Shareholders of companies linked to former Cabinet minister and businessman Simeon Nyachae were cleared to proceed with a derivative suit over the alleged fraudulent sale of a prime property in Kisii town valued at more than Sh35 million.
High Court Judge Freda Mugambi allowed shareholders to file the case on behalf of Sansora Bakers and Confectioneries Limited and its parent firm Sansora Investments Ltd, paving the way for a full hearing into the disputed transaction.
At the centre of the dispute is a property in Kisii town allegedly sold for Sh8 million in May 2021, despite claims that it was worth over Sh35 million.
The shareholders argue that the sale was irregular, opaque, and deliberately undervalued.
“I have equally reviewed the plaint filed, and I am satisfied that the reliefs sought are directed towards the protection of the Company as a whole,” Justice Mugambi ruled.
She noted that the application met the threshold under Sections 238 and 239 of the Companies Act, 2015.
The suit names company directors Michael Moragia Nyachae and Jamaludin Shamsudin Alibhai Rajwani, who are accused by a section of the Nyachae family of running the company as personal property to the detriment of other shareholders.
Michael Nyachae is currently the Chairman of the Development Bank of Kenya.
The shareholders claim the company is in a precarious position due to alleged mismanagement and say the disputed sale occurred when much of the family was still grieving the death of the patriarch, leaving them unaware that assets were being disposed of.
They further allege that the directors deliberately depressed the property’s value and failed to act transparently.
The property was reportedly sold to Pine Tree Real Estate LLP, a firm said to be owned by Rajwani’s nephew.
In her ruling, Justice Mugambi directed the directors to produce the sale agreement, transfer documents, and evidence of receipt of the purchase price.
The court also barred any transfer, sale, or charging of the property pending determination of the case.
Additionally, the directors were ordered to furnish shareholders within 30 days with books of account and banking slips showing receipt of the purchase price.
The court also ordered for furnishing of an audited financial statements and company bank statements from 2021 to date.
The shareholders argue that the company has been run in secrecy and that critical information relating to the disposal of the property has not been shared.
Through their lawyer, the applicants said the derivative suit was filed in good faith to promote accountability and protect the long-term success of the company.
In his response, Michael Nyachae admitted there had been a breach of company law procedures, stating that the bakery was one of the firms established by his late father and that it had historically operated without written resolutions.
“For clarity, since incorporation of the 2nd applicant, the business has operated without written resolutions — directors, who have included my late father, have all along acted in good faith, based on the perceived needs of the company,” he said.
The matter is scheduled for hearing on May 11, 2026, as members of the Nyachae family seek to recover the property and push for the disqualification of the two directors.
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