A legal suit has been filed against Michael Moragia Nyachae, son of the late minister Simeon Nyachae, and his two business associates, over the management of the family-run company, Associated Auto Centre. The dispute, now pending before Kenya’s High Court Commercial Division, highlights growing tension within the shareholders of the company, which operates in the automotive sector.
Eureka Holdings, a shareholder in Associated Auto Centre alongside AJS Investments and Associated Motors, has sued Michael Nyachae, Amin Mohamed Shamsudin, and Moez Ismael Jamal, aiming to remove them from their roles as directors. Eureka contends that the trio’s ongoing leadership risks financial mismanagement and could result in substantial losses to the company.
In the suit, filed through lawyer George Ouma, Eureka Holdings is requesting court orders to freeze bank accounts, shares, and properties registered under the names of the directors. Eureka argues that these measures are essential to protect its interests pending a comprehensive investigation.
Key allegations against the directors include the unauthorized acquisition of loans from Diamond Trust Bank, Credit Bank, and Sidian Bank, resulting in default on substantial debts. Court filings reveal that Credit Bank recently issued a demand for KES 82 million, while the Kenya Revenue Authority is seeking KES 77.9 million in unpaid taxes. According to Eureka, these outstanding obligations have jeopardized the company’s financial standing and shareholder value.
Additional claims include the alleged unauthorized substitution of Eureka’s shares with those of Shanzu Enterprises Limited, an action that, according to the complainant, occurred without necessary shareholder consent or that of Credit Bank.
Eureka further alleges that in 2016, the directors obtained a $2.2 million (KES 258.3 million) backstop loan from Ashok Leyland Motors Kenya at an interest rate of 14.5%, along with a KES 233.9 million loan from Diamond Trust Bank at a 13% rate. Both loans remain partially unpaid.
With mounting debts and potential liquidation looming, Eureka has requested asset freezes and called for arbitration to resolve the issues. Through their legal representatives, the accused directors have indicated a willingness to engage in arbitration, stating that the matter falls under the firm’s memorandum and articles of association.
