By James Anyanzwa
The High Court has given Capital Markets Authority (CMA) sweeping powers to discipline errant directors of listed companies by barring them from holding office.
In a recent court ruling, the regulator was granted latent authority to intervene in troubled listed firms by reconstituting their respective boards.
Justice Daniel Musinga of High Court set the precedence ruling in which former CMC chairman Peter Muthoka sought to be reinstated at the helm of the troubled auto dealer.
Mr Muthoka, the largest shareholder in the troubled motor-firm and John Kivai were toppled in a boardroom coup. CMA followed the ouster with the seconding of three nominees to the board of CMC.
The former chairman filed the suit seeking among other reliefs, for CMA to be found in contempt of court proceedings for allegedly sanctioning his ouster.
In the ruling, Justice Musinga said the market regulator had powers to remove directors of a public listed company and appoint an interim board.
Regulate affairs
He absolved CMA from blame saying the authority had powers to regulate the affairs of any listed company.
The judge said the powers set under the CMA Act are wide and that there is a general power that allows CMA for the removal of a director, which is necessary to promote the Act.
Muthoka holds a big stake in the car dealer through his logistic company, Andy Forwarders.
“In view of the foregoing, I am not satisfied that the plaintiff (Muthoka) has demonstrated that his removal from the board was done unlawfully,” said Musinga.
He said since CMC is a listed company, its operations are by law subject to the regulatory framework established by the CMA Act.
