The High Court has paved the way for Nairobi Hospital to hold its Annual General Meeting (AGM).
Justice Peter Moloa, in a ruling on November 4, ordered the AGM to be held within 30 days from the date of the decision, and a report to be submitted to the court.
In a blow to over 400 members who had called for an extraordinary general meeting, Justice Molowa issued an order restraining the meeting, saying the extraordinary general meeting could be influential and consequential to the management and business affairs of the ailing hospital.
The judge added that an EGM might affect the hospital in an irreversible way if there was institutional and individual harm to the hospital and its directors, which might be difficult to recover by way of damages “given the personal reputation of the hospital.” Some board members and the hospital as a whole are at stake.
“As such, prudence requires the issuance of an injunction against the proposed EGM sought by the defendants (members of the Kenya Hospital Association),” the judge ruled.
The judge noted that both parties agreed that the hospital called for the annual general assembly to be held in a notice issued on August 30, 2024.
“The importance of the annual general assembly cannot be overemphasized. Through this meeting, the company holds its shareholders accountable, discusses its challenges, and makes decisions in managing its affairs.
“As such, I find that it would be in the interest of justice and progress in this matter, for the AGM to continue as set out in the notification dated 30 August 2024 where the question of rotation and election of directors is part of the agenda,” the judge ruled.
A group of members led by Mr Robert Shaw has requested an EGM, with plans to remove board members including Chairman Chris Beechag and appoint a caretaker committee to run the hospital for six months, pending the appointment of a substantive board.
The Board of Directors opposed the Extraordinary General Assembly meeting on the grounds that the letter from Ahmed Nasser Abdullah Law Firm contained various allegations against some members of the Board of Directors, including conflict of interest, tribalism, nepotism, nepotism and dereliction of duty.
The Board of Directors also said that the applications made false statements, which damaged their reputation, and therefore holding an Extraordinary General Assembly where the said statements would be discussed and any decision would be taken, would therefore be in violation of Article 277(6)(b) of the Companies. represents.
The court heard that the board had received complaints from some of its members that they had not signed the said application notices but their names and signatures were on them.
In these circumstances, the Board said it was unable to verify the identity of the persons who made the application as required under the Companies Act.
While calling the extraordinary general meeting, KHA’s 400 members said one of East Africa’s leading medical providers had been brought to its knees.
They also opposed the board’s plans to borrow a Sh4.2 billion loan, which they said would potentially bankrupt Nairobi Hospital.
The Board of Directors at its June meeting decided to spend Sh2.4 billion on purchasing medical equipment, Sh970.4 million on equipment maintenance, Sh501.2 million on software, Sh215.8 million on furniture and fixtures, and Sh50.1 million. on software, Sh41.8 million on vehicles, and Sh19.2 million on infrastructure improvement.
Their lawyer, Wilfred Mtopwa, opined that operations would cease, and that orders preventing borrowing put Nairobi Hospital at risk of being sued by suppliers and other contractors.
Dr Mtobwa confirmed that the borrowing was legally approved by the board and that Symbiafric Ltd was indeed looking for a financial institution.
The court was told that the hospital serves more than 182,500 patients a year with a bed capacity of more than 450 and more than 400 doctors with admitting rights.
The Board said that Nairobi Hospital occupies a uniquely critical and important role, although it is not a parastatal, it is a national institution whose operations are consistent with the public interest and therefore its optimal performance is a matter of significant public interest.
The members who called the EGM through Mr. Abdullah opposed the prevention of their meeting on the grounds that the court had been invited to the center of the board wars where the members had issued notice, paid for the venue and were ready to proceed with the meeting in order to dismiss the board.
The lawyer said that the General Assembly aims to obstruct the constitutional right of members to remove the troubled board of directors as stipulated in the Companies Law and the company’s articles of association.
Abdullah said the lawsuit was a desperate attempt to use the judicial process as a shield against legal action and subject themselves to either having it removed or preserved.
There are several other cases pending before other divisions of the Supreme Court.
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