Clement Muturi Kigano v Kibera Development Company Limited

Sections 82(3) and 118(1) of the Companies Act expressly confer jurisdiction on the court to order issuance of share certificates and rectification of the register respectively. However, both provisions contain conditions precedent: under Section 82(3) the applicant must prove entitlement to delivery of certificates; under Section 118(1) the applicant must show there is no sufficient cause to omit his name from the register. The jurisdiction is therefore discretionary, to be exercised sparingly and in exceptional circumstances.

Relying on National Westminster Bank PLC v IRC and Farrar's Company Law, the court held that the phrase 'after allotment of its shares' in Section 82(1)(a) is critical. Allotment creates an enforceable contract for the issue of shares, completed by entry on the register of members. Following Lord Templeman, allotment confers only a right to be registered; registration confers title. Since no shares were allotted to the appellant, there was no enforceable contract for issuance of shares and he could not be a shareholder.

The respondent company was incorporated on 26th August 1998, yet most of the receipts relied on by the appellant predated incorporation. In law, a company has no legal capacity to receive payments or issue receipts before incorporation, and cannot ratify pre-incorporation contracts because the ostensible principal did not exist (Kelner v Baxter; Newborne v Sensolid). The receipts therefore related to the Kibera Self Help Group, not the respondent company.

The appellant was not a subscriber to the Memorandum and Articles of Association, which named Joseph Karanja Mbugua and Peter Mburu Kariuki as subscribers. The Act does not recognize 'founder member' as a legal status - it is an anomalous colloquial with no legal effect in the registration process. Promoter rights, if any, must be stipulated in the Memorandum and Articles, and no such rights were evidenced here.

Applying Selle v Associated Motor Boat Co., the court re-assessed the evidence. The receipts neither named the recipient nor referred to the Self Help Group or the company, and the company denied issuing them. Most predated incorporation. The appellant was not a subscriber to the Memorandum or Articles. He therefore failed to establish a plain and clear case justifying exercise of the jurisdiction under Sections 82(3) and 118. Contentious questions of fact cannot be raised under the guise of rectification (Ammonia Supplies Corporation v Modern Plastic Containers).