A fresh legal battle has emerged involving the family of former Cabinet minister Simeon Nyachae, with his son Michael Nyachae and an associate now facing a derivative suit over the alleged fraudulent sale of a prime property in Kisii town valued at more than Sh35 million.
The case has opened up serious questions about how family-linked companies have been managed and how key decisions were made behind closed doors.
Shareholders of companies connected to the late minister have been cleared by the High Court to proceed with the case. In a ruling delivered by Justice Freda Mugambi, the court allowed them to file a derivative suit on behalf of Sansora Bakers & Confectioneries Limited and its parent firm, Sansora Investments Ltd.
This decision paves the way for a full hearing into a disputed transaction that has sharply divided members of the Nyachae family.
At the centre of the dispute is a property in Kisii town that was allegedly sold in May 2021 for Sh8 million. Shareholders claim the land was worth more than Sh35 million at the time of sale.
They argue that the transaction was irregular, opaque, and deliberately undervalued.
The large gap between the alleged market value and the sale price has raised concern among family members who say the company may have suffered heavy losses.
“I have equally reviewed the plaint filed, and I am satisfied that the reliefs sought are directed towards the protection of the Company as a whole,” Justice Mugambi ruled, noting that the application met the threshold under Sections 238 and 239 of the Companies Act, 2015.
The suit names company directors Michael Moragia Nyachae and Jamaludin Shamsudin Alibhai Rajwani. A section of the Nyachae family accuses them of running the company as personal property to the disadvantage of other shareholders.
Michael Nyachae currently serves as the Chairman of the Development Bank of Kenya, a position that adds public interest to the dispute.
According to the shareholders, the company is in a precarious position due to alleged mismanagement. They claim the disputed sale took place when much of the family was still grieving the death of their patriarch.
During that period, they say, key assets were disposed of without proper consultation or full disclosure.
They further allege that the directors deliberately depressed the value of the property and failed to act in a transparent manner.
The land was reportedly sold to Pine Tree Real Estate LLP, a firm said to be owned by Rajwani’s nephew, a detail that has intensified claims of conflict of interest.
Justice Mugambi directed the directors to produce the sale agreement, transfer documents, and evidence showing receipt of the purchase price.
The court also barred any transfer, sale, or charging of the property until the case is heard and determined.
In addition, the directors were ordered to provide shareholders within 30 days with books of account, banking slips showing receipt of the purchase price, audited financial statements, and company bank statements from 2021 to date.
The shareholders maintain that the company has been run in secrecy and that critical information about the property sale has not been shared.
Through their lawyer, they insist the derivative suit was filed in good faith to promote accountability and protect the long-term success of the business.
In his response, Michael Nyachae admitted there had been a breach of company law procedures. He explained that the bakery was one of the firms established by his late father and that it had historically operated without written resolutions.
“For clarity, since incorporation of the 2nd applicant, the business has operated without written resolutions directors, who have included my late father, have all along acted in good faith, based on the perceived needs of the company,” he said.
The matter is scheduled for hearing on May 11, 2026. As the case moves forward, members of the Nyachae family are seeking to recover the property and push for the disqualification of the two directors, setting the stage for a closely watched legal showdown over accountability and corporate governance.
