Wachira Kang'aru
6 September 2005
opinion
Nairobi — Unlike the military coups, boardroom coups are bloodless - unless one presses.
The incumbent is given a leeway to choose his exit strategy.
And if you show a gentlemanly inclination, a party is perfectly thrown in. Champagne is cocked open. It is the only thing that gets to be spilled in public.
But that's the furthest civilized coups go.
And that is exclusive to the privileged class of the company's stakeholders. Welcome then to the corporate annual general meeting, and extraordinary general meeting, where ice-cold and heartless coups happen.
As far as it goes, a company is a democratic organisation whose affairs are to be managed by directors according to the provisions of the Companies Act, the company's memorandum and articles of association.
Where a decision of the members is required, the decision of the majority of the company's members expressed as an ordinary or special resolution carries the day. This is done by a vote in the annual general meeting or extraordinary general meeting. It is a case of the first on the post; the winner takes it all.
The minority of members who have been outvoted during the passing of the relevant resolution must, therefore, be prepared to abide by the decision of the majority of the company's members.
And this is how the bloodiest coups are carried out. Outvoting!
Take the case of Mount Kenya Bottlers, the majority gang up to ouster the company's chairman and the managing director.
They may as well, resolve to consolidate the Nyeri operations with the Nairobi one and sell off the Nyeri plant.
And that will be perfectly in order. It is a majority decision.
And like the Manchester United minority shareholders and fans discovered, once the majority vote yes, you can only turn to activism to route your course, with little success if any.
Ask the (former) Mount Kenya Bottlers Board chairman Matu Wamae. The minorities had gone a mile further to recruit the support of Transport Minister Chris Murungaru in their activism - though it was a case of bad timing as the minister's efforts were drowned by his passport saga.
But take heart! That does not mean the minority shareholders must remain at the mercy of the majority shareholders.
There are instances when the minority can successfully thwart the decisions of the majority.
An example is where the majority's resolution requires the minority to take or subscribe for more shares than their current holdings.
Or reduce the company's share capital in a way that is not fair and equitable to the minority. Say, by forcing the minority to surrender their shares, or sell a portion of it.
The minority can also contend the majority's decision, where the latter resolve to embark on, or continue with, a course of trading which they (the minority) had not contemplated when the company was being formed.
This could have saved Mr Wamae and Co. - if there is any truth in their allegations that the intention of, ICDC Investment, Industrial and Commercial Corporation and IDB, the majority shareholders, is to consolidate the Mount Kenya Bottlers operations with those of the Nairobi-based firm, after their exit.
Surely, moving the company's operation from Nyeri was not in their vision or dreams.
Wamae and Co. could then have moved to court under section 211 (1) of the Companies Act, which provides that any member of a company who complains that the affairs of the firm are being conducted in a manner oppressive to some part of the members, including himself, may make an application to the court by petition for an order under the section.
The court is empowered, under Section 211 (2), to make such orders as it thinks fit to bring an end to matters complained of, or to regulate the conduct of the company's affairs in future.
Do you read me Sir! Or is too little too late.
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