The High Court in Kampala has ruled that businessman Hamid Mohammed can be held personally liable for the debts of Aya Investments (U) Ltd.
This comes after Court discovered that the business entity was used to conceal assets and frustrate court orders in a decade-old civil case.
Delivering judgment electronically, Justice Simon Peter M. Kinobe of the Civil Division said the conduct of Mr Hamid “showed deliberate acts of wrongdoing” and that the company’s separate legal personality had been abused to avoid execution.
The court lifted the corporate veil, allowing Jackson Ntwatwa , the decree holder, to pursue Hamid’s personal assets to recover more than Shs 200 million in damages plus accrued interest and costs.
“All these point to deliberate acts of wrongdoing,” Justice Kinobe wrote in his 10-page ruling, adding “I am satisfied that the applicant has met the grounds necessary to lift the corporate veil.”
The ruling stems from Civil Suit No. 136 of 2014, in which Ntwatwa successfully sued Aya Investments (U) Ltd, Hamid Mohammed , and Watuwa Isongoni Mustafa, obtaining a decree for Shs 150 million in general damages and Shs 50 million in punitive damages.
However, more than a decade later, the decree remained unsatisfied.
Between 2023 and 2024, Ntwatwa filed multiple garnishee applications to attach Aya Investments’ bank accounts, but execution failed after the company’s funds were shifted to Aya Flour Mills SMC Ltd, an entity owned and controlled by Hamid.
Court filings show that on May 29, 2024, just minutes before Equity Bank was served with a garnishee order, Shs 1.03 billion was withdrawn from Aya Flour Mills’ account, followed by USD 800 from its dollar account.
The withdrawals were executed by Hamid personally, according to an affidavit by Martha Nimurungi Kamuhanda, a legal officer at Equity Bank.
“These transactions, coupled with the transfer of company property into Hamid’s personal name, are indicators of fraud,” Justice Kinobe said.
The court relied on Section 20 of the Companies Act, which empowers it to disregard corporate identity where a company is used to commit fraud or evade legal obligations.
Justice Kinobe also cited the landmark UK case Prest v Petrodel Resources Ltd (2013) and the Ugandan decision in Bhatia & Anor v Boutique & Shazim Ltd (2023), emphasizing that a director can be treated as the company’s “alter ego” when abusing limited liability protection.
“The corporate veil can be lifted against directors at the execution stage if every possible effort to recover through normal means has failed,” the judge noted, referencing Justice Musa Ssekaana’s interpretation of the law in a previous case.
Hamid, through his lawyers M/s Lawgic Advocates, argued that he was not a party to the original 2014 suit and therefore could not be held personally liable.
But the court rejected that position, saying the evidence demonstrated that Aya Investments’ structure had been used as “a sham and a device” to conceal assets and defeat justice.
With the veil now lifted, Ntwatwa is expected to commence direct execution against Hamid’s personal property and bank accounts.
Aya Investments, a subsidiary of the Aya Group, known for high-profile projects including the Pearl of Africa Hotel, has not yet commented on the ruling.