A court battle over the shareholding of Cannon General Insurance (K) Limited and Cannon Life Assurance (K) Limited has erupted, with a South Africa-based Insurance firm Metropolitan International Holdings Ltd (MIH) being at the heart of the case.
Nirmalla Kumari who is an administrator of the wealth of business mogul Inderjit Talwar alongside her sibling Vishisht Indejari who is also the director Cannon General and Canon Life Assurance (K) Limited have sued MIH, Goodison Twenty-Five limited, Gareto Investment Trust Limited, lawyer Desterio Oyatsi, Gorum Investments and registrar of companies claiming illegal transfer of their late father’s stake.
In the case filed before the Commercial Court in Nairobi, Kumari and Indejari stated that Cannon General was incorporated on January 3, 1974.
According to them, the firm had a nominal share capital worth Sh453 million. At the same time, the court heard that the sister company, Cannon Life, was established on March 22, 2022, with Sh420 million as the nominal share capital.
The two siblings explained that Cannon General was known as Cannon Assurance Limited before 2014. They stated that it was owned and controlled by their late father Talwar.
The court heard that MIT approached Talwar, seeking to buy off the firm. According to them, Evisa Investments Limited was to have the controlling stake of 14 million shares while Doughlas Bazil Anthony Pinto would be the third largest shareholder with Sh1.8 million. Meanwhile, Talwal, according to his heirs, had the second highest shareholding with 5.6 million shares.
“The key terms of the Shares Sale Agreement (SSA)were as follows; the fifth defendant would acquire 75 per cent shareholding in Cannon, with Mr. Talwar to continue as a shareholder to ensure business continuity given his legacy of over thirty years with Cannon at the time,” Kumari and Indejari said in their court papers filed by Anjarwalla and Khana advocates.
Following the SSA, it is alleged that Tarwal had 25 per cent stake in both Cannon General and Cannon Life while Goodison and Gareto had 4.71 per cent in both insurance firms. In the meantime, MIT was alleged to have had 66.29 per cent.
Kumari and Endejari further stated that prior to the agreement, both insurance companies operated as separate entities, offering general and life insurance.
However, they said that it was agreed that the life insurance business, which Cannon General was running, would be transferred to Cannon Life, which was allegedly running into losses, with an understanding that Tarwal would have a 25 per cent shareholding.
“In accordance with the structuring of the SSA, the first defendant’s life business was transferred to the second defendant sometime in 2017. The above shareholding structure remained unchanged until sometime in 2022 when the shareholding in the second defendant was unlawfully altered,” Tarwal’s heirs claimed.
They also alleged that initially, the deceased was dealing with the South African company directly but the firm brought Goodison and Gareto on board.
At the same time, they claimed that after MIT took up majority shareholding, it recommended that Mr Oyatsi takes up Cannon Life’s chairmanship. The two said that Oyatsi allegedly signed the agreement on behalf of Gareto as a beneficial owner while Talwar was designated as the Cannon general chairman. They said MIT had a right to appoint Oyatsi as chair.
In the meantime, since Talwar was the second largest shareholder, he appointed Indejari as a director in both companied. He died on August 9, 2020.
Following his death, Kumari said they decided to sell off a 25 per cent stake in both Cannons. She said they approached Goodison, Gareto, MIT, and Golum. However, according to her, MIT also proposed selling off its shares.
Therefore, she claimed that Goodison, Gareto, Oyatsi and Golum floated their interest in buying both Talwar’s and MIT’s shares.
According to her, the four did not have the financial resources to complete the purchase. She alleged that MIT decided to lend Goodison and Golum 50 million South African Rand while they offered to transfer their shares to Gareto and Oyatsi.
She claimed that Talwar was to sell shares worth Sh350 million in both companies.
Fast-forward to September 9, 2022. Kumari alleged that MIT indicated that Cannon General’s Board had approved the transfer of Talwar’s shares to Goodison and Golum and that the commissioner had also approved the same.
“The purported Board approval, as alleged by the fourth defendant was a fabricated falsehood since the Chief Executive Officer of the first defendant (Cannon General), on September 6, 2022 wrote to the first plaintiff (Kumari) and clarified that neither the board nor the management had approved any share transfers as the transfers were handled between the sellers and purchasers and approval sought directly with the regulator,” said Kumari.
She asserted that the sale was not completed as Insurance Regulatory Authority (IRA)’s conditions were never met. In the end, she claimed that Talwar was left without shares in Cannon General.
The two want the court to force Goodison and Golum to pay Sh313 million in accordance with their agreement. At the same time, they are seeking an additional Sh 37 million for Cannon Life shares.
They also want the court to block any changes in Cannon Life until the money is paid. They are also seeking a declaration that removing Indejari as a director was illegal and compensation for the same.
By Kamau Muthoni
