High Court affirms that where shareholders pass away, courts may lawfully empower surviving members to convene meetings and carry out corporate actions to preserve the business.
- Waboga David
- Jul 2
- 3 min read
High Court Clarifies Legal Threshold for Holding a One-Member Company Meeting in Absence of Quorum Due to Death of Shareholders
Introduction
The High Court (per Hon. Justice Simon Peter M. Kinobe) granted leave to a surviving shareholder of Odu Group Ltd to convene, hold, and conduct an Extra Ordinary General Meeting (EGM) without the constitutionally required quorum due to the death of the other two shareholders, thereby invoking the court’s jurisdiction under Section 138(1) of the Companies Act, Cap 106.
Background
This application was brought by Mr. Raymond K. Otika under Section 33 of the Judicature Act, Section 98 of the Civil Procedure Act (Cap 71), and Order 38 Rule 6 of the Civil Procedure Rules S.I. 71-1. The Applicant, a director and shareholder of Odu Group Ltd, sought:
Leave to call, hold, and conduct an Extra Ordinary General Meeting (EGM) without a quorum.
Orders allowing such a meeting to pass resolutions appointing directors and a company secretary.
Costs of the application.
Odu Group Ltd, incorporated on 13 February 1987, is constituted by three equal shareholders: Raymond Otika, Denis Musisi (deceased), and Ingwersen Ult (deceased). Each held 340 shares and were also affiliated members of a religious community. No administrators had been appointed to the estates of the deceased shareholders, thereby rendering the quorum requirements under the company’s Articles of Association (requiring two members) unattainable.
Issue
Whether, in the absence of quorum due to the death of shareholders, the applicant could be granted leave to hold and conduct a valid company meeting to pass key resolutions.
Court's Analysis and Findings
Justice Kinobe acknowledged the procedural and operational paralysis occasioned by the deaths of Musisi and Ult. The Applicant had taken reasonable steps to engage the heirs of the deceased, including contacting the son of the late Musisi, without success.
The court emphasized that:
Section 138(1) of the Companies Act, Cap 106 empowers courts to order meetings where it is "impracticable" to hold them per the company’s constitution or statute.
Subsection (2) allows the court to direct that a single member may constitute a meeting. The failure to appoint administrators to the deceased shareholders' estates had created an impasse that stifled the company's affairs.
Justice Kinobe relied on judicial precedents including:
In the Matter of Kasita Estate Ltd (1982) HCB 107, In the Matter of Uganda Baati Limited, Company Cause 023 of 2024, Emmaus Foundation Investment Uganda Limited v Giuseppe Giammona, Company Cause No. 2 of 2018, Liberation Finance Community Ltd, Company Cause No. 1 of 2025,
All of which affirmed that where shareholders pass away, courts may lawfully empower surviving members to convene meetings and carry out corporate actions to preserve the business.
"In this particular application, the death of Denis Musisi and Ingwersen Ult, who are two out of the three shareholders, has made it impossible to call a shareholders’ meeting in the manner in which such meetings of the company may be called or to conduct a meeting in the manner prescribed by the company’s constitution. I am also cognizant of Article 10 of the Company’s Articles of Association which provides that the quorum for general meetings shall be two members.
This in my opinion creates a situation warranting the issuance of an order pursuant to Section 138 of the Companies Act, Cap 106. In the circumstances, it would also be in the interests of justice and equitable to issue the said order.
Once shareholders of a company pass away, it is reasonable for the court to allow the surviving member and/or officer to conduct the affairs of the company as they deem fit to further the company’s objectives.”
Order
The Court granted the application, specifically:
Leave was given to Raymond Otika to convene and conduct an Extra Ordinary General Meeting as a single shareholder.
The meeting was valid for all legal purposes including appointing new directors and a company secretary.
No order was made as to costs.
Implications for Corporate Governance and Practice
Section 138 of the Companies Act, Cap 106 is a powerful statutory safeguard for corporate continuity in the face of shareholder death or deadlock.
Directors and shareholders are encouraged to regularize company succession planning, including updating share registers, appointing administrators, and amending Articles of Association where needed.
The case emphasises the inherent powers of the High Court under Section 98 CPA and Section 33 of the Judicature Act to issue orders to prevent corporate paralysis.
Read the full case below
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