Mutamba Birungi

One of the easiest ways to create a corporate crisis is to confuse possession of the office with authority to exercise it. The learned registrar held, Where the authority of those purporting to convene a meeting is itself the central matter in dispute, the unilateral exercise of that very authority to convene and conduct a meeting cannot produce a legally valid or unimpeachable outcome." That is exactly what the Registrar of Companies confronted in Batangaya Asuman & Others v Igara Growers Tea Factory Ltd. At its core, the dispute was not really about tea. It was about a fundamental question of company law: The dispute arose after shareholders of Igara Growers Tea Factory Ltd challenged the continued management of the company by a Board of Directors whose mandate, according to a resolution passed at an Extraordinary General Meeting on 31 January 2025, had expired in August 2025. The applicants alleged that despite the expiry of its mandate, the Board continued to convene meetings, make corporate decisions and file company documents, while the company was also grappling with allegations of financial mismanagement, unpaid salaries, outstanding debts and governance failures. They therefore petitioned the Registrar of Companies to investigate the company's affairs whilist the respondents maintained that the Board remained lawfully in office under the company's Articles of Association. What happens when a board's mandate expires, but the directors continue behaving as though nothing has changed? The ruling makes an important distinction that many companies often overlook. A governance vacuum is undoubtedly a problem. But it does not give anyone a licence to invent authority. If the legitimacy of the board is already under challenge, every major decision taken by that board carries the same cloud hanging over it. What impressed me most is the Registrar's refusal to reward what lawyers often call "self-help." The company argued that since it had already convened an Annual General Meeting, the dispute had effectively become academic. The Registrar disagreed. You cannot use a meeting convened under disputed authority as proof that your authority was valid in the first place. That would be like marking your own examination paper and declaring yourself the top student. The ruling also serves as a practical lesson in corporate governance. Section 138 of the Companies Act was specifically enacted for moments like these. When the company's governance machinery breaks down, the law provides a neutral solution: go to court and have the meeting convened under judicial supervision. Instead of following that route, the parties attempted to solve a legal problem through unilateral corporate action a shortcut the Registrar firmly rejected. Another aspect worth applauding is the Registrar's judicial discipline. There were serious allegations of financial mismanagement, unpaid workers, mounting debts and possible oppressive conduct. The evidence was sufficient to justify an investigation. Yet the Registrar recognised that investigating first, before determining who lawfully constituted the Board, could leave inspectors with findings that no legitimate governing body had authority to implement. Rather than stretching statutory powers, the Registrar insisted that the foundation be fixed before the house could be renovated. Companies rarely collapse overnight. They often begin to unravel when governance stops being treated as a legal obligation and starts being treated as an inconvenience. This ruling reminds directors that corporate authority is not sustained by habit, seniority or convenience it survives only because the law continues to recognise it. In the end, the Registrar delivered a message every boardroom should pin on its noticeboard: “When your mandate expires, you don't extend it by holding another meeting you extend it by following the law.”