First, there was a call for an annual general meeting of members of the Kenya Hospitals Association (KHA), which runs Nairobi Hospital.
This was soon followed by a court order and a request for an extraordinary general meeting. An annual general meeting is an annual meeting held by companies to discuss their financial performance, elect directors and conduct other business as specified in their bylaws. An extraordinary general meeting, on the other hand, is a meeting held outside the company’s normal schedule to discuss and vote on a specific matter that cannot wait until the next annual general meeting.
While KHA members were still digesting this development, another legal challenge was filed in court to stop the EGM from being held.
KHA members had called for an AGM, but the Board of Directors sought a court order to prevent the meeting from taking place. KHA members then called for an EGM.
On September 12, High Court Justice Peter Mulwa suspended the extraordinary general meeting, scheduled for September 18, pending the hearing of the case brought by KHA challenging the first injunction.
The judge set the case for October 8, after directing senior legal advisor Ahmed Nasser Abdullah, who filed the lawsuit on behalf of 400 members of the landowners association, to hand over the court papers to the council.
In the application, Mr. Abdullahi stated that the board members, led by Chairman Chris Petchag, called a board meeting at a Nairobi hotel through a notice published on September 3.
He said the court was never informed that members had been called to the annual general meeting scheduled for September 21.
According to Mr. Abdullah, the court was called to the War Center in the boardroom, where the members had given notice, paid for the meeting place, and were ready to proceed with the annual general meeting to remove the board.
The lawyer said the injunction obtained by the board was an attempt to obstruct the constitutional right of the members to recall an ineffective board of directors as stipulated in the Companies Act and the company’s articles of association.
“Since the suit and the court order relate to the validity of an application made under the provisions of Section 277 of the Companies Law and Section 18 of the Company’s Articles of Association, and as a legal document used and applied by the company to initiate the process of holding an extraordinary general meeting, under the provisions of Section 3 of the Companies Law, this court has no jurisdiction to issue the impugned order and/or deal with the suit,” the lawyer said.
Mr. Robert Shaw, a member of KHA, said that after the board failed to hold the annual general meeting, he and 387 other members (who signed the lawsuit) submitted a request to hold the meeting to the board as required by KHA’s articles of association and the Companies Act.
He said the committee’s lawsuit was a “desperate attempt” to use the court process as a shield against legitimate processes.
Mr Shaw said the doctors had since issued a strike notice if the council failed to resign. “The court order is intended to aggravate and complicate the current situation and must be resolved and the meeting allowed to proceed as scheduled,” he said.
He added that the request to hold the annual general assembly indicated the members’ intention to study and approve or pass a resolution to remove the board members from their positions, and highlighted the general reasons related to all board members and the specific reasons related to some board members.
He said the board was in the process of placing the company and its assets in a syndicated loan of Sh4.2 billion. “The company is currently in financial difficulty and certainly does not have the capacity to repay the loan installments of over Sh4 billion. The above placement of the company and its assets will certainly push the company into bankruptcy,” he added.
Mr Shaw added that the situation at Nairobi Hospital that required the board to be called is a matter of life and death. “Lives have been lost and continue to be discriminated against, which calls for urgent intervention, including by this honourable court,” he said.
KHA members accuse Dr. Bichag and his deputy, Philemon Mwaisaka, of failing to lead and manage the company, including chairing and presiding over board meetings that passed decisions that contravened the company’s articles of association, human resources and procurement manuals.
In addition, the duo is accused of acting in a serious conflict of interest and violating the company’s articles of association by conducting business with the hospital through proxy companies, and failing to properly lead and manage the company, resulting in a serious decline in the hospital’s performance, revenue, efficiency and brand reputation.
In his capacity as Chairman of the Board of Directors’ Human Resources Committee, Barclay M. Onyambo allegedly oversaw the irregular recruitment of staff at the hospital on the basis of tribalism, nepotism and favouritism, and in violation of the company’s Human Resources Manual and the Board Charter.
Other board members are Dr Magdalene Muthoka, Dr Fred Kamboni, Dr Mbira Gikhunu, retired Justice Philip Waki, Professor Herman Manyora, Professor John Mwiru, Geoffrey Njich, Professor John Nyiro Mwiru, Professor Galdisa Joyo Waku, Professor Peter Ndagwatha, Samson Mbutia Kinyanjui and Valerie Style.