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French multinational Larfarge’s bid to gain more control of the East African Portland Cement (EAPCC’s) board suffered a major setback Wednesday after the High Court dismissed a suit challenging suspension of annual general meeting resolutions that included appointment of its nominee.
Justice Mumbi Ngugi Wednesday dismissed the suit challenging the Capital Markets Authority (CMA’s) action on the grounds that the case was filed without authorisation of the EAPCC’s board of directors.
The resolution to file the case was ratified by only three (a minority) out of the firm’s seven directors.
CMA on December 19 suspended the Portland AGM resolutions, including payment of dividends, confirmation of accounts and appointment of French multinational Lafarge’s representative Didier Tresarrieu to the Portland board pending investigations.
Lafarge also has Titus Naikuni and lawyer Hamish Keith as its nominees on the EAPC board, and at the time also had the chairman Mark Ole Karbolo, a government appointee, and CEO Kepha Tande also supporting it in the boardroom. Lafarge has a 41.7 per cent interest in EAPCC and also owns 58.9 per cent of Bamburi Cement.
“Consequently, there is no resolution in filing of this matter and the Preliminary Objection by second respondent succeeds,” said the Justice Ngugi in reference to application for dismissal of the suit filed by lawyer Kamau Karori on behalf of the government.
The Portland’s board moved to court arguing that CMA had no powers to suspend the resolution. The verdict now paves the way for the CMA to continue with its investigations into alleged mismanagement at the company.
The judge agreed with the government’s position that when the suit was filed only three directors had authorised filing of the suit.
The firm’s articles of association required the filing of the suit to be authorised by more than half of the directors who are present in Kenya at the time of initiating the case.
But after Mr Karori raised the objection, the petitioners filed a further document showing that Mr Tresarrieu had also authorised the filing, which the judge said amounted to mischief and questioned why the same was not provided at the time of filling the case.
The judge further said the appointment of Mr Tresarrieu is still in question since it has been suspended by CMA and cannot therefore file the suit.
This is a major setback for Larfarge whose control of the Portland’s board was greatly eroded when the board’s chairman Mark ole Karbolo was replaced by former CMC chief executive officer Bill Lay.
Mr Karbolo was an appointee of the government but the government had claimed he sided with Larfarge when making the decision.
He was blamed for blocking the government’s proposal of Mr Lay as a director during the AGM in favour of Larfarge’s Mr Tresarrieu.
Mr Karbolo moved and temporarily blocked his replacement but the suit was dismissed and he was ordered to shoulder the costs of the suit. He has indicated that he will appeal against the ruling.
The judge in a terse ruling further directed the company secretary Mr John Maonga, Mr Karbolo and the lawyer representing them —Aduda and Company advocates—to shoulder all costs incurred by EAPC and the government.
Mr Karbolo and his colleagues will shoulder the fees that have accrued in favour of four firms—Iseme, Kamau and Maema, Hamilton and Harrison and Mathews and Okoth and Okoth and Kiplagat that represented the government, CMA and NSSF in the suit.
– Business Daily