The High Court of Malawi (Commercial Division) in Blantyre has delivered a significant ruling in the ongoing legal battle between Wester Kosamu and individuals who were masquerading as the board of directors at Salima Sugar Company Limited. The court has declared that the defendants lacked the authority to remove Kosamu from his position as executive director of the company.
In a default judgment dated November 18, 2024, Justice Masauko Msungama ruled that the power to remove the executive director lies solely with the company’s shareholders, acting through a simple majority resolution. This ruling invalidates the actions of the defendants, who held a meeting in December 2023 in an attempt to dismiss Kosamu from his position, despite lacking the necessary quorum and authority.
The judgment, which was made available to Nation Online, specifically stated: “A declaration that the meeting held on December 16, 2023, by the defendants, masquerading as the board of directors of the 1st claimant company, lacked both the power and the quorum to remove the 2nd claimant from his position of executive director of the 1st claimant company.”
The court also nullified the defendants’ purported resolution to remove Kosamu, as well as their appointment of Salima Sugar Company Limited’s new signatories, including Kosamu and Vikas Hirawat, to the company’s bank accounts. The judgment firmly reinforced that only the proper board and shareholders of the company, acting in accordance with the law and corporate governance procedures, can make such significant decisions.
Kosamu, who had previously obtained a court injunction in December 2023 to prevent his firing by the board, expressed satisfaction with the court’s decision. In an interview following the ruling, he remarked: “Sometimes justice must not just be done but be seen to be done.”
The ruling has significant implications for corporate governance in Malawi, particularly in the context of the rights of executive directors and shareholders in decision-making processes. It underscores the importance of following proper legal procedures when making changes to leadership or management within a company, as well as the role of shareholders in determining the direction of the business.
Kosamu’s legal team argued that the actions of the defendants were not only unlawful but also represented a dangerous overreach that could set a harmful precedent for corporate governance in Malawi. The court’s decision sends a clear message that individuals who attempt to act outside the law will be held accountable.
The defendants, who had been posing as the board of directors, are yet to comment publicly on the ruling. However, the judgment could pave the way for further legal action and scrutiny into their conduct during the period in question.
With the court ruling in favor of Kosamu, the immediate issue of his removal from office has been resolved. However, the ruling leaves open questions about the future of Salima Sugar Company and the governance of its operations. Kosamu, who has remained in his position throughout the legal process, now holds a stronger position to lead the company forward, especially as the legal disputes surrounding the legitimacy of the board’s actions have been clearly defined by the court.
The ruling also serves as a reminder to corporate bodies, both public and private, about the importance of upholding the rule of law in business operations. Shareholders and boards must ensure that all decisions, particularly those related to management and executive appointments, are made in compliance with corporate bylaws and relevant legal frameworks.
As for Kosamu, the ruling offers a sense of vindication, reaffirming his position as executive director of Salima Sugar Company. Moving forward, it remains to be seen how this judgment will impact the company’s governance structure and its future strategy in the competitive sugar industry in Malawi.
The High Court’s judgment represents a victory not only for Kosamu but also for the principles of fairness, transparency, and accountability in corporate governance. By upholding the legal rights of the executive director and clarifying the roles and responsibilities of shareholders and the board, the court has ensured that due process is followed in corporate decision-making. The decision also highlights the importance of providing solid evidence in disputes of this nature and serves as a powerful reminder that actions taken outside the law can have significant legal consequences.
This case will undoubtedly have far-reaching implications for corporate governance practices in Malawi, as it reinforces the idea that individuals cannot simply take matters into their own hands, particularly when it comes to the leadership and operation of companies. As the dust settles on this case, it will be interesting to see what further legal actions may arise, and how Salima Sugar Company Limited will move forward in its quest for growth and stability.
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