(Nairobi) – The High Court has cleared Nairobi Hospital to proceed with its Annual General Meeting (AGM) after a ruling on November 4, 2024, directing the meeting to be held within 30 days. Justice Peter Mulwa also issued an order preventing the proposed Extraordinary General Meeting (EGM) called by over 400 members, which had been intended to address concerns about the hospital’s management.
The court’s decision came after the members, led by Mr. Robert Shaw, requested the EGM to remove board members, including Chairman Chris Bichage, and to appoint a caretaker committee. However, the court ruled that holding the EGM could potentially have irreversible consequences for the hospital and its management, including harm to the reputations of the directors and the institution itself. The judge emphasized that it was in the best interest of the hospital’s stability for the AGM to proceed as planned.
In its ruling, the court underscored the significance of the AGM, stating that it is the essential platform for the hospital to report to its shareholders, discuss challenges, and make decisions regarding the institution’s future. The judge also noted that the AGM’s agenda included the rotation and election of directors, which was critical to the hospital’s governance.
The members who called for the EGM argued that Nairobi Hospital, one of East Africa’s premier medical institutions, was facing a financial crisis, citing concerns about a proposed Sh4.2 billion loan. They opposed the board’s decision to borrow the money, fearing it could lead to the hospital’s bankruptcy. The board had planned to use the funds for medical equipment, maintenance, software upgrades, furniture, and infrastructure improvements.
The hospital’s board, however, argued that the requisition for the EGM contained false accusations against them, including claims of conflict of interest, nepotism, and dereliction of duty. The board also disputed the authenticity of some signatures on the requisition notice, stating that some members had not authorized their inclusion.
Dr. Wilfred Mutubwa, representing the board, defended the planned loan, asserting that it was lawfully approved and was crucial for the hospital’s continued operation. He warned that blocking the loan could lead to the hospital being sued by suppliers and contractors, further harming its financial stability.
The board further highlighted Nairobi Hospital’s critical role in the national healthcare system, noting that it serves over 182,500 patients annually, has a bed capacity of over 450, and employs more than 400 doctors. They argued that the hospital’s operations are of great public interest and that its proper functioning is vital for the public.
On the other hand, the members calling for the EGM criticized the board’s actions and accused them of using the judicial process to block legitimate efforts to address the hospital’s management issues. They argued that the AGM was an attempt to derail their constitutional right to recall a non-performing board, as outlined in the hospital’s articles of association.
While the AGM has been cleared to proceed, the dispute continues, with other legal cases pending before the High Court.