The High Court in Nairobi has issued a landmark ruling clarifying the rights of business partners who own companies on a 50/50 basis, offering fresh legal certainty for the many Kenyan enterprises run by couples, relatives and friends.
The judgment followed a dispute between two equal shareholders and directors after one partner allegedly seized control of the company’s operations and locked the other out of key decisions and financial information. The Court found that an equal shareholder who also serves as a director has an inherent right to participate in running the company, access its records, and benefit from its assets and profits, regardless of who handles day-to-day management.
At the heart of the case was a disagreement over income generated from rental properties, machinery and commercial vehicles, with one partner alleging that some proceeds were being channelled outside the company’s official bank account. The Court established that the disputed properties and vehicles belonged to the company and directed that all income from them be deposited into its designated account to ensure transparency and accountability.
In a further blow to the managing partner, the Court ordered the production of company books of record and bank statements dating back to 2020, opening the business’s financial affairs to full scrutiny. Judges found that excluding an equal shareholder from management while retaining control of company assets and income amounted to oppressive conduct and unfair prejudice under the Companies Act, a legal framework traditionally used to protect minority shareholders but now extended to equal partners who lack a majority vote to override one another.
The Court also granted an injunction barring the respondent from selling, transferring, charging or otherwise dealing with company assets pending determination of the main petition, safeguarding the disputed property until the matter is resolved.
Legal experts say the ruling carries significant weight for Kenya’s small and medium enterprise sector, where 50/50 ownership arrangements are common but often undocumented. The decision makes clear that the partner running daily operations does not automatically gain superior rights over company property, income or decision-making simply by virtue of being in charge.
For business partners across the country, the ruling delivers a simple but powerful message: owning half a company comes with the right to participate, to access information, and to share in its benefits, and no partner can unilaterally shut the other out when disputes arise. Lawyers are now urging entrepreneurs entering equal partnerships to draft clear agreements on management, profit-sharing and dispute resolution from the outset, since prevention remains far cheaper than litigation once trust between partners breaks down.
