Kenya’s Court of Appeal has dissolved the board of directors of Savannah Cement amid an ownership tussle at the firm, Business Daily reported.
The judges presiding over the case were William Ouko, Daniel Musinga and Gatembu Kairu.
The move comes after months of legal battles over the insider purchase of a share in the company, which was initially held by Chinese investors. The shares were said to have been purchased by a company director, Peter Ndeta, for Ksh 1.5 billion ($13.86 million), and then transferred to Seruji Ltd., a distribution subsidiary of its Nairobi Securities Exchange-listed competitor, Bamburi Cement. Savannah Cement founding shareholders Donald Mwaura and John Gachanga challenged the transfer as illegal and filed a lawsuit.
Earlier, a Kenyan High Court judge also ruled to appoint an interim board to manage the affairs of the company, pending the outcome of the case. According to the appeals court, the move usurped the shareholders’ powers, meaning it was not in the court’s jurisdiction to appoint an interim board.
In the ruling, the judges stated: “We agree with the appellants (Mwaura and Gachanga) that the appointment of interim directors by the learned judge amounted to usurping the powers of the shareholders of the 1st respondent (Savannah Cement). It follows, therefore, that the learned judge acted ultra vires.”
Savannah Cement was established by a group of Kenyan and Chinese investors. The Kenyan shareholders operated under Savannah Heights Ltd., with Mwaura holding 30 percent in the company, Gachanga 35 percent through Isinya Plains Ltd. and Benson Ndeta 35 percent. Meanwhile, the Chinese invested in the company through two companies — Wanho International Limited and ACME Wanji Investment Limited.
Savannah Cement was long associated with its high-profile founding CEO Ronald Ndegwa, who resigned in August 2020 under unclear circumstances. The board accepted his resignation, stating that he was leaving to pursue other interests.In 2019, Ndegwa was voted Kenya’s “CEO of the Year” as part of the Company of the Year Awards for turning around the cement maker’s fortunes, Smart Investor reported.