A legal Battle has erupted over the Control of Meridian Acceptances Limited Amid Allegations of Fraudulent Share Acquisition.
The contentious legal dispute has surfaced involving House of Procurements Limited (HPL), a company linked to Nairobi politician Francis Mureithi Wambugu, over the alleged unauthorised acquisition of shares in the said Meridian Acceptances Limited (MAL), a microfinance institution.
Photo Courtesy: Francis Wambugu Mureithi, Former Embakasi East MP aspirant
The prominent Kenyan politician is currently under investigation for the alleged unlawful acquisition of property belonging to a deceased investor.
The case, which has garnered significant public interest, revolves around the estate of the late Dhirajlal Bhagwanji Shah, a respected businessman who passed away in 2014.
The case centres on the estate of the late Gonzalo Hernadez Ciriza, a Spanish investor and significant shareholder in MAL, who passed away in 2018.
James Ndwigah Muchungu, a co-founder and former director of MAL, has filed a lawsuit accusing HPL of fraudulently transferring Gonzalo’s shares without the consent of his heirs or the board.
Muchungu asserts that HPL filed misleading returns with the Registrar of Companies, effectively removing him from the company’s directorship and consolidating control under Wambugu, despite his minority shareholding of 37.7 per cent.
Background of the Case
The property in question, located on General Mathenge Drive in Nairobi, was part of Mr. Shah’s estate.
According to court documents, the deceased had transferred two-thirds of his interest in the property to his daughters, Rupal and Rakhi, in 2009.
The remaining one-third was intended to be distributed equally among his three daughters, including Sejal, as stipulated in his will.
However, complications arose when it was discovered that the politician had allegedly acquired the entire property, including the portion meant for Sejal, through questionable means.
This acquisition has led to legal battles among the family members and brought the politician’s actions under scrutiny.
In court filings, Muchungu alleges that HPL convened an Annual General Meeting (AGM) on February 2, 2023, attended solely by Mureithi and fellow HPL director Bernard Odote. During this meeting, decisions were made to reallocate Gonzalo’s shares, despite the absence of a confirmed grant of probate or letters of administration for Gonzalo’s estate.
Muchungu contends that these actions violate MAL’s articles of association, which grant pre-emptive rights to existing shareholders before any share transfers.
Adding complexity to the situation, Muchungu faces a separate legal challenge. In 2021, the High Court barred him from conducting business on behalf of MAL, citing allegations of mismanagement and unauthorised actions, including the dismissal of staff and the introduction of family members as shareholders.
Furthermore, Muchungu and his relatives were previously charged with conspiring to steal KSh176 million from MAL, though they were released on bail pending trial.
The Registrar of Companies, named as the first defendant in Muchungu’s suit, has yet to file a response. The case is scheduled for hearing on October 2, 2023, at the Milimani Commercial Court.
This legal tussle underscores the complexities of corporate governance and succession in Kenyan businesses, particularly when foreign investors and local political figures are involved.
The outcome may set a precedent for how shareholding disputes, especially those involving the estates of deceased investors, are resolved in the country.
Legal Proceedings
In a recent ruling, the High Court determined that the deceased intended for his daughters to share the property equally. The court recognised the two-thirds transfer to Rupal and Rakhi as a gift inter vivos and ruled that the remaining one-third should go to Sejal.
The court also addressed other aspects of the estate, including financial contributions made by Sejal to settle debts associated with the property.
Political Implications
The involvement of politician Francis Mureithi in this case has raised concerns about potential abuse of power and influence in property acquisitions.
While the politician’s exact role and actions are still under investigation, the case highlights the need for transparency and adherence to legal processes in estate matters
As the investigation continues, the public awaits further developments to understand the full extent of the politician’s involvement and the measures that will be taken to address any wrongdoing.
This case serves as a reminder of the importance of upholding the rule of law, especially regarding matters of inheritance and property rights.
