• Allegations raised by the ex-shareholders to be determined in the full trial
•SBM and CBK have 14 days to file their defences in the case.
Image: FILE
A Mauritius-based lender and the Central Bank of Kenya (CBK) will have to defend themselves in a case in which former shareholders of the former are claiming to have been allegedly pressured to release their shares for only Sh 100 ($1)
Commercial Court Judge Alfred Mabeya said such allegations are serious and they require to be interrogated at a trial.
He said there is evidence that the asset base of the then Fidelity Commercial Bank Limited (FCBL) now SBM Holdings was at least substantial as of December 2016.
“For the same to be sold for a short period later at a sum of $1 is curious,” he said
The Judge said it is likely that there were sums payable later on to complement the said $1 for the said sale and purchase but the shareholders have claimed it was never paid.
“No accounts have been provided to show whether the Disposal Accounts and Impaired Loans yielded anything payable to Khimji and his colleague shareholders,” said the Judge.
Fidelity was taken over by Mauritius’ SBM Holdings for Sh 100 in May 2017.
CBK brokered a deal with SBM Mauritius to sell FCBL after the lender run into a financial crisis. It also approved the change of name from Fidelity to SBM Bank.
The only asset it has in Kenya is the SBM Bank, the shares of which are alleged to have been purchased from Sultan Khimji and others.
Khimji suing as seller’s representative on behalf of the former shareholders of defunct Fidelity Bank named SBM and CBK as respondents in the case.
Judge Mabeya explained that If SBM off-loads those shares or decided to have them taxed, and Khimji and the team are ultimately successful in their suit, they will have nowhere to seek remedy.
“The court is alive to the importance of direct foreign investment, which the alleged deal seems to have been, but such investment should not be tainted with irregularity,” he said
He said if SBM leaves Kenya, Khimji and the team would suffer losses that cannot be remedied.
As a result, the Judge said SBM will not advertise or offer for sale regarding the challenged shares.
The shareholders claim that their rights were violated as they were forced into entering into the agreement ‘which made them part with FCBL for a song’.
The judge said whether or not the contract was entered into willfully or misrepresentations, duress or coercion is a matter to be decided at the hearing of the suit.
SBM and CBK have 14 days to file their defences in the case.
The matter will be listed before the Deputy Registrar for pre-trial directions.