KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha and Brian Muchiri, Cliffe Dekker Hofmeyr (Kieti Law LLP)
11. Activism 11.1 Shareholder Activism
become common for employees to apply for injunc - tive remedies to prevent M&A deals from concluding, pending the determination of employee benefits in instances of redundancy. This was recently seen in the acquisition of Spire Bank by Equity Bank, where the High Court of Kenya delayed the transaction in October 2022 until an agreement was reached with the employees. 10.2 Stage of Deal Most disputes are commonly brought after comple - tion of a deal when the investor is a shareholder in the company and begins to understand the operations of the business. With respect to employment grievanc - es, cases are commonly brought once the proposed merger or takeover has been announced or disclosed. 10.3 “Broken-Deal” Disputes Most transaction documents would contain a material adverse change clause that would define a material adverse change and the consequences of such occur - rence. Some transaction documents would provide for parties to review the purchase consideration and in extreme cases terminate the contract. An illustration is the takeover of BOC Kenya PLC, which collapsed after a prolonged, four-year process marked by legal and timing challenges. The takeover by Carbacid Investments PLC and Aksaya Invest - ments LLP was announced in 2021 but ultimately failed to complete by the required timelines, following a Capital Markets Tribunal appeal and delays that per - sisted into 2024. By August 2024, the Capital Markets Tribunal had dismissed the appeal, but the parties concluded that the conditions for completion had not been met within the stipulated long-stop dates, and the offer consequently lapsed, leaving prior accept - ances void and the transaction unrealised.
Shareholder activism is not common in Kenya, but there have been instances of minority shareholders demanding fair treatment during takeovers of listed companies. The focus of activists has been on the valuation of the listed company and the price payable by an acquirer. Though uncommon, shareholder activism is typically exercised in two ways: • firstly, through shareholder protests at general meetings with complaints ranging from low divi - dend payouts to poor corporate governance; and • secondly, through the lobbying for the change of management and the governance (including ESG) in an organisation. 11.2 Aims of Activists Shareholder activism is not common in Kenya. 11.3 Interference With Completion Affected shareholders will typically approach the courts to delay or prohibit a transaction if they believe their rights as minority shareholders have been ignored.
719 CHAMBERS.COM
Powered by FlippingBook