 5 therefore succeeds in part. Orders of Court (i) (ii) (iii) 32 Furthermore, the contentious issue of whether or not the appellant had paid for the shares allotted to him would also be resolved through the same audit. 2. Consequently, I would set aside the judgment and orders of the Court of Appeal and reinstate the orders of the trial judge as follows: (a) The auditor be agreed upon by all the parties to the petition. 1. The appellant having succeeded on 4 out of the 5 grounds, I would allow the appeal with costs here and in the courts below. The auditor ’ s draft report be availed to the parties for their comments. The auditor should not consider evidence already availed in court and addressed in the judgment. (b) The auditor be given specific terms of reference including; The duty to receive evidence on whether the petitioner paid for his shares. (iv) 5. The final report shall be binding upon the parties. 33 In addition to the above orders, the terms of reference for the special audit were as follows: 4. A final report shall be made to court and the parties within another 14 days. 2. That the petitioner and the respondent company shall share the cost of the audit in the proportions of 1 /3 for the petitioner and 2/3 for the respondent company. 3. That the preliminary findings of the special audit shall be made available to the parties within 45 days of the appointment for comments which comments shall be made within another 14 days of receipt by them of the preliminaiy report. 1. That the special audit shall be carried out by any of the following reputable audit firms: price water house coopers, Ernest and Young, Deloitte and Touche, KPMG or PKF Uganda to be jointly appointed by the petitioner within 30 days of the judgment. The parties be at liberty to challenge the auditor ’ s findings in case their comments on the draft are not taken into account. (b) The final orders be made by court after the process in (a) and (b) are concluded. 6. The special audit shall address the following issues:- (i) (ii) shareholders not were (iii) and appropriate (iv) To make such other recommendations to court to (v) 34 Based on the letter of M/S Agaba & Co. Advocates to Mr. James Musinguzi dated 15 th December 2003 whether the 45% foreign shareholders represented by the petitioner of M/S Incafex Ltd withdrew and were compensated for their shares. Precise details as to minutes, dates and payment amounts are to be provided by the parties. said foreign compensated for their shares what would be the fair value for their compensation. This is to pave way for the purchase of the said shares by other members of the company or by the company. To establish whether the respondent company has been holding regular meetings of the company and if not to make appropriate recommendations to court. ensure good corporate governance within the respondent company. To establish whether the respondent has been preparing and maintaining annual audited accounts and if not, to make recommendations to court. If the 2017. 35 ! PROFESSOR DR. LILLIAN TIBATEMWA-EKIRIKUBINZA JUSTICE OF THE SUPREME COURT. ref ... day of Dated at Kampala this .^3. THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT KAMPALA CIVIL APPEAL NO 03 OF 2015 5 BETWEEN ] APPELLANT MATTHEW RUKIKAIRE AND ] RESPONDENT INCAFEX LTD. io 15 20 [Appeal from the Judgment of the Court of Appeal (Kasule, Mwangusya & Mwondha, JJA) dated 22 nd December 2014 in Civil Appeal No. 67 of 2010] The background to this appeal and the parties ’ submissions have been well set out in the lead Judgment of my sister Tibatemwa-Ekirikubinza, JSC. I will therefore only give a brief summary. The appellant petitioned the High Court in Company Cause No. 03 of 2004 under section 21 lof the repealed Companies Act, Cap 110. The appellant made the following prayers in his Petition: i In his petition, he contended that the affairs of the respondent company were being conducted in a manner that was oppressive to some part of its members, including himself. [CORAM: KISAAKYE; ARACH-AMOKO; NSHIMYE; OPIO-AWERI; & TIBATEMWA- EKIRIKUBINZA, JJ.S.C.] JUDGMENT OF DR. KISAAKYE, JSC This is a second appeal from the Judgment of the Court of Appeal rendered in Civil Appeal No. 67 of 2010. 5 (V) 10 15 20 25 The trial Judge however, declined to order for the winding up of the company. He instead ordered that books of accounts of the respondent company be audited the audit report be filed in the Court. Lastly, the Judge ruled that thereafter, the parties should move Court to make consequential orders to the Judgment. Kiryabwire, J. (as he then was) heard the Petition and held among others, that the appellant was a shareholder and a member of the respondent company and that there was evidence of oppression on the appellant. Dissatisfied with the decision of the trial Court, the respondent company appealed to the Court of Appeal. The company faulted the trial Court ’ s finding that: (i) the appellant was a shareholder and member of the respondent company, and (ii) there was evidence that as a member of the respondent company, the appellant was being oppressed by the manner in which the respondent company ’ s affairs were being conducted. The Court of Appeal, held, among others, that there was no basis for the trial Judge to hold that the appellant was a shareholder when the same Court had earlier found that the appellant had failed to prove 2 An order to bring to an end the matters complained of; Such further or other order as the Court shall think, fit; An order for the audit of the company ’ s accounts; An order, in the alternative, that the company be wound up; and lastly; An order that the costs of this Petition be provided for (i) (H) (Hi) (iv) The respondent company opposed the Petition on grounds that the appellant had no locus to petition the High Court for any of the above orders because he was not a shareholder therein. 5 10 15 20 25 3 The Court of Appeal further held that since the appellant did not hold shares in the respondent company, he was therefore not a member of the respondent company and could not claim to have been oppressed by the respondent company. The appellant was dissatisfied with the decision of the Court of Appeal and appealed to this Court on five grounds. The focus of my Judgment is on ground 4 which was framed as follows: The appellant prayed this Court sets aside the Judgment of the Court of Appeal and reinstate the Judgment of the High Court. He also prayed that the respondent company pays him costs in this Court and in the Courts below. I have had the benefit of reading in draft the Judgment of my sister, Tibatemwa-Ekirikubinza, JSC. I agree with her analysis and conclusion that the appellant is a member of the respondent company. I also agree with her finding that there was evidence of oppression of the appellant by other members and managers of the respondent company. I further agree with her that, with the exception of ground 3 of appeal, this appeal ought to succeed on all the other grounds. that he had subscribed to the shares that had been allotted to him in the respondent company. The learned Justice, in the lead Judgment has found that the appellant was oppressed. While I agree with her that neither the repealed Companies Act, Cap 110 Laws of Uganda nor the new Act did not define what amounts to oppression or oppressive conduct, it is in my "That the learned Justices of Appeal erred in law when they held that the Appellant could not claim to have been oppressed by the Respondent Company. ” 5 10 15 20 25 4 view important for this Court to define oppression and to also discuss and consider the relevant evidence on record that supports our finding that the appellant was indeed oppressed. The appellant contended that he was oppressed as member of the respondent company because: (i) the majority shareholders kept denying that he was a member of the respondent company, (ii) the majority refused to call meetings whenever he requested for them, (iii) the majority shareholders kept him out of company meetings, by among others, ensuring that he did not get notices of such meetings. Black ’ s Law Dictionary 9 th Ed., at page 1203 defines oppression as follows: On the other hand, oppressive conduct was defined by Haslam, J. in Re Empire Building Ltd [1973] 1 NZLR 214, 220 cited in ‘ Words & Phrases Legally defined Vol 3 K-Q at page 281 as follows: Furthermore, in Re Bright Pine Mills [1969] V.R. 1002 cited in Stroud ’ s Judicial Dictionary 4 th Ed. 3 1-0 at pages 1859, the Court held: “ Oppressive conduct seems to me to begin when directors, or officers, or a group of shareholders, use powers expressly or impliedly given to them by [Act of Parliament] or by the constitution of the company, as to the use of which they have a discretion, in a way which is unjust to other shareholders. ’ “ Unfair treatment of minority shareholders (esp. in a close corporation) by the directors or those in control of the corporation. ” “ Conduct is ‘ oppressive ’ to members of a company within the meaning of s. 186 of the Companies Act 1961 (Vic.) if those holding a controlling power pursue a course designed to advance their own interests ” 5 10 15 20 25 30 Lastly, in Re Five Minute Car Wash Service [1966] 1 W.L.R. 745, 751, Buckley, J. held as follows: The learned Judge then set the following test a petitioner must satisfy in order to succeed in proving oppression. While all the above are persuasive authorities from other jurisdictions, they do provide useful guidelines for our Courts to use in adjudicating Petitions on oppression of members of a company. 5 Secondly, the matters complained of must relate to the conduct of the affairs of the company. Thirdly, they must be such as not only to make the winding up of the company just and equitable, but also lead to the conclusion that the affairs of the company are being conducted in a manner which can properly be described as ‘ oppressive ’ of the petitioner, and, it may be, other members. “ First, the matter complained of must affect the person or persons alleged to have been oppressed in his or their character as a member or members of the company. Harsh or unfair treatment of the petitioner in some other capacity, as, for instance, ...in relation to his personal affairs apart from the company cannot entitle him to reliefunder section 210. “ To succeed in obtaining relief under the section, a member of a company must have established that at the time when his petition was presented, the affairs of the company were being conducted in a manner oppressive of himself , or of a part of the members including himself... ” The mere fact that a member of the company has lost confidence in the manner in which the company ’ s affairs are conducted does not lead to the conclusion that he is oppressed; nor can resentment at being outvoted; nor mere dissatisfaction with or disapproval of the conduct of the company ’ s affairs. Those who are alleged to have acted oppressively must be shown to have acted at least unfairly towards those who claim to have been oppressed. ” 5 10 15 20 25 30 Furthermore, I note that our own High Court adopted similar standards on what conduct can amount to oppression on a shareholder. In Re Nakivubo Chemists (U) Ltd [1977] HCB 312, Manyindo, J. (as he then was) also held as follows with respect to the Petitioner ’ s claims that he had been oppressed. In the instant case the removal of the petitioner from his post of Executive Director did not amount to oppression within the meaning of section 211 of the Companies Act. Dr. Rwanyarare ’ s illegal act of purportedly taking away some of the petitioner ’ s shares in the company clearly amounted to oppression to the petitioner as a shareholder. The petitioner had also been oppressed by the majority in that he had not been allowed to attend any company meeting as shareholder since 1974 and this was contrary to the Memorandum and Articles of Association of the company. The petitioner was wrongfully excluded from all participation in the management of the company...By the respondents declaring and taking dividends twice without the knowledge and consent of the petitioner was also oppressive to him as a shareholder...That not being allowed to attend company meetings or purporting to take away shares of a petitioner amounted to oppression. ” Re Nakivubo (supra) is a High Court decision, which is by no means exhaustive. I however find that, it correctly reflects the law on what can amount to oppressive conduct in Uganda. I only wish to add that that since the new Companies Act of Uganda does not define oppression, it remains open to a petitioner to adduce other evidence 6 “ For the petitioner to succeed under section 211 of the Companies Act, he must show not only that there has been oppression of the minority shareholders of a company but also that it has been the affairs of the company which have been conducted in an oppressive manner. The oppression must be to a person in his capacity as a shareholder and not in any other capacity. 5 c< 10 9. 15 20 25 73. ... 30 14. In January 2004 your Petitioner discovered that an Extraordinary Meeting of the Directors of the company, of which your Petitioner, as a Director, was not aware and had not been 7 that can support a finding of oppression of a shareholder by our Courts. : 8. ... your Petitioner made efforts to get involved in the company in a more active way but all overtures to the company, and in particular the Managing Director Mr. James Musinguzi, for such involvement or in the alternative for the holding of a formal Annual General Meeting, were ignored. Sometime in 2003 your Petitioner learnt that the company, through the Managing Director, was negotiating with the Government of Uganda for the payment of compensation to the company in respect of the companies [sic] ranches that had been taken over or acquired by the said Government. 10. Since no annual General meeting was called nor appeared forthcoming, your Petitioner demanded to know the details from the said Managing Director who reluctantly confirmed that the said compensation was due and that a down payment in excess of one billion shillings was imminent. 11. Upon expressing your Petitioner ’ s disquiet at the manner the affairs of the company were being conducted, and upon your Petitioner ’ s insistence, a Memorandum of the Company ’ s shareholders dated 1 9 th June 2003 was drawn up and executed by the said James Musinguzi and myself whereby it was agreed that we would be the only two signatories of the company account at DFCU Bank Ltd. and that this would not be changed without our joint signatures. 12. ... Turning to the present appeal, the appellant claimed in his petition, at pages 13 to 14 of the Record of Appeal that he had been oppressed as follows: 5 10 15 20 25 30 8 I note that James Musinguzi, one of the Directors of the respondent company, who deponed one of the two affidavits in opposition to the petition, at pages 86 to 108 of the Record of Appeal did not reply to all the above allegations. The same can be said of the second affidavit in opposition to the Petition, which was deponed by Henry Nganwa, also a Director in the respondent company. This Affidavit appears at pages 109 to 112 of the Record of Appeal. I further note that the appellant alleged in his Petition that the Directors in the respondent company: (i) did not call an annual general meeting of the company; (ii) held extra ordinary meetings without his involvement, yet as a Director and shareholder, he had the right to participate; (iii) did not notify him of the convention of these extra ordinary meetings; (iv) generally did not allow him to participate in the affairs of the country. From my perusal of the record of appeal, I have also found that the appellant also alleged that the Managing Director had failed to account for money he received on behalf of the respondent company. In 15. Your Petitioner further discovered that another Extra ordinary Meeting of the Directors of the company was held on the 3 rd December 2003, again without my knowledge or any notice to me, at which a Resolution was passed to sell one of the company ’ s properties at Kololo, Kampala. 16. Your Petitioner immediately wrote through my lawyers to DFCU Bank and the Registrar of Companies protesting the manner in which the companies affairs, and in particular its bank account, were being handled but received no response. given notice, had been held on 1 st December 2003 and a Resolution passed changing the mandate to operate the above said account at DFCU Bank Limited. 5 10 15 20 25 9 Section 131(1) of the now repealed Companies Act obligated a company to hold an annual general meeting. Thus, the failure by a company (usually through its Directors) to convene one is a breach of a statutory directive. Indeed under section 131(5) of the now repealed Companies Act, and under section 138(8) of the current Companies Act, 2012 failure to convene one attracts a penalty in form of a default fine of twenty five currency points. particular, the appellant alleged that the said monies were compensation made by the Government in respect of the ranches belonging to the respondent company-one of which was contributed to by the appellant. Again, the Managing Director of the respondent company did not refute these allegations in his Affidavit in Reply. In the present case, the respondent company was expecting a large sum of money (over 13 billion shillings according to the appellant) due to it from the Government of Uganda. The appellant, in my view, had the right, as a shareholder and director in the respondent company, to have a say on how the respondent company was going to disburse or otherwise use the money it was going to receive. It is during an annual general meeting of the company that major decisions affecting the assets and dealings of a company are tabled and discussed and voted on. Therefore, by failing to convene an Annual General Meeting, the directors of the respondent company were denying the appellant the The question that arises is whether or not there was oppression of the appellant by the managers and other shareholders in the respondent company? I note that the Court of Appeal did not consider this issue because of its finding that the appellant was not a member of the respondent company. 5 10 15 20 25 Similarly, by holding extra ordinary meetings without the knowledge of the appellant, thereby excluding his input in the ‘ extra ordinary business of the company that could not wait for an annual general meeting ’ , the respondent company clearly oppressed the appellant. In the circumstances, I find the holding of Manyindo, J. (as he then was) in Re Nakivubo Chemists (U) Ltd (supra) that not allowing a shareholder to attend company meetings was evidence of oppression persuasive. A clear appreciation of this oppression on the appellant is further evident in one of the resolutions passed in one of these extraordinary meetings of the directors of the company. This resolution appears at page 65 of the Record of Appeal. It was provided therein that ‘ with immediate effect ’ , a one Henry Hapa Nganwa, a Director in the respondent company was to be added as a signatory to the respondent company ’ s current account at DFCU Bank. In the same special resolution, it was also stated that ANY TWO of the signatories could sign. It suffices to note that the other two signatories to the said account were James Musinguzi and the appellant. The significance of this special resolution is not hard to decipher. It meant that James Musinguzi could sign with Henry Hapa Nganwa to access the company ’ s funds. The effect of this resolution was that the respondent company could lock out the appellant from having any say in how the respondent company ’ s funds are spent thereby excluding him from any financial control in the respondent company From all the above actions of the respondent company, I find that the actions of the Managing Director and other shareholders amounted to io avenue of expressing his views. This, in my view, amounted to oppression on the appellant by the respondent company. 5 10 15 20 25 11 I further note that that the Court of Appeal held that there was no evidence adduced to justify winding up the respondent company, since the appellant was not a shareholder therein. I agree with the decision of the trial Judge not to wind up the company in the circumstances since it would, among others, unfairly prejudice the other members of the respondent company. I also agree with the trial Judge ’ s finding that ‘ the deadlock among the shareholders of this case is all about disclosure and transparency with regard to the compensation due from the Government for the ranches of the respondent company which, is its core business. ’ This hurdle, like the trial Judge held ‘ is not un surmountable. ’ Basing on the above finding, the trial Judge invoked his powers under the then section 211 (2) of the Companies Act to ‘ make such orders it thinks fit to bring to an end the matters complained ofi. I note that the appellant preferred the option of petitioning the High Court for various orders I listed earlier in my Judgment including, in the alternative, an order that the company be wound up. oppression of the appellant by the respondent company. It therefore follows that by denying the appellant the right and/or opportunity to participate in the respondent company ’ s affairs (either through failing to convene an annual general meeting or holding extra ordinary meetings behind the appellant ’ s back; and by-passing his signature on the respondent company ’ s account in DFCU Bank), the majority shareholders and managers were clearly oppressing the appellant. Having found that the appellant was oppressed by the majority shareholders, the question arises as to what reliefs is he entitled to? > 5 Conclusion (i) 10 (ii) (iii) 15 (iv) 20 day of 2017. Dated at Kampala this 25 12 I agree with the orders on the auditing of the respondent company ’ s books, which have been well laid out in the lead judgment of my learned sister, Tibatemwa-Ekirikubinza, JSC. I further agree that once this audit is completed, the parties should move the High Court, as directed by the trial Judge for further consequential orders. The appellant is a member and shareholder of the respondent company; The appellant was oppressed by other Directors/shareholders in the respondent company; That an audit of the books of the company be done as ordered by Kiryabwire, J. (as he then was) and thereafter the parties report back to the High Court for consequential orders; The appellant is awarded costs in this Court and in the Courts below. JUSTICE DR. ESTHER KISAAKYE JUSTICE OF THE SUPREME COURT. I would allow grounds 1, 2, 4 and 5 of this appeal and make the following orders: Order of the Court As the rest of the members agree with the decision of Tibatemwa- Ekirikubinza, JSC, this appeal is allowed in part on the terms proposed by the learned Justice in her lead Judgment. t CIVIL APPEAL NO. 03 OF 2015. BETWEEN APPELLANT MATHEW RUKIKAIRE AND RESPONDENT INCAFEX LIMITED JUDGMENT OF M.S.ARACH-AMOKO, JSC 2017 JSC, and I agree with her that this Appeal should be allowed with costs. I also agree with the Orders she has proposed. I have had the benefit of reading in draft the Judgment of my learned sister, Hon. Justice. Prof Lillian Tibatemwa-Ekirikubinza, {Appeal arising from the judgment of the Court of Appeal at Kampala before Hon. Justice: Kasule, Mwangusya, Mwondha, JJA, in Civil Appeal No. 67 of 2010, dated 22 nd December, 2014.} (CORAM: Kisaakye, Arach-Amoko, Nshimye, Tibatemwa-Ekirikubinza, Opio-Aweri, JJSC;) M.S. ARACH-AMOKO JUSTICE OF THE SUPREME COURT » A THE REPURLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT KAMPALA 0'5^ Dated at Kampala this t ?SP....day of. I CIVIL APPEAL NO.03 OF 2015 BETWEEN APPELLANT MATHEW RUKIKAIRE AND RESPONDENT INCAFEX LIMITED JUDGMENT OF A,$, NSHIMYE. JSC. I am also of a strong opinion that once one has been allotted with shares and returns have been filed with the Registrar of companies to that effect, the allotee becomes a fully fledged shareholder, whether or not he/she has actually paid for the shares alloted, is another matter between him/her and the company. (CORAM: K/SAAKYE,ARACH-AMOKO, NSHIMYE, OPIO AWERI, TIBATEMWA, J JSC) THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT KAMPALA [Appeal from the judgment of the Court of Appeal at Kampala before Hon Justices of Appeal Remmy Kasule, Eldad Mwangusya and Faith Mwondha, JJA, dated the 22 nd day of December 2014 in Civil Appeal no. 67 of 2010] I have had the benefit of reading the lead judgment of my sister Hon Justice Prof Tibatemwa Ekirikubinza Lillian, JSC. I agree with her reasoning and application of the relevant company law. - I i 4 > That is one exercise. Dated at Kampala, this 2017. A. S ’ NSHIMYET JUSTICE OF SUPREME COURT I agree that appeal be allowed with costs as proposed by her lordship. the matters that can be disposed of in an audit Therefore winding up of a company before investment dues of the appellant are ascertained, would be prejudicial to is rights. I would have withheld a winding up order in the circumstances . r CIVIL APPEAL NO. 03 OF 2015 j BETWEEN APPELLANT MATTHEW RUKIKARIE AND RESPONDENT INCAFEX LIMITED JUDGMENT OE OPIQ-AWERI, JSC Dated at Kampala this y of, 2017. I have had the benefit of reading in draft the judgment of my learned sister, Justice Tibatemwa-Ekirikubinza, JSC. I agree with her that this appeal should succeed. I also agree with the Orders she has proposed. (Appeal from the Judgement of the Court of Appeal at Kampala before Hon. Justice: Kasule, Mwangusya and Mwondha, JJA, in Civil Appeal No. 67 of 2010, dated 22 nd day of December, 2014) (Coram: Kisaakye; Arach-Amoko; Nshimye; Opio-Aweri; Tibatemwa- Ekirikubinza; JJ.S.C). HON. JUSTIC OPIO-AWERI JUSTICE OF THE SUPREME COURT. THE SUPREME eoulr'oF UGANDA AT KAMPALA