TWO ousted board members of the troubled CMC firm yesterday lost a legal battle over after the court allowed them to be thrown out of the board.
Justice David Majanja lifted the orders issues by Justice Mohammed Warsame on September 27. The two had obtained orders blocking the Capital Markets Authority from blocking them from the firm board. CMA, however, faulted the orders saying they were granted to them under non-disclosure of material facts.
Justice Majanja said the orders were issued ex-parte on several grounds including the non-disclosure of material facts. He said the application was an abuse of the court process and not in public interest.
Majanja said the effect of the decision contained in the Report against John Kivai was to disqualify him from appointment as a director of CMCHL from August 3.
"How can the ex-parte applicants then approach the court without disclosing the nature and tenor of the cases and more particularly disclosing the rulings delivered?" questioned the judge.
Justice Warsame he said may well have declined to order the stay against the regulator had the non-disclosure of material facts been disclosed.
Kivai was accused by the CMA of having participated in the appointment of Peter Muthoka as chairman of the CMC board while knowing that he was non-independent director in breach of the Guidelines on Corporate Governance. The CMA found him guilty and resolved to disqualify him from appointment as a director of CMC
Muthoka breached trust as a director of CMCHL by signing off accounts which were not prepared in accordance with International Financial Reporting Standards and allowing himself to be appointed board chairman.
After conducting an investigation, the CMA found him guilty and disqualied him from appointment as a director of any listed company But on 27 September Justice Warsame granted them a stay of the decisions made by the CMA in the report.
The CMA then moved the court to quash the orders. CMC has been embroiled in a controversy over the board following investigations by the CMA into the company.