The High Court has struck out a petition by Kenya Reinsurance Corporation (Kenya Re) minority shareholders seeking to overturn the election of directors at the company’s annual general meeting that was held on June 19, 2026.
The court upheld Kenya Re’s preliminary objection against the suit, finding that the dispute concerned the company’s Articles of Association and shareholder rights, rather than a constitutional matter.
It stated that the dispute could be addressed through the statutory remedies provided under the Companies Act, including provisions allowing shareholders to challenge oppressive or unfairly prejudicial conduct and seek relief in relation to the company’s governance and their rights as members.
“The foundational controversy therefore remains one concerning corporate governance and shareholder rights. The constitutional jurisdiction of this Court ought not to be invoked as a substitute for that framework merely by couching the corporate grievances in constitutional language,” Justice David Mburu said.
Kenya Re is a Nairobi Securities Exchange-listed company in which the government holds a controlling 60 percent stake, while the remaining 40 percent is owned by public shareholders.
It provides reinsurance services to more than 482 companies across more than 84 countries. The case filed by shareholder Rakesh Gadani, the African Institute for Peace and Human Rights and David Kinyanjui, followed Kenya Re’s February 11 decision to divide ordinary shares into Class A and Class B for board representation.
Class A comprises shareholders other than the Cabinet Secretary for the National Treasury, while Class B comprises government shares held by the finance minister. The amended Articles gave Class A shareholders three board seats while Class B shareholders got five seats.
Both classes retained equal rights except on nomination and election of directors, according to the court ruling. Seven directors, some of whom were subsequently ousted by the Treasury, were joined as interested parties in the dispute.
They were Eric Gumbo, Jackline Nyandeje, Leah Rotich, David Muthusi, Irungu Kirika, Abdirahin Abdi and Omar Shallo.
The petitioners challenged the June election, arguing that the three Class A seats were not subjected to a separate vote by Class A shareholders. They said the government’s Class B voting strength could therefore influence seats reserved for minority investors.
They said the election therefore allowed government voting power to influence more positions than the five seats allocated to Class B shareholders.
The petitioners also cited poll results showing substantially similar and high votes for leading candidates.
They acknowledged, however, that complete voting data broken down by share class had not been provided when Gadani swore his affidavit.
They sought orders stopping Kenya Re from implementing the results and wanted the Capital Markets Authority to review the election. They also sought voting records and other AGM documents.
However, Kenya Re opposed the case, arguing that it was a private corporate dispute improperly presented as a constitutional petition. It said the Companies Act already provides remedies for shareholders alleging unfair or oppressive treatment.
The company relied on sections 780 and 782 of the Companies Act, which provide relief against oppressive or unfairly prejudicial conduct.
The petitioners disagreed, saying the case involved government shareholder power, public investment and the conduct of the CMA and the Insurance Regulatory Authority (IRA).
The court rejected that distinction, ruling that the presence of a State officer or public body as a party to proceedings, however, cannot by itself determine the character of the dispute.
“In the present case, stripped of its constitutional language, the immediate controversy remains whether the voting and election of directors at the AGM complied with the first respondent’s Articles of Association,” the judge said.
He stated that courts should avoid constitutional questions where existing legislation can address a dispute, and found the Companies Act provides protections for members.
“The Constitution is not violated merely because a dispute arises within a corporate setting,” the court said.
It added: “Equally, the invocation of constitutional provisions does not transform every dispute involving a Company into a constitutional controversy.”
The court noted the immediate controversy remained whether the voting and election of directors at the AGM complied with the company’s Articles of Association, and whether the rights accorded to the respective classes of shareholders under those Articles were respected.
The court upheld Kenya Re’s preliminary objection and struck out both the petition and the application. The ruling did not determine whether the June 19 election complied with Kenya Re’s amended Articles. It determined that the constitutional petition was not the proper route for resolving the complaint.
The judgment says the Companies Act provides the statutory framework through which the shareholders’ grievances may be pursued. During the contested elections, Treasury removed four directors, including chairman Erick Gumbo, amid a board dispute, while the minority shareholders’ court challenge was pending.
The revised Articles reduced the board to nine members, with five elective seats for the government and three for minority shareholders.
Kenya Re’s audited 2025 financial statements show group profit after tax of Sh3.92 billion, down from Sh4.44 billion in 2024. The company maintained a dividend payout of Sh839.9 million, or Sh0.15 per share.
