The Munga Rule: Why a Spouse’s Signature Can Freeze Multimillion Shillings Deal
~Your Wealth, Your Shares, Your Marriage, Your Lenders~
At the highest levels of business, the real risks don’t always come from the boardroom.They surface where your wealth, your shares, your marriage, and your lenders collide.
In corporate finance, we often overlook a simple truth; the most decisive and binding signature on a loan Agreement isn’t always the Director’s. Sometimes, it’s the spouse’s.
The Insights
The unfolding battle involving Peter Munga , his Britam Shares and ABC Bank is a sharp reminder of two often – overlooked truths; the far-reaching power of the Matrimonial Property Act, and the serious risk of trying to file the same dispute in multiple courts ‘forum shopping’.
Drawing from the recent Munga v African Banking Corporation Ltd & another [2025] KEHC 4668 (KLR), we break down the key issues every high value investor and business owner should understand.
Q: Can my spouse actually stop the bank from selling my pledged shares?
The Short Answer: Yes. And it is a card that can be played very late in the game.
In the Munga case, the “ace up the sleeve” wasn’t a corporate restructuring but Mrs. Rose Njambi Munga. Though Mr. Munga had pledged the shares, his wife filed for injunctive relief asserting her matrimonial property rights.
Under Kenyan law, assets acquired during the marriage, even seemingly “business” assets like 75 million shares in a publicly listed company fall under the umbrella of matrimonial property. Therefore, they cannot be disposed of without spousal consent. In this instance, the court recognized her “veto power,” forcing the bank to pause, proving that spousal consent isn’t just a formality.
Why this matters to HNWI & Business Owners:
- Risk Exposure: Your lenders may not have as much control as your security documents suggest. An entitled spouse can stall the enforcement.
- Asset Protection Pitfalls: Although you view your shares as ‘personal/business assets’, they may legally fall under Matrimonial estate.
- Lender Strategy: Banks increasingly require a spousal consent to mitigate their risk exposures, which almost always materialises at the later stage, enforcement.
- Litigation Traps: When a spouse claims matrimonial rights, courts will likely prioritise that over commercial urgency.
- Corporate Structures Exposures: Inter spousal transfers, beneficial ownership reclassifications can trigger unintended legal and governance exposures, if not properly planned.
Q: Do business shares fall under matrimonial property ?
Under the law, matrimonial property extends to every asset acquired during marriage , including business shares. Understanding what property falls under that category is key in structuring clear agreements to separate business and personal property.
Q: If one court denies my injunction to stop a sale, can I file a fresh suit in a different court?
Attempting ‘forum shopping’ is a fatal strategy. Mr. Munga filed a suit in Kiambu seeking to stop the bank, but he failed to mention he had already filed a similar suit in Milimani (HCCC No. E602 of 2024). Justice D.O. Chepkwony termed this conduct as “oppressive litigating tactics” designed to undermine judicial integrity.
Why this matters:
- Courts require full transparency
- Filing multiple squirts can instantly void protections
- Legal missteps automatically escalate disputes
Q: What happens if I fail to disclose a prior lawsuit?
Concealing a prior lawsuit , whose facts, issues and parties are similarly related to a present suit violates the principle of coming to court with clean hands. In law, he who comes to equity must come with clean hands.
Because the existence of the prior Milimani suit was concealed, the Kiambu court set aside the interim orders ex debito justitiae (as a matter of right). It didn’t matter that Munga later withdrew the Milimani suit; the court viewed that as a “post-facto” attempt to sanitize fraud.
The lesson? In high value transactions, strategic omissions can destroy your defenses.
Q: What your Lender may not be telling you.
Spousal consents protect the lender more than the borrower. The Munga case demonstrates that banks are exposed if a spousal consent is not obtained. Anticipate this in your next facility.
Q: What are the legal and tax implications in this case ?
While the Munga case centres on matrimonial rights, the other legal and tax consequences are equally critical.Assets transferred or blocked due to spousal consent can trigger:-
- Capital Gains Tax ( CGT); upon disposal, even if part of marital claim.
- Reclassification of Beneficial Ownership; Lender , Regulators and tax authority may reclassify ownership affecting tax obligations
- Estate Planning and Succession Risks; Asset considered as matrimonial property may impact inheritance and estate tax strategies
- Corporate Structure Exposures; shares held in holding companies and trusts can have unintended legal consequences and exposures if matrimonial causes arise.
THE TAKEAWAY
Matrimonial rights can pause or block disposal of business assets, litigation missteps can void protections, and complex structures can create unexpected exposure. Asset protection is no longer reactive but a strategic discipline.
At Ithera Africa we simplify these complex intersections. We offer confidential, asset protection reviews for business owners and high value clients. During this session, we:
- Assess your current collateral, shareholding and corporate structures;
- Identify legal, tax and succession risks arising from your current structures;
- Recommend strategic structures to protect both personal and business wealth, while optimising tax outcomes
Authors:
Mike Ogutu and Steve Muikia.
Contact us :admin@ithera.africa
Disclaimer –This Article is in general terms for guidance only and is not intended to substitute professional advice. While due diligence has been undertaken, in ensuring the accuracy of information provided herein, Ithera Africa is not responsible for any actions or omissions undertaken as a result of the same.
